Robert Thurlow Vanderbilt didn’t need Money magazine to advise him on the best way to invest a thousand dollars. In 1916, the 31-year-old entrepreneur combined his $1,000 savings with a family loan and opened R.T. Vanderbilt Company on 42nd Street in the heart of New York City. A contract to sell clay for a Southern firm was just the beginning. Soft clay for paper led to the mining of hard clay for the rubber industry. Success in these areas spawned a wealth of products for other industries until, at last count, R.T. Vanderbilt Company now sells over 60 types of minerals and chemicals, reflected in more than 800 products sold in 80 countries around the globe, to 12 different industries — including the lubricants industry.

In 1974, the company left New York City and moved to new headquarters next to its research and development laboratories in Norwalk, Conn. Today it employs 630 people and operates two chemical plants and four mineral subsidiaries. Its additives for lubricants range from extreme pressure/antiwear agents and metal deactivators to friction reducers, bactericides and rust/corrosion inhibitors. While a good deal of product is sold to the automotive sector, the accent is on industrial applications.

Company President Hugh B. Vanderbilt Jr., grandson of the founder, has been working at the privately held firm for 28 years — and he is only 43. At 15, Vanderbilt began a comprehensive education on the company and its businesses by first doing a stint in the mailroom, followed by the analytical laboratory, advertising, and purchasing. Prior to taking on the presidency, he ran the Mining and Manufacturing group.

Vanderbilt says, “While petroleum is one of six businesses we participate in, it is the second-largest operation. The roots of this business go back to 1925 when we signed distribution agreements with B.F. Goodrich and others. In the early ‘50s, the ADPA [alkylated diphenylamines] chemistries associated with these rubber applications were modified to function in the lubes and greases area, and we branched out to make products for this industry. These and dithiocarbamates still represent our basic chemistry.

“Vanderbilt Chemical Company manufactures 60 percent of our lubricant additives and we act as resale distributors for the other 40 percent. Yet we go way beyond what distributors typically do. Every department has a dedicated research laboratory. The petroleum laboratory handles customer service and developmental activities, and it gives us the ability to customize formulations. Our Synthesis Group is one of the best in the country. We’ll also take raw materials from other companies, create a new molecule and promote the new product in our industry.”

Vanderbilt says his father’s favorite saying is, “We always prefer 100 smaller customers to one large customer,” but adds that even large customers rely on R.T. Vanderbilt Co.’s input and technology.

While everything R.T. Vanderbilt sells goes through further processing before it reaches a consumer, you’ll find this company’s products everywhere: in greases, airplane lubricants, antiperspirants and fine china, in toothpaste, shampoo and “practically every bit of rubber in an automobile,” says Hugh Vanderbilt Jr.

The freedom to pursue this diversity is just one of the many perks of being privately held. Jack Hattendorf, vice president of the Petroleum Division, says there’s more latitude for creative R&D and long-term thinking at R.T. Vanderbilt Co. “Our channels of communication are very open here. We’ve managed to cut the red tape, and there are no layers of management one has to go through to get things done. Even disagreeing with management is allowed. Everyone works together, from the bench chemist to the CEO.

“This type of environment not only creates fertile ground for innovative thinking, it also engenders respect between people. No one likes to leave R.T. Vanderbilt Company. I’ve been here 20 years; Linda Dvornek [vice president of R&D] is a 25-year veteran, as is CFO Joe Denaro. Roger Sabo has clocked 20 years and Steven Donnelly has been here 19 years. Long-term relationships extend to customers, too — 74 years with B.F. Goodrich is a prime example.”

Humming a Fine Tune

Linda Dvornek has the R&D laboratories humming with the discovery of new products and the fine-tuning of existing ones. She says, “Right now, we’re working on a new friction reducer, Molyvan 2000, which we feel is very close to being ready for commercial introduction. It is primarily designed for engine oils, but has potential for other applications as well. With people looking for alternatives to zinc dithiophosphates, we’re also investigating formulations containing non-metal dithiophosphate chemistry for antiwear protection in hydraulic, compressor and engine oils.”

Hattendorf adds, “We’re also fine-tuning Molyvan 855, the friction reducer that helps meet proposed GF-3 requirements for new engine oils, to address larger-than-expected production volumes. With no sulfur and no phosphorus, Molyvan 855 should give the performance the industry is seeking. In fact, R.T. Vanderbilt Company is expanding its Murray, Kentucky, plant by 10,000 tons to meet anticipated demand for Molyvan 855. We’re not afraid to reduce prices in this market either, because we’ve realized economies in our manufacturing facilities and streamlined processes that allow us to do this. Everyone is concerned about price these days. A quart of oil still costs under a dollar, and no one is anxious to raise it. Molyvan 855 is priced well and can allay these concerns.”

Roger Sabo, the Petroleum Division’s commercial product manager, says the company is contacted regularly by customers looking for customized formulations. “We prefer to use something that already exists in our product line to meet customer needs because of the costly registrations required for new formulations. Or we look at modifying existing products. If these approaches don’t fill the bill, we create new chemistry to help customers introduce new products.”

Some of these chemistries are now on view on the Internet. According to Steve Donnelly, technical services manager for the Petroleum Division, “When people visit our web site [www.rtvanderbilt.com] and click on ‘Research s’ they find something that’s uniquely Vanderbilt. We provide them with the most up-to-the-minute research information in areas such as friction-reducing additives and anti-wear dispersant technology. The site discusses what’s been discovered, the chemistry of the product itself — information you won’t find on any other web site. For example, we’ve posted details about a unique chemistry that can be added to the dispersant for antiwear/antioxidant protection, and a formulation on polyurea grease used in constant velocity joints for automotive applications.

“Why do we do this? It’s to stimulate interest, to show site visitors how they can use our technology in their formulations. This web site is generating cooperative programs with companies; we have 50 to 60 active cooperative research programs going on right now. Some of these are customers who initially contacted larger additives companies who weren’t interested in working with them. But we are. Some of our smaller customers have eventually become much larger ones. This is a market niche we can exist in very comfortably.”

Technical Sales Rep Richard Luberda covers the greater Midwest for the Petroleum Division. He says, “Chemists really like working with Vanderbilt materials. That’s because, while many companies won’t disclose the makeup of their materials, we show them the structural formula and the actual chemistry involved. Today, companies looking to improve their products seek us out because we tend to work more closely with them than other organizations, provide better technical assistance with our dedicated laboratories, and are very flexible when it comes to customizing formulations.”

Finding, Funding Growth

With lubricant additive growth predicted to be just 1 to 2 percent a year, Hattendorf sees opportunity in the upcoming generation of motor oil. “We hope to share in this growth and are confident we will continue to grow faster than the industry average. In addition, expansion into other petroleum industry areas would grow us considerably. We also see great potential outside the U.S. Our export sales via distributors in 72 countries have grown considerably over the last few years.”

Donnelly says, “The growth we experience is usually at the expense of one of our competitors. That’s because we’re big enough to have the appropriate resources to help customers, and small enough to react very quickly to customer issues. Thanks to our unique chemistry, knowledgeable people and fast turn-around, we enjoy very good relationships with customers. R.T. Vanderbilt Company continues to look for specialty areas to grow our business in; we can succeed in these areas where larger companies cannot. Also, in this era of mergers and downsizing, companies without additives technology may lose their formulation labs. This can mean more business for us.”

Sabo adds, “The Petroleum Division is respected as the most innovative and smoothly run department in the company. While statistics are against market growth, we can still grow with the confidential research work we’re doing with up to 60 of our customers with specialty needs. We’re also looking to the future with research on a ‘fill for life’ oil. All additives companies are trying to develop this ‘closed box’ for the automotive companies. Our superb lab facilities should give us a good head start.”

CFO Joe Denaro has a lot of faith in the company’s expected growth, especially in petroleum additives. “Petroleum is the area we’re the most optimistic about, both near- and long-term. The reason we’re willing to make significant capital investments in this division’s chemical plants is petroleum’s growth prospects. We also have great confidence in our people. They’re head and shoulders above the competition, and that gives us a great competitive edge.

“As a company, we take a lot of pride in cultivating long-term relationships with customers: this is part of our history, and also our future. But this also extends to other organizations with which we do business. We have a 65 year relationship with Deloitte & Touche, and another one with Citibank that began in 1916 and continues today. This is a very stable operation. We tend to find an arrangement that is mutually agreeable to both parties, and we stick to it,” Denaro continues.

“This attitude carries over to the customer and employee side as well. While price counts a lot in purchasing decisions today, our future lies in continuing to create that extra added value for customers.”