Monday, April 30, 2018

Marathon announces big acquisition

Marathon Petroleum, one of the largest movers of petroleum products on the Ohio River, this morning announced it had reached an agreement to acquire Andeavor. The merger, if completed, will combine Marathon's strength in the Midwest and Gulf Coast regions with those of Andeavor's in the California, Mid-Continent and Pacific Northwest  regions. The combined company would be the largest refining company in the United States and one of the five largest in the world.

The first question that ran through my mind was what the reaction must be in Findlay, Ohio, where Marathon has its corporate headquarters. I've never been to Findlay, and I know only a few people there, most of whom are former residents of my home region. The guess here is they're probably processing the news and figuring out what it means for them.

But if I lived there, I would wonder if this means a local hometown company will be looking for a new corporate home soon. Here's why.

Ashland, Ky., once was home to a Fortune 500 company known as Ashland Inc., and formerly known as Ashland Oil & Refining Co. It was one of the dominant corporate players in the Huntington-Ashland-Ironton Tri-State region,  and the only one with its main headquarters here. Some of the other big players  were Allied Chemical, Armco Steel, Inco Alloys International, BASF, Dayton Malleable and Owens-Illinois.

Ashland Inc.'s presence in the Tri-State was a blessing, as the company supported many nonprofits and educational institutions, and its executives provided intellectual capital to those same groups. The refinery at Catlettsburg was one of the region's largest employers. There is a story that one CEO had his home phone number listed in the phone book, and people would call him to complain if the windshield washer fluid at the pumps at the company's convenience stores was frozen.

There was always a fear, though, that Ashland Inc. didn't really want to be here. When I was a reporter at the Huntington paper and covering Ashland Inc. was part of my beat, one executive told me the company's location in a small town was a disadvantage in attracting executive talent, particularly minority talent. The lack of direct air service to major population and business centers also was a drawback. Ashland Inc. had  its own corporate jet or jets, but getting large numbers of people in and out was not always easy.

For years Ashland Inc. was lead by its founder. After him came another person and then came John R. Hall, a petroleum engineer by training. When Hall retired, it was apparent the product people were no longer in control of the company and the mantle had passed to the bean counters and marketers. Soon enough, investor groups started pushing for changes to maximize shareholder return regardless of the impact on communities where the company had begun and that had stood behind it.

In 1998, Ashland Inc. announced it was relocating its corporate headquarters to Covington, Ky. The company would leave behind some money for nonprofits, but after that, it would not consider helping the Tri-State to be one of its top priorities.

Ashland also announced it was forming a partnership with Marathon that would combine the two companies' refining and marketing assets. After a given number of years, Marathon would have the option of buying out Ashland's interest in Marathon Ashland Petroleum LLC, which it did.

Now Ashland Inc. is known as Ashland Global Holdings Inc., a company that develops and produces specialty chemicals. As one of its former p.r. people said to me a long time ago, if Paul Blazer came back to life today and looked for the company he started, he would need dental records to identify it.

I've lost track of what happened to the former Ashland Inc. and Ashland Petroleum headquarters buildings at Russell, Ky. And those other companies listed above? They're gone, too. Inco sold its nickel plant at Huntington to another company, and Armco sold its Ashland works, but the facilities operated by the other companies have been closed,  and most have been demolished.

If I lived in Findlay, I would expect to hear that Marathon remains committed to the area. But sooner or later a new generation of leadership will make decisions for the company, and it will weigh whether a city of 41,000 people in northwest Ohio offers what a world leader in petroleum refining and marketing  needs. Marathon has invested a lot of money in its corporate HQ campus there, but companies have walked away from such investments before.

Or this deal could bring even more investment to downtown Findlay and northwest Ohio. We won't know until it happens.