Corrections or additions?
This article by Barbara Fox was prepared for the May 8, 2002
edition of U.S. 1 Newspaper. All rights reserved.
Church & Dwight’s Long & Winding Road
Dotcoms come and go, biotechs wax and wane, but laundry
product companies just keep scrubbing along. So it has been with
Church
& Dwight, holder of the fabled Arm & Hammer brand and logo on the
yellow box of baking soda. Founded in 1846, C&D has been doing pretty
much the same business from its facilities on North Harrison Street
and Thanet Circle since 1985. But last year it bought two big
companies
and doubled in size.
The first purchase, USA Detergents in North Brunswick, merely added
to Church & Dwight’s soap repertoire, but the second purchase —
the consumer product side of Carter Wallace — could change Church
& Dwight’s public image. Suddenly the company accustomed to relying
on words like “pure, safe, and natural” finds itself mouthing
slogans that refer to glamour, pleasure, and steamy sex. With Carter
Wallace came an intimate line of products, Trojan condoms.
One change has already occurred: The company accustomed to toiling
away in relative obscurity — with most of its revenues coming
from such arcane areas as sodium bicarbonate for dairy cow feed —
is enjoying the spotlight that comes with an increase in revenues.
Though C&D is exponentially smaller than the top laundry product
company
in the United States (Procter & Gamble), it now holds the third-ranked
position. Sales of the new brands account for a one-third increase
in revenues.
Church & Dwight negotiated with Medpointe, the company that was buying
the other half of Carter Wallace, to divide up the loot. Medpointe
got the ethical drugs division for $408 million (see story on page
55) and Church & Dwight paid about $739 million for the personal
products,
including the international division and Lambert Kay pet products
(vitamins, supplements, collars and leashes, grooming aids, and
shampoos).
In addition to all the condom brands, some of the other brands are
Nair depilatories, Arrid deodorants, First Response pregnancy testing
kits, and Pearl Drops toothpolish. Carter Wallace adds a technical
base, particularly in aerosols, to C&D’s substantial R&D efforts in
Princeton. “It also adds to an already highly motivated,
efficient,
and productive organization,” says Steven Cugine (pronounced
koo-chee-nee),
vice president of human resources.
Family members are no longer in charge. Dwight C. Minton, a fifth
generation member of the founding family, holds the post of chairman
emeritus. President and CEO Robert A. Davies III, 66, started his
career with Procter & Gamble and has also worked at Colgate-Palmolive
and American Home Products. A graduate of Colgate with an MBA from
Columbia University, he was at Church & Dwight from 1969 to 1984.
As earnings were plunging in 1994, Davies was brought back and
promoted
to president and CEO with Zvi Eiref as his CFO.
“Since Bob Davies returned to the company, the team he put
together
has really massively transformed the company and backended it into
a solid high performance organization,” says Cugine. “Sales
have gone from $400 million to just north of $1.5 billion, which is
pretty extraordinary, and profits have grown as well.”
Of the 620 jobs on Half Acre Road in Cranbury that were acquired by
Church & Dwight, 320 are in manufacturing and about 300 in the
corporate
office. Of the corporate staff, about 150 people (in marketing, sales,
and R&D) will join Church & Dwight at its expanded offices in
Princeton,
and the others are retiring or being laid off. The union workers on
the manufacturing line have been invited to apply for jobs at the
Lakewood plant. “We said we would love to have you, just
apply”
says Cugine. All in all, Church & Dwight will end up with a total
of 1,430 workers in New Jersey.
On the consumer side, the Half Acre Road plant was the
manufacturing site for such products as Nair, Arrid, Sea & Ski sunburn
cream, Rise shave cream, pet shampoos and vitamins for the Lambert
Kay division, and ethical drugs, such as the pioneer tranquilizer,
Miltown.
Some of the Carter Wallace products were bought by Church & Dwight
outright, the rest were purchased by Armkel LLC, a 50/50 joint venture
partnership between Church & Dwight and venture capitalists at Kelso
& Company. C&D by itself came up with $128.5 million and Armkel
chipped
in the rest of it, $610.5 million.
Armkel is a public company that tapped the bond market for funds,
and it owns technology, licensing, and manufacturing facilities for
certain brands. The Armkel/C&D arrangement works like this: for the
brands that Armkel’s factories produce, Armkel buys the management
services from C&D, and C&D buys the inventory from Armkel. Armkel
owns the 750,000-foot facility on Half Acre Road, and C&D is in charge
of selling that on Armkel’s behalf.
By June, both C&D and Medpointe are scheduled to clear their workers
out of Half Acre Road. Cushman & Wakefield is marketing the property,
which has 450,000 square feet of manufacturing space, a 160,000-foot
warehouse, and laboratory/office buildings of 127,000 and 35,000 feet.
C&D contracted with Berkowsky & Associates, on Route 1 North, to
design
and build a 55,000 square foot expansion for its headquarters at 469
North Harrison Street. It now totals 125,000 feet, and C&D also leases
91,000 feet in two buildings on 100 and 101 Thanet Circle.
Carter Wallace’s international division has been housed, along with
the credit department, at 2 Research Way, and both entities now
operate
as Armkel, with former CW executive Adrian Huns remaining in charge
of the international division. They are also expected to move to the
C&D headquarters.
At this point C&D has a nearly $500 million U.S. personal care
business
plus a $250 million international business. Synergies of consolidation
are expected to save $10 million for Armkel and an equal amount for
C&D. Now C&D faces the task of assimilating all the Carter Wallace
products and people. Here’s what C&D (and Armkel) bought:
Personal Care Products
Church & Dwight already had a line of deodorants,antiperspirants,and toothcare products.Carter Wallace brands bought by Church & Dwight: Arridand Lady’s Choice antiperspirants.Carter Wallace brands bought by Armkel: Trojan condoms,Naturalamb condoms, Class-Act condoms, Nair depilatories (lotions,creams, and waxes), First Response and Answer home pregnancy andovulationtest kits, Pearl Drops toothpolish and toothpaste, Rigident dentureadhesive. And not to forget — Carter’s Little Liver Pills, thelaxative.Laundry ProductsChurch & Dwight brands: Arm & Hammer liquid detergent,Arm & Hammer Fabricare powder detergent and baking soda deodorizer,Arm & Hammer Fresh “N Soft fabric softener sheets, Arm & HammerSuper Washing SodaBrands from USA Detergents, purchased as part of a jointventure, Armus: Xtra liquid and powder detergents and Nice ‘N Fluffyliquid fabric softener.Deodorizing & Household Cleaning ProductsChurch & Dwight brands: Arm & Hammer pure baking sodain the familiar yellow, red, and black box, also Arm & Hammer carpetand room deodorizer, vacuum free foam carpet deodorizer, cat litterdeodorizer, Super Scoop, Super Clay, and Crystal Blend cat litters,Super Puppy Pads and Home Alone floor protection pads. Brillo soappads, Scrub Free bathroom cleaners.Carter Wallace brand: Lambert Kay Pet Care Products.Specialty ProductsSpecialty chemicals: Performance grade sodium bicarbonate,leavening mix for tortillas, potassium carbonate, potassiumbicarbonate,a fungicide, an anti-slip floor treatment, a pollution controlproduct.Animal nutrition products: Feed grade sodium bicarbonateand potassium bicarbonate, rumen fermentation enhancers, and Megalec— rumen bypass fat.Specialty cleaners: Armex (blast media), Armakleen, andAquaworks (aqueous cleaners).That’s an impressive list for a company that started out makingplain bicarbonate of soda. Centering the products and image aroundbicarbonate of soda has proved useful. Analyst Bill Mann(www.fool.com)points out that Church & Dwight has had “an iron-clad brand”for more than 150 years. “It took a basic product with a solidbrand and turned it into something that your kitty, your refrigerator,your teeth, and your neighbors can’t live without.””The stable companies have come back into favor,” says PhillipHofmann, senior vice president of J.M. Lafferty, an independentresearchprovider in Chicago (E-mail: pjhof@jmlafferty.com). “Soap is aslow growth business. You will sell only as many bars of soap as youhave people to wash.”C&D has been saying it wants to grow since Minton moved the companyto Princeton in 1985. But 10 years ago people were coming and goingwith dismaying speed, and 120 jobs were cut from 1994 to 1996. Oneview is that a lot of money was spent on sales that were nevergenerated,and the creation of new functional areas expanded the companydramatically.While the company tried to launch new baking soda-related products,there were a lot of personnel changes and team changes.”Bob and Zvi were brought back to turn the company around fromits financial performance in the early 1990s,” says Cugine. Cugineclaims that — with the exception of the last year’s departureof former president and COO Jon Finley (Davies took over as president)— the personnel situation has been pretty stable. “It hasbeen a significant and slow build,” says Cugine. “We are amajor employer in New Jersey, and I don’t think you could have saidthat in 1994.” He also claims that having a streamlinedorganizationhelps C&D rack up $500,000 in sales per United States employee, anunusually high ratio for the industry.Cugine, the son of a sheet metal worker in northeast Philadelphia,majored in industrial relations and human resources at Temple, Classof 1984, and started his HR career working for Jim Carnes at theSarnoffCenter. For 10 years he worked for various divisions of FMC and cameto Church & Dwight in 1999. He lives in Yardley with his wife andtheir three school-age children.”In many respects there a lot of similarities between thesecompanies,”says Cugine. “They are two old companies with a lot ofhistory.”CW was popular with the corset set because of Carter’s Little LiverPills, the major product from 1880 to 1929. In 1935 came Arrid, thefirst dry, stainless deodorant, followed by Nair in 1940. Throughoutits history, Carter Wallace spent heavily on print, radio, and thentelevision advertising, with 85 percent of advertising dollars doingto television. Nationally, it was the 16th company to be an earlyTV sponsor, with “Name That Tune” and the Johnny Carson showamong the favorites.C&D’s reputation came, of course, from sodium bicarbonate manufacturedin the kitchen of a physician (Austin Church) and his brother-in-law(John Dwight) in Rochester, New York in 1846. The first corporateheadquarters was over a grocery store in New York. As far back as1860, the firm was using direct mail advertising. The famous “armof Vulcan” trademark came from Austin Church’s son who had beenmanufacturing mustard at Vulcan Spice Mills.From 1880 to 1966 the firm distributed promotional trading cards,and by 1922 it had instituted a health education program, supportedby direct mail. In contrast to Carter Wallace, C&D did not begin touse radio until 1969, and soon after that it went into TV advertising.Cugine admits that the two companies have their cultural differences.”The good news is that Carter Wallace and USA Detergents arelocal,so it increases our ability to execute and integrate theseacquisitions.””C&D has been in this community for a long time, and we have asignificant investment in New Jersey. We try to be good to theenvironmentand good to the community in which we work. We are basicallyconservativebut lean and aggressive in the markets in which we compete,” saysCugine.For the first time, Church & Dwight will be competing in the youthmarket, where Carter Wallace had notably excelled. No where is thisdisparity more plain than on the Internet. Church & Dwight has a verytypical, buttoned-up corporate site. In contrast, way early in theInternet game, Carter Wallace followed the advice of Market Source(the Cranbury-based company that focused on the adolescent market)to invest in a collective branding site geared to a young audience.MarketSource grabbed the URL “www.loveandsex.com” for itsclient and put up a chapter for each brand (Nair, Trojans, PearlDrops)all relating to dating, says Peter Morrison, vice president of whatis now Market Source Integrated Solutions on Commerce Drive.”In its heyday, loveandsex.com was doing a couple million usersa year, moved a lot of free samples, and got linked to a lot of othersites,” says Morrison, a 1985 graduate of the School of VisualArts in New York City.The Trojan chapter has a quiz: How long does the average woman taketo achieve orgasm: 25 minutes, 15 minutes, or 10 minutes. (Hint:alwayspick the middle answer). Trojan visitors spend from 10 to 30 minuteson the games, the equivalent of a five-minute television commercial.This is definitely the youth market: The Pearl Drops chapter offerskissing tips: Brush your tongue before going out. Never use the tongueon the first date. Relax and enjoy every bit of each other’s lips.Trojan’s offer of a free condom starts out “All we need from youis your parents’ address and your exact condom size . . . onlykidding.You don’t have to worry about receiving any embarrassing packageswhich say `Do not bend: your requested condom is enclosed.’”At the time of the sale, Carter Wallace was getting more sexy, notless. “They were getting more daring,” says Morrison. “Theposters on the Trojan site were downright risque.”Carter Wallace had been marketing sex effectively for a good longtime. Will Church & Dwight do as well?— Barbara FoxChurch & Dwight Co. Inc. (CHD), 469 North HarrisonStreet, CN 5297, Princeton 08543-5297. Robert A. Davies III, CEO.609-683-5900; fax, 609-497-7177. Www.armhammer.comArmKel International Division, 2 Research Way,Princeton 08540-6628. Adrian Huns, division president. 609-520-3100;fax, 609-520-3114.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
