with chemicals to be delivered to a customer.
Company: John R. Hess & Company
Location: 400 Station St., Cranston
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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Type of business: Specialty chemicals distributor
President: Peter Y. Hess
Year founded: 1969
Employees: 25
Annual revenues: More than $20 million
There are two toy trucks sitting on the conference room table of John R. Hess & Company in Cranston.
“These are models of the trucks we use to deliver our product,” company president Peter Y. Hess said. “It’s just another neat thing.”
In fact, Hess thinks most of what he does is neat. The second-generation owner of the family’s chemical distribution business, he loves to talk about the different materials he works with, and how those same materials are used by a variety of companies from the region.
“I tend to talk a lot,” he said.
And while many people may not understand exactly what Hess talks about – what chemicals can blend with others, which are soluble and which aren’t, and which are considered organic – he says people do understand when he mentions the final products, which include industrial cleaning products, pharmaceuticals, textiles and shampoos.
“There are people out there, definitely, who are chemi-phobic,” he said. “We try to do our best to educate people that chemicals are a part of everyday life. People hear a few bad stories and think the entire industry is like that, but that isn’t the case. There are chemicals in almost every pharmaceutical… it’s not all bad.”
When Hess’s father, John R. Hess, bought the company in 1969 the industry was very different. The chemical industry, Hess said, was rapidly expanding, supplying chemicals mostly for textile manufacturers in the New England region.
In the 1950s and the 1960s, Hess said, the industry had grown rapidly in the post-World War II boom. “The idea then was to produce as many new products as you possibly could – chemicals were part of that.”
Today he said, the company, which continues to serve manufacturers in the region, is broader in scope. Marketing its products to a wider range of manufacturing companies, the company’s principal clients are those that make industrial and institutional cleaners, cosmetics, pharmaceuticals, paints, paper and textile finishes.
The company acts as the middleman, receiving large shipments from chemical manufacturers and then sending smaller amounts out for delivery using one of four leased-tractor trailers, and bulk carriers. Hess said the company gets most of its chemicals shipped in by truck or by rail from Boston.
“The larger chemical companies that we represent, like Shell Chemicals, they don’t want to go after the small customer,” Hess said. “Big producers tend to only want to sell in full rail, or truck and a large number of customers want to buy in drums. So they depend on us to buy what they need in the large quantity and then sell it to them in drum.”
What makes today’s chemical distribution so different from even two decades ago, Hess said, is that his company isn’t just worried about the product it handles. In fact, he said, he is aware of the product from initial contact with the large distributor until it is completely used by manufacturers.
“We call it product stewardship,” he said. “We are responsible for the product we handle from even before we get it – from cradle to grave as we say. This is one of the few codes we have in this industry that is regulated by a third party.”
Considered a medium-sized distributor for the New England market, the company must struggle to maintain its customer base, Hess said. Part of that, he said, is that more national companies are buying local manufacturers, and in some cases closing them down. For example, he said, when Butcher Wax in Marlborough, Mass. was sold to a national company and closed, John R. Hess lost one of its biggest clients.
“Our biggest threat occurs when a good local customer gets bought out by a large national company,” he said. “The problem is that these good customers tend to be good companies to purchase.”
Ironically, Hess said, his company has benefited from consolidation in the chemical industry.
“It’s definitely an advantage for an independent company like ours,” he said. “Especially in an area like this. Customers like dealing with independents and that has helped up.”
Still with pressure consistently coming from the large suppliers to increase orders, Hess said, the company is constantly looking for new customers. And they aren’t opposed to looking outside of New England.
“It’s a challenge to grow in this business,” he said. “This industry tends not to be unlike other commodities-oriented businesses. Generating money for a major expansion or capital improvement is difficult. We have a lot invested in our industry.”
But there is no doubt in Hess’s mind that there is room for growth.
“This is a really diverse sector, especially in New England where we have a lot of new ideas being worked on,” he said. “Right now I think we are restricted only by where our trucks can go.”
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