printed in the September 27, 1999 issue of The Philadelphia Inquirer
Haas Corp. of West Chester is a contractor for GM, Ford and
At General Motors Corp.’s factory in Oshawa,
Ontario, 30 miles east of Toronto, Ian Bellinger heads a staff of
10 from the Haas Corp. in West Chester who manages the use of paints,
greases, hydraulic fluids, lubricants, solvents and other chemicals.
The facility is GM’s largest, producing more
than 800,000 cars and trucks each year. Haas staffers there also
oversee inventory control, recycling, waste treatment, and all other
aspects of “chemical management” – tasks formerly
handled in-house by GM.
From unpretentious headquarters on West Chester Pike,
the Haas Corp. operates internationally and expects to gross $30
million this year. Yet its workforce totals just 75.
“We’re a one-stop shop for all chemical
processes”, said Thaddeus J. Fortin, 40, chief executive officer
of the family owned business, which has no connection to Philadelphia
based Rohm & Haas Co. “It’s a good sophisticated
niche for us”.
Haas is capitalizing on what has been termed a “quiet
revolution” as more and more manufacturers out-source work
not directly involved in making their products.
The company recently received its first contract with
the Ford motor Co. for chemical management of two engine plants
in Ontario, not far from Detroit. As a Ford “preferred supplier”,
Haas provides all the chemicals for the plants at Windsor and Essex.
“Ford was dealing with 500 suppliers,”
Fortin said. “Now they’re dealing with one – us”.
However, General Motors is Hass’ prime customer.
GM has been “very aggressive in letting out chemical management
contracts”, Fortin said. And Haas, he said, has become the
largest chemical manager for GM assembly plants in North America.
Last year, GM out-sourced to Haas that duty at its
giant manufacturing and assembly complex at Ramos Arizpe, south
of Monterrey in Mexico. GM makes 600,000 engines and 350,000 transmissions
per year there. It also assembles 175,000 automobiles annually at
that facility, and is planning to expand.
Scott Chapman is Haas’ program manager at Ramos
Arizpe, with a staff of close to 50, a dozen being Haas employees
and the others representing sub-contractors.
Next month, Haas will begin chemical management programs
at 17 Mexican plants of Delphi Automotive Systems Corp., the former
GM parts unit that was spun off in May.
And late last year, Haas received a chemical management
contract for a plant that General Motors, in a joint venture with
a Chinese company, is building in Shanghai. In that deal, Haas is
partnering with a Taiwanese firm. Fortin made three trips to Shanghai
to negotiate the venture.
Haas also has three staffers working at a Boeing Co.
rocket plant under construction in Decatur, Ala. It got the contract
in July. Boeing expects to make two Delta 4 rockets for satellite
launchings in each of the next two years and then 40 a year for
the ensuing 10 years.
Closer to home, Haas is in the second year of a chemical
management contract with SPS Technologies, Inc. in Jenkintown, which
makes products for the aerospace industry. Ed Chelo, head of purchasing
for SPS, said Haas had reduced his company’s spending on chemicals
and lubricants and has introduced it to the recycling of oil for
“Haas found the recycling supplier and did all
the testing for us” Chelo said. “We’re looking
at significant savings”.
What helps to attract customers to Haas is its guarantee
of cost reductions. When an industrial company used many vendors
in purchasing chemical products, said Fortin, each vendor seeks
to maximize its sales and profits. The results often are higher
costs and higher inventories for the customer, he said. Haas’
profits come from saving money for customers through reduced usage
of chemicals, smaller inventories, and more efficient operations.
He said that for some of Haas’ competitors,
chemical sales are the major line of business and chemical management
is a sideline. That puts them in a “conflicting relationship,”
he said, on the one hand pushing savings and on the other pushing
“Our focus is on chemical management”,
Haas is continually expanding the scope of its management.
As the general contractor, it procures all the chemicals, but subcontracts
such services as water treatment and recycling.
Haas began life as a specialty chemical manufacturer
in North Philadelphia in 1925. Its reincarnation as a chemical manager
followed acquisition of the company in 1975 by Thaddeus Fortin’s
father, John J. Fortin.
A Bartram High School graduate who saw action with
the U.S. Navy in the South Pacific in World War II, the elder Fortin
had worked as a salesman for nearly 30 years, the last 19 with Quaker
Chemical Co. in Conshohocken, when he decided to go off on his own.
For about $300,000, he purchased Charles J. Haas Inc.,
which made textile and bakery-goods chemicals in a two-story 17,000
square-foot factory at American and Cumberland Streets. The down
payment was $30,000, and the balance was paid over 10 years. Fortin
said he put $15,000 in savings into the down payment and borrowed
$15,000 from one of his Quaker Chemical customers.
The plant remains in operation today with six employees.
It makes chemicals that Haas sells to its chemical management customers,
but the sales account for less than 10 percent of its gross revenues.
Thaddeus Fortin, whom everybody calls Thad, was the
oldest of five children and the only son. He joined the company
in 1981 after graduating from the Haverford School and Ithaca College.
Company sales were about $750,000 a year, and its markets were in
metalworking and specialty chemicals. One year later, Haas entered
the automotive market with a new product that cleaned up the “over-spray”
in shops where new cars were being painted.
Haas’ “economical non-methylene chloride
paint stripper” removed splattering of paint from walls, floors
and workers’ clothing, Fortin said.
“We developed a safer technique that was cost-effective”,
he said. “That’s what got us into automotive”.
GM’s Wilmington plant was Haas’ first
customer. Business continued to be brisk for its paint stripper
until the U.S. economy fell into recession. Beginning late in the
1980’s and continuing for about four years, GM retrenched,
closing plants and laying off thousands of workers.
“We lost half of our sales”, said Fortin.
“We had a little business with Chrysler and Mazda, but GM
was our only significant customer. Competition was increasing, and
our marketplace was shrinking. There were a lot of pricing pressures.
To grow the company, I thought we had to build a better mousetrap”.
At the same time, General Motors, in looking for ways
to operate its plants more efficiently, began outsourcing management.
“They were the pioneers in chemical management from the user
end”, said Fortin.
Haas seemed like a long shot for a GM contract. It
was tiny compared with billion-dollar competitors, such as Castrol,
Henkel and PPG Industries. And GM was looking for companies with
hefty spending on research and development. Haas’ R&D
budget was miniscule.
In several visits to Detroit, Fortin pleaded with
GM’s purchasing department to give Haas a chance. Finally,
the automaker agreed. Because Haas had a “strong presence”
on the East Coast while most of the other suppliers were in the
Midwest, GM awarded it a contract in 1994 for chemical management
of a minivan plant in Baltimore.
The contract was for three years at about $2.5 million
a year. When that contract expired, GM renewed it for another three
years without going out for bids. And with the credibility in Baltimore,
Haas was awarded a three-year chemical management contract for GM’s
truck plant in Flint, Mich., in 1996.
What put Haas’ on the map, said Fortin, was
its three-year contract for GM’s giant Canadian plant later
that year. The contract is for $10 million in Canadian dollars annually,
or about $6.8 million in U.S dollars at the current exchange rate.
“We hope for a stronger Canadian dollar”, Fortin said.
Both the Flint and Oshawa contracts have been renewed
for three years. Those jobs and the big Mexican contract have helped
to boost the Haas Corp.’s annual revenues from $7 million
in 1995 to $15 million in 1996, $17 million in 1997, and $21 million
Fortin says this year’s revenues will hit $30
million, and he is projecting $40 million for 2000. The biggest
obstacles to growth, he said, is “getting qualified people
on site”. The Haas model has been very successful, he said,
“but it will fall without our hiring and training qualifies
people. We’re very, very people intensive”.
Trade publications have reported that executives sometimes
oppose relinquishing control of chemical management to outside specialists.
“Sure”, said Fortin, in confirming the report. “The
best way for us to deal with it is to let our customers do the talking.
We encourage plant visits”.
Haas makes sure it really is going to be welcomed
before taking an assignment, he said. As a result, it rejects more
than half the business it is asked to bid on. “There have
been horror stories about companies not supporting chemical managers”,
Fortin said. “We can’t force change. We have to be supported.
And if we’re nor careful, we’re going to chase business
that we don’t actually want”.
So far, in building Haas, he has managed to avoid
that pitfall. He was named president in 1996, succeeding his father,
who at 77, is board chairman.
The company is owned by Thad Fortin and his four sisters,
none of whom works there. “I own just over 50 percent, but
they keep me in line”, he said of his siblings.