(Reprinted from BarterNews issue #37, 1996.)
Of Giant Chemical Corporation Used Barter To Get His Company Started...
Jon Huntsman Jr., 58-year-old CEO and founder of Huntsman Chemical Corporation, runs the largest privately held chemical company in America (annual sales $4.3 billion). Like every company founder he had to "walk through fire" before he attained his ultimate success.
Recently, Huntsman and his wife, Mary, donated $100 million to the Huntsman Cancer Institute at the University of Utah. "Since I was eight and got my first paycheck for picking potatoes in Idaho, I have given the same percentage of my money to others," says Huntsman, who, as a member of the Church of Latter Day Saints, also tithes 10% to the church.
"I have always felt a need, if not a duty, to put something back into the community. The size of the donation doesn't matter. I have never stopped to think about it," says the self-made billionaire.
A schoolteacher's son, Huntsman made his first fortune with the plastic clamshell container for fast food, and now runs the world's largest private petrochemical company.
But the cancer institute is his biggest challenge. "This is just round one," says Huntsman, whose $10 million founded the institute in 1993. "Our family has no higher priority. We know there is not one cure-all for cancer. We are committed to donating several hundred million dollars to this cause, because cancer seems to be a plague that has affected so many families."
It's the largest cash contribution ever for medical research, cancer or otherwise.
Huntsman's "walk through fire" happened shortly after he designed the first plastic egg cartons, and then started a firm with his brother to manufacture them. This was in 1973 when the oil embargo hit, which dried up supplies of petrochemicals. One supplier raised prices 600%, the other cut them off entirely.
Inasmuch as they couldn't manufacture their product without these supplies, and because the brothers had put up their houses and other assets to start the company, they were in a real bind!
The Board of Directors voted to liquidate the company. Huntsman gave a firebrand optimistic speech at the meeting, saying he'd never be associated with a bankruptcy. Furthermore, they shouldn't worry, because he had a plan.
At the time Huntsman didn't know exactly how it'd work, but he had decided that his company would capitalize on the petrochemical shortage. So he and his brother got on a plane and personally called on all the chemical companies. They sold themselves as petrochemical brokers, and bartered for what they needed.
As brokers they asked chemical companies what product they were short of. Sometimes the brothers had to ask how to spell it, and then they'd tell them, "We'll go find you some."
On to another company they'd go to find that chemical, but then something else would be needed. They started a chain of trades, sometimes having to trade three or four products out, to get each company what it needed.
No one else was doing this. The oil companies were used to being able to dial a number and have someone deliver what they needed. In one case the brothers found a wholly owned subsidiary of ARCO had a big surplus of one product, while the parent company was short of the same product.
A New York bank agreed to finance the deal based on a purchase order. They then bought a barge load from the subsidiary, turned around and sold it to ARCO for a $600,000 profit.
The first year the brothers completed a dozen trades and netted a $5 million profit in raw materials they needed for their manufacturing efforts.
In retrospect Huntsman admits that his bankers, lawyers, and everyone in his family, except his wife, told him that his strategy wouldn't work. But, he stressed, "I had confidence. We all have reserves we only tap at times like that. Major inventions and creations are developed during crisis, danger, and potential downfalls."
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