Nine years ago, Taiwanese pig farmers caused a stir that reverberated 7,700 miles away in an Irving office block. An odor-eating cleanup chemical made by NCH Corp. had mistakenly been poured into a water tank used by 25,000 piglets. When told to flush the biological product—unlicensed as a feed supplement—the Taiwanese flatly refused.
Their defiance stemmed from seeing the pigs gain 3 percent more weight on the same diet over a month, while mortality halved, from 4.5 percent to 2 percent, saving the farm a bundle. The Taiwanese attributed the improvements to NCH’s product and, with the pigs so healthy, regulators gave special permission for the farm to continue using it.
NCH now markets a probiotic feed supplement made from more effective, FDA-approved ingredients, to farms in Thailand, Taiwan, India, and Mexico. A study by a university in Taiwan found chickens gained 4.4 percent more weight than a control group, with an added bonus of statistically “significant” less E. coli and salmonella, a major problem in the poultry industry.
“If we can do this for animals, why can’t we do it for humans?” asks Lester Levy Jr., one of four co-CEOs (that’s not a misprint) of family-run NCH.
Going beyond their core fields—lubricants, water treatment chemicals, plumbing parts, and cleaning products—is nothing new for the company. Over time, it has sold church sheet music, fish tanks, graffiti removers, first aid kits, a hairball remedy for cats, and diapers for dog.
The Levys now running the company trace that entrepreneurialism to their grandfather, Milton P. Levy Sr., who launched the National Disinfectant Co. in 1919 near Old City Park in Dallas. It was a good time to go into hygiene products, as the world was in the middle of a Spanish influenza epidemic. Milton had other motivations, too; he wanted to impress a reluctant girlfriend so she’d return from New York and marry him. He ultimately prevailed, and the match endured—as did his company, becoming National Chemsearch and later renamed NCH Corp.
Over the next 100 years, the family-led venture survived a near collapse after World War II, went public on the New York Stock Exchange in 1969 (with the Levys holding a majority of shares), went private again three decades later, and weathered a major downturn during the 2008 recession. It is now generating a comfortable $1 billion in sales in 58 countries, employing 7,500 around the globe.
Still, NCH and the third-generation of Levys remain far less well known than other homegrown North Texas enterprises and their respective founding families. “When I tell people in Dallas that I do work for NCH, they say, ‘Who?’” says Jim Davidson, an executive trainer who has done work for the company and known the family for about 15 years. “The Levys have been very successful and support community efforts, but they don’t go, ‘Look at us! Look at us!’ They keep a low profile in the community—I would assume deliberately.”
AGREEING TO DISAGREE
The four NCH CEOs also serve as co-presidents of the company. They’re two sets of Levy brothers—John and Robert, and their cousins, Walter and Lester Jr., whose sister, Ann, is the other Levy on the company’s board.
John handles global corporate services and the Partsmaster division of industrial supplies. He’s tall, quiet, and health-minded, Davidson says. “He’ll walk up six flights of stairs instead of taking the elevator. He is the financial person, very factual.”
Walter, who supervises Asian chemical sales, is the most sociable, Davidson says, and likes to look at new ideas operationally. Robert, who handles the Danco-brand and the rest of the plumbing division, as well as retail pet products, is quiet, but can be the catalyst for action at the end of a discussion.
Lester Jr., who oversees biological product lines and Latin American chemical sales, “is an idea person, always bouncing ideas, looking for more,” Davidson says. A former college athlete, Lester studied the African meerkat during prolonged stays on the continent and maintains a website about the mongoose cousin, meerkats.net.
The four CEOs have figured out a way to work well together as a family unit, Davidson says: “They have different personalities, but they respect the different aspects of those personalities. Each brings a unique perspective to the business.”
All four of the Levys have MBAs. Lester and Walter earned theirs despite having dyslexia—Walter severely. He dealt with the challenge by getting his textbooks recorded. Both brothers now routinely use text-to-sound software. Walter recently expressed disbelief when Lester told him that he had read an entire book cover to cover. “What book?” Walter challenged. “Tuesdays with Morrie,” his younger brother replied.
The four frequently argue, but it never becomes a fight, Robert says. “Twenty minutes later, we’ll all be at dinner together.”
By 2013, Walter had concluded that NCH needed to quit the fracking business. Sales for its “green” fracking chemical were booming like the drilling technique itself. But costs also mounted. Only Robert joined Walter in his skepticism. “I drank the Kool Aid,” admits Lester Jr., as did John. Revenue poured in, but NCH had to keep investing ever more to keep up.
“I kept saying, ‘No!’” Walter recalls. “Every month the list of customers changed and I asked, ‘Why can’t we keep customers?’ At any time, Schlumberger or Halliburton could spend more on R&D and create a better product. I thought there would be no way to compete.”
Walter finally won over the two holdouts, and today there’s only relief. Explains Lester: “We don’t want to put a lot of assets in a highly cyclical business.
In 2016, NCH sold the Terra Services unit for a few million and wrote off the losses. “The major lesson for us,” John says, “is that we are more comfortable innovating products that are closer to the traditional markets we have pursued in the core chemical business.”
The coming-of-age moment for the third generation of Levys was the foray into East Europe, as the Soviet Empire collapsed. Lester was visiting West Germany when the Berlin Wall fell. He joined hordes of mauerspechte or “wall woodpeckers,” who handed him a rail spike and a hammer to chip off concrete pieces of history.
A small chunk of the wall is mounted in a shadow box at NCH headquarters, enclosed with a snapshot of the hammer-wielding Levy. “There were 200 Russian tanks waiting there and I told myself, ‘I’m going to get killed,’” Lester recalls. But the armored vehicles didn’t shift or fire and he had an epiphany. “I realized the East was opening up.”
REBOUNDING FROM TRAGEDY
The previous generation of NCH leaders—three sons of the company’s founder—had come of age in a very different way: by saving the business. Milton Jr. (Bubba), Lester Sr., and Irvin shelved their own ambitions in 1946 when their father dropped dead of a heart attack at the age of 55. That left their 52-year-old mother, Ruth, in charge, but owing the government a crippling wartime “excess profits” tax bill of $100,000 (equivalent to $1.34 million in 2019) and a third of its gross revenue.
Lester Sr. had passed the bar exam before serving in the Army Air Corps and wanted to practice law. But his mother implored him: “Lester, you run the company and make it right.”
An emergency infusion of capital was needed. Luckily, Jack Mann a longtime and loyal employee, stayed with the company. He took the three Levy sons to Mercantile National, where he told its chief, Milton F. Brown, that extending a life-saving loan was better than the bank finding itself in the disinfectant business. Brown needed little convincing. “I never lost any money on your dad,” the banker told them. “He borrowed from me for years, and I don’t believe fruit falls far from the tree. So, I’m going to go along with you boys.”
Crisis averted, the second generation leaders transformed the distribution company by hiring chemists, microbiologists, and other technical specialists to expand manufacturing of their own industrial and maintenance products at a new plant in Irving. Sales offices, then production units, were opened around the country and overseas.
National Disinfectant Co. was rechristened as National Chemsearch in 1960 to reflect new product lines. Sales reached $47 million by 1969, when NCH floated publicly traded shares. Instead of hiring outside consultants to suggest how to enter new markets, the brothers tested the waters with face-to-face sales calls, relying on an internal sales bible called The Gears of Selling. Irvin and Bubba conceived the manual while on a business trip to Oklahoma in a stick-shift vehicle. The selling process was broken down into three steps, or “gears.”
A generation later, the sales handbook was used to get through locked gates at a Russian factory, to demonstrate a self-polishing floor cleaner in a Budapest hotel, and to show amazed Chinese trade fair-goers that an electric motor could be cleaned without highly flammable gasoline. The sales manual explains the importance of initial small talk, handing out promotional novelties, giving live demonstrations, and closing a sale, and includes tips on overcoming excuses not to buy.
TAKING ON EASTERN EUROPE
NCH’s West European managers had taken a pass on the East, where free market economics was still a vague notion. They didn’t want to risk their budgets, or their reputations, on what seemed like a futile effort. But the third-generation leaders relished the challenge. “It was really fun,” says Lester Jr. “It didn’t seem hard to us.”
Walter cold-called on a power plant over the objection of his Russian interpreter. He got in to see the manager by chatting up a guard and handing him a rare, Western-made pocket knife, engraved with the NCH logo.
But not everyone was friendly toward Americans. Portraits of Lenin still adorned some factory managers’ offices. And there were other challenges. Phones didn’t work. A Czech Ph.D. took a 13-hour bus journey for a job interview after being reached by messenger. “The hardest part was finding people to trust,” says Jerry Mansfield, a British employee who was recruited for the East Europe expansion. A Russian chemist ran off with NCH’s product formulations. A St. Petersburg factory had 40,000 people on the books, but only 100 actually came to work. Russian authorities twice drained NCH’s bank accounts; in one case, half was seized as “taxes” and the remainder taken as a “loan” to the government.
NCH gave up on Russia and Bulgaria, and Ukraine, Moldova, and Kazakhstan were a no-go, Walter says. But other former Soviet bloc countries proved welcoming. It helped that maintenance supplies from Russia were no longer imported. But the poor conditions cut both ways.
“Prague was crumbling, and dirty. Things didn’t work,” recalls Edward Jansen, a multilingual Dutchman who would end up running sales in East Europe. “Some factory floors hadn’t been cleaned in years—a half inch of oil covered the floor. It was like walking on gum. But it was great for us,” says Jansen, explaining that NCH’s cleaning products fulfilled an obvious need.
The company opened small warehouses throughout the region, hiring and training core management. Ph.D. holders were willing to peddle the company’s goods—something unheard of today. “We went from zero to 250 salesmen in five years; total sales quickly hit $60 million” says Jansen, in a call from Switzerland, where he now runs his own business after 15 years with NCH. “Competition became tougher with more foreign companies coming in, but they didn’t build a good foundation with qualified people like we had. That’s why NCH is still here.”
A FAMILY BUY-BACK
Another turning point was the decision by the third generation to take NCH private. Their fathers were not keen on the idea. The sons argued that the company was undervalued. Diversified conglomerates were out of favor and NCH was no longer followed by Wall Street analysts. “We had been among the ‘Nifty 50’ [for high earnings per share] because of our high growth in the 1950s and 60s,” says John. “But growth had slowed to single digits,” Walter adds. “We stopped being sexy.”
“We saw our parents were getting older and tax laws were friendlier to private companies,” says Lester Jr. “By keeping it in the family, we protected employees from upheavals,” says John, adding that “it took us two years to persuade our parents to take on debt.” Having grown up during the Depression, they were wary of borrowing heavily. “Really it was John who pulled it off,” Walter recalls. “He convinced everyone.”
In 2002, the family bought back the 43 percent of stock it didn’t already own, by borrowing $108 million. “We paid that off,” Lester Jr. says. “In 18 months,” adds Walter. “No, two years, two months—paid in full,” says John. Revenue grew from $679 million in 2001 to $1 billion today.
That’s not to say there haven’t been challenges. Three years ago, the Department of Justice fined NCH about $335,342 for plying Chinese government officials with gifts, meals, and other hospitality to influence purchases. Compared to other U.S. companies that have been fined millions for bribery, NCH’s penalty was relatively small. The DOJ explained the leniency by noting that the Texas company had blown the whistle on itself, carried out a comprehensive internal investigation of the bribes, and took disciplinary action against those who were responsible.
John Levy says it should come as no surprise that NCH voluntarily informed federal authorities. “Our family has always had a very strong philosophy about doing business ethically, with no exceptions or tolerance for marginally questionable activities,” he says. “We repeat advice that has been handed down to us: ‘You should not do anything that you would not want to read about on the front page of your local newspaper.’”
LOOKING AHEAD
The company is gearing up for ongoing expansion. It has outgrown its Irving plant and is shifting production of water treatment chemicals to a new 200,000-square-foot facility in Greenville, freeing up more room for lubricant manufacturing in DFW. Then there’s the biotech breakthrough that evolved from the Taiwanese pig incident. After the 2010 episode, a small team in Irving reworked the probiotic, using microbials deemed safe by the American Association of Feed Control Officials and the FDA. “It took us eight months to develop the first product safe to feed pigs and chickens,” says Charles Greenwald, an A&M geneticist who heads the group.
Using a proprietary system called ECOcharger, even more probiotics are absorbed in an animal’s gut. The additive did cause one problem; at one Asian poultry farm, eggs came out 25 percent bigger, so packing machinery had to be shut down until readjusted to handle the extra jumbo eggs. The ECOcharger radically ramps up absorption of beneficial bacteria to 90 percent, compared to about 3 percent absorption of probiotic products now on the market.
Would there be a way to deliver a super beneficial probiotic in, say, an Earl Grey teabag? Human testing is planned for this year at a Texas university, and preliminary talks are under way with U.S. pharmaceutical companies and food processors.
“There was a lot of disbelief internally, at the board level,” Greenwald says. “They didn’t know we had the skill set to enter this market. Lester supported us.” And the others were won over. “The Levys are dreamers,” Greenwald says. “They also get things done.”
Meanwhile, four adult cousins from the fourth generation of the Levy family have joined NCH. Will they someday lead the company? “That’s left to be determined,” says John Levy, noting that there had been no formal succession plan for him and his co-CEOs. “It just evolved,” he says. “We’ll see how they progress in their careers.”
