8. Loctite:A Marriage of Technology and Marketing Skins
TECHNOLOGY AND HISTORY
In 1953, Professor V.Krieble retired from the Department of Chemistry at Trinity College in Connecticut and began experimenting with various compounds. One of'his patented inventions was an unusual anaerobic-a chemical that remains in a liquid state while exposed to air but turns into a tough, binding solid in the absence of air. This chemical, which he called "Loctite," would lock
nuts and bolts against loosening from vibration. In the beginning; no one believed that a liquid could do the job that Loctite was claimed to do. But it did, and the result was phenomenal. Today Loctite offers a series of "amazing chemicals"that keep metal assemblies together. These compounds can and do replace lockwashers, gas~~ts, tape, rivets, screws, and other mee chanical fastenerS. The adhesives and sealants the company offers rely on the fourth generation of
This case is based in part on a longer report developed in 1991 by Ramune Kubiliunasat The Freedonia Group, Cleveland, Ohio. It is also based on various Loctite publications, including annual reports, product brochures, catalogs, and journal articles. This version was developed by An GASKET'
SEALANT GUIDE Import OE Endorsed Non-Hafdening Formula
19971 81998 t/ t/
t/ t/ II' t/
Hardening Formula Threa Sealant
Positioning t/' t/
t/ 400°F t/ t/ t/ 400°F t/ t/ t/ 400°F t/ t/ t/ t/ 350°F
t/ 600°F t/ t/
t/ 400°F II' t/ 300°F t/ t/ 450°F t/ tI'
Source; Loctite Auto p.4.
CASE8 . LOCTITE
anaerobics to provide very strong bonding. The compounds span a range of functions and perforin wt;ll under adverse conditions in industrial, automotive, and consumer applications. Loctite's corporate strategy is research, diversification, and marketing ''within itsskiijs"; it is devoted to its fiunily of specialty chemicals and will not eQter
(see lExhibit 1 for details). About 25 percent of Loctite is owned by Henkel (Germany). '
CORPORATE STRATEGYAND TACTICS Between 1985 and 1990, Loctite experienced excellent growth; sales grew at the rate of 17 percent per year and net income at 25 percent per year. The company is dedicated to inaintaiiling this pace with a group of loyal employees around the globe. Indeed, Loctite benefited from being in foreign marketS; today it derives 60percent ofits sales from outside the United States. Loctite expects its future growth to come from expansion beyortd North America and Europe. It also plans to expand into electronics and medical markets, beyond its current emphasis on general industrial, automotive, and household applications. Loctite may make selected acquisitions in the futUre, but
into unrelated fields.
The (:ompany began teSt marketing its first productS in the mid-1950s and was granted its first patent in 1959. Sales reached n million in 1961. In i963, the company changed its name from American Sealants to Loctite. In the early 19708, the company acquiredPermatex, a famous name in automotive cements, :qid Woodhill Chemical, a marketer of househOld chemicals. Expansion continued based on internal growth, and the company has been highly successful in terms, of sales, net income, arid other indicators. Loctite joined the elite tanks of the Fortune 500 in 1990 EXHIBIT1 Loctite Rankings in the Fortune 500
Fortune mag3zine tanks the largeSt 500 Americart industrial companies by sales volume for the prior year. Fortune alsOtanks the 500 companies by selected financial results and stock market performance. Shown below are the comparative rankings for Loctite Corporation among the FortUne 500...