Niche Producer Flourishes in FluorochemicalsNovember 17, 2011
Halocarbon Expertise Yields Profits
Halocarbon (River Edge, NJ) has carved out a profitable niche in fluorine chemistry, leveraging 60 years of expertise to build positions in specialty fluorochemicals, inhalation anesthetics, and inert oils, waxes, and greases. The privately held company does not disclose sales, but says revenues are in the tens of millions of dollars per year. Growth has been strong, at 20% in 2010, due to the addition of new chemistries, and early indications show the company is on track to post similar results for full-year 2011. Fluorochemicals make up about half of Halocarbon’s sales, with anesthetics and oils, greases, and waxes accounting for the remaining 30% and 20%, respectively. Exports accounted for just under 60% of the company’s revenue last year.
Robert Ehrenfeld founded the company in 1950 based on inert fluorinated lubricants technology he developed for the Manhattan Project, the U.S. effort to build an atom bomb during World War II. Since his death in 2007, the company has been owned by Ehrenfeld’s three daughters, including president Emily Ehrenfeld. In the late 1950s, the company leveraged know-how in fluorochemicals to add trifluoroacetyl chloride (TFAC) derivatives. It currently produces inhalation anesthetic isoflurane from trifluoroacetic acid. Another TFAC derivative, trifluoroacetamide, is used in the pain drug celcoxib. The company is currently sold out of TFAC derivatives.
Halocarbon expanded into hexafluoroacetone (HFA) and HFA derivatives to continue to serve an inhalation anesthetic market that was migrating to sevoflurane, a product developed by Baxter Laboratories. Halocarbon began selling sevoflurane in 2008. The company says it has been inundated with requests for HFA derivatives for a number of other specialty applications. These small volumes require extremely high purity and can cost thousands of dollars per kg, says Ron Epstein, sales director/Halocarbon.
Demand has been so strong that the company has been selective about HFA opportunities. “The world seems to have been somewhat under-served in HFA derivatives, based on the volume of the inquiries we’re receiving,” says CEO Peter Murin. For many of these chemistries, Halocarbon’s only competitor is Central Glass (Tokyo).
Customers have been requesting increasingly complex molecules in applications where fluorochemicals have not yet been prevalent, says Barry Jones, technical director. Photoresist makers have been using HFA derivatives in coatings, an application that is expected to be Halocarbon’s fastest-growing for the near future. Requests from pharmaceutical companies are also increasing, and some customers are experimenting with HFA derivatives in medical device coatings.
Strong demand has caused a crunch at Halocarbon’s sole manufacturing site at North Augusta, SC. The company does not disclose production capacity details, but says it is planning a “significant” debottlenecking in the HFA portion of the plant. However, Murin expects debottlenecking opportunities to run out within a year. The company is not planning a second facility at North Augusta in the near term. “Volumes for our current portfolio don’t support such an investment,” Murin says. “An additional plant would only be supported by a decision to enter a new area of fluorochemicals.” However, no such decision is in the works.
The company became averse to high-volume products ten years ago, when competitors for its TFAC business began to emerge in Asia, Murin says. “We now tend to shy away from customer requests for products in the thousands of metric tons.” Halocarbon has, for example, turned away opportunities in agrochemicals. “The products would have been high-volume applications, but also in a more competitive, low-margin situation. We like to focus on high-value product requests of 100 m.t. or even 10 m.t.”
Whether or not a chemical can be easily made by competitors is also a factor in whether or not Halocarbon will take on a project. “If it’s a commodity product and a lot of companies can produce it, then it’s just not for us,” Epstein says.
Murin theorizes larger chemical companies with fluorochemical expertise, such as DuPont, do not find the low-volume applications pursued by Halocarbon interesting enough to attract investment. “One million dollars per year profit growth is sizable to us, but to a company like DuPont or Dow it’s not enough to get excited about.” Dedication to being a true niche player has helped the company ride out market volatility, Murin says. During the recession, none of Halocarbon’s 150 employees were laid off.
Although HFA derivative sales growth is outpacing TFAC, Murin says the TFAC side is still active. Demand is growing for trifluoroacetic acid for use in glass coatings, and the company recently learned one of its customers is using it in solar panels. While Halocarbon has been producing many of its oils, greases, and waxes for 60 years, the business “is far from a dead product group,” Epstein says. Volumes are moderate, but demand and profits remain steady, and for many applications, materials with similar properties have never been developed. The company’s oils are used in applications ranging from missile guidance systems to fruit fly breeding in biological research. The company’s greases have recently begun to be used for pipe connections in hydraulic fracturing applications, and its waxes are used as a barrier coating against corrosive chemicals.