As demand for the company’s products grows in North America and Europe, CEO Corning Painter says the manufacturer is planning to build a third Texas plant.

Orion Engineered Carbons has a long and storied history, tracing its corporate lineage back 160 years to a German entrepreneur by the name of August Wegelin. Wegelin “sold specialty chemicals and a little bit of salt from his shop in Cologne,” says Painter. “He eventually moved his operation to a suburb of Cologne called Kalscheuren, where we still have our biggest facility. It is the longest-operating carbon black plant in the industry.”

Over the years, the manufacturer went through a series of mergers and acquisitions involving companies such as Degussa, Hüls AG, LG Chemical, Engineered Carbons, and Evonik Industries. “We were carved out of Evonik in 2011 and became Orion Engineered Carbons,” Painter continues. “In 2014, we became a publicly listed company on the New York Stock Exchange (NYSE: OEC). We have 14 plants worldwide, and we are starting up our fifteenth plant — our second facility in China — in the eastern city of Huaibei. Orion is the only company in our industry with a plant in Sub-Saharan Africa. For a small-cap company, we are extremely international.”

Painter joined Orion Engineered Carbons in 2018. “I saw huge opportunity in resetting our position in the tire value chain with greater focus on return on capital and renewing our plants,” he says. “In the specialty side of the business, I saw an opportunity to continue to develop highly differentiated offerings by being close to our customers. One of our early moves was to open an application-centered innovation center in the U.S. and double down on applications selling. I was also drawn to the global aspect of Orion; we are a very diverse team.”

Carbon black is an essential material that most consumers encounter every day. “Almost all manmade products that are black contain carbon black, a solid form of carbon produced as powder or pellets,” explains Painter. “The amazingly versatile material reinforces and fortifies tires and other rubber goods, making them last longer. It strengthens polymers and absorbs UV light, providing protection from the damaging effects of sunlight. Carbon black prevents fading in black fabric, and it adds the deep, dark bluish undertones in paint for cars, and coatings, and other products. It also conducts electricity in lithium-ion batteries for vehicles and high-voltage cable for wind and solar farms. These are just a few of the applications of the near ubiquitous material.”

The company’s plants in Borger and Orange, Texas, make up about half of Orion’s U.S. production and a little more than 10 percent of the global capacity. “We are planning to build a third plant in La Porte, close to Houston, which will make materials for lithium-ion batteries,” Painter says.

Manufacturing of carbon black is highly engineered. “Without getting too technical,” says Painter, “I can say we can modify the surface chemistry of our material. We can control the particle size and structure of the carbon. This means the material can be customized to fit our customers’ products. A good example is the average car tire, which contains six pounds of carbon black. Four different types of carbon black — each with a separate function — go into the tire. So, it very much involves providing a tailor-made solution for our customers’ products.”

Painter notes that different technologies are used to produce different types of carbon black for different products. “Orion is special because we are the only company in our industry that has five production processes. This enables us to have the broadest product portfolio. Some of the methods use different raw materials, and they produce different shapes, sizes, and structures of carbon black that work better in different products. Our strong research and development program — which includes four innovation laboratories strategically located worldwide — also gives us an edge. We have equipment that is identical to what our customers use and how they evaluate these products in their laboratories.”

The company’s full year revenue in 2022 grew 31 percent to over $2 billion. “We had record Adjusted EBITDA of $312 million, up 16 percent,” says Painter. “This was the first time we broke the $300 million level. It is also the first time we surpassed $2 billion in revenue.”

He says the company is expecting 2023 to be an equally good year, with an EBITDA target that shows growth of approximately 17 percent. “A key factor behind our optimism is growing demand in the rubber business in Europe and North America,” he continues, “which is leading to more favorable pricing due to shortfalls in supply in those markets.”

Challenges: “We are growing rapidly,” Painter says, “with a target to nearly double our 2021 EBITDA of $268 million with a mid-cycle EBITDA capacity to $500 million by 2025. We have laid the foundation for this growth over the past five years, and in 2022, we saw the first step up toward this goal. We expect to continue this path in 2023. This is great, but it is a lot of work, and we need talent to make it happen. The last couple of years have been great for us in terms of talent acquisition, but still there is more to do.”

Photos courtesy Orion Engineered Carbons

Opportunities: Painter says Orion Engineered Carbons is poised to benefit from trends such as electrification and sustainability.

“With electrification, we are seeing a shift toward electric vehicles and energy storage,” he explains. “There is a huge need to massively upgrade the electrical grid in the U.S., Europe, and the rest of the world. This is creating tremendous demand for the type of carbon black — known as acetylene-based conductive additives — that serves as a key material for batteries. We are one of very few global producers, and the facility we plan to build in La Porte, Texas, will expand our global capacity by a factor or four.”

As far as sustainability, Painter says the company is positioning itself to be the “leader in the sustainable transformation of the rubber business. We are working on new and more efficient ways to recycle end-of-life tires — recovering the carbon black from the tires and blending it into new tires. We are also developing renewable carbon black made from plant-based materials.”

Needs: “People are the most important aspect of business success,” Painter says. “With our growth, talent in our U.S. plants continues to be a big need. Attracting motivated people with technical skills who want to be part of the new Orion is key to our success.”

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