USALCO Increases Its Capabilities Through New Acquisition

USALCO Increases Its Capabilities Through New Acquisition

USALCO is a chemical manufacturing firm whose products are used widely in the municipal water treatment field. It recently acquired the companies AlChem and CalCHEM, gaining two new plants, new capabilities, and a new geographical range. In this interview, USALCO Vice President of Sales and Marketing Terry Badwak tells Municipal Water Leader about the company’s history and current growth.

Municipal Water Leader: Tell us about your background and how you came to be in your current position.

Terry Badwak: I started working for a company called Delta Chemical Corporation in 1989 in a sales role. Delta made aluminum-based coagulants for water treatment and other industrial applications. As time progressed, we developed some new products, mainly for water treatment, and my position developed into a sales and marketing role. By 2000, Delta had grown to be a significant business, and it continued to grow during early part of the 2000s. Delta was privately owned, as are a lot of the companies in the aluminum-coagulant space. In early 2011, USALCO acquired Delta Chemical. At that time, I was Delta’s vice president of sales and marketing, and I’ve maintained that position with USALCO for the last 10 years. Since then, we’ve continued to grow the business and bring additional salespeople on board. Also since that time, USALCO has built two additional plants and has acquired AlChem and CalCHEM, which had one plant each.

Municipal Water Leader: Is USALCO privately held?

Terry Badwak: The company is majority owned by the private equity firm HIG Capital. Founding family members David and Peter Askew retain a significant minority interest and serve as cochairs on the company’s board.

Municipal Water Leader: How many plants does USALCO have today?

Terry Badwak: Delta Chemical had two plants, USALCO had five at the time it acquired Delta, and now that USALCO has built two additional plants of its own and acquired AlChem and CalCHEM, it has 11 plants total. USALCO started in 1981 with a single plant, so in 40 years, it has gone from 1 plant to 11.

Municipal Water Leader: Do those plants each manufacture something different, or do they manufacture the same thing?

Terry Badwak: The common theme across all our plants is aluminum-based chemistry and technology, which gives us economies of scale and the expertise to meet customer needs. We tailor our solutions to meet unique customer requirements, so the specific products made at each plant may vary. Moreover, all the products we produce are limited from a transportation standpoint. They can only be transported about 300 miles from the plant where they are manufactured. That means that we have to create new plants to expand our geographic reach. Accordingly, the product mix manufactured at a plant is matched to what customers need in each new area.

The USALCO plant and corporate headquarters in Baltimore, Maryland.

Municipal Water Leader: With 11 plants, does USALCO have a nationwide reach?

Terry Badwak: With the addition of CalCHEM, we now have a plant in California. We also have a plant in Little Rock, Arkansas. Everything else is east of the Mississippi. We cover most of the 50 states, except for a few in the Southwest. We do ship and sell to Canada and Alaska as well.

Municipal Water Leader: What are the limiting factors in chemical transportation?

Terry Badwak: The main limitation is that freight is a component of the cost. Most of the products are 50 percent water, and after you get past the 250- to 300‐mile range, the cost of transportation starts to escalate, making the product noncompetitive from a cost standpoint. We do manufacture a new, patented dry product that is not as freight sensitive.

Municipal Water Leader: Do you have plans to export your products?

Terry Badwak: Most of these products are produced throughout the world. It is unlikely that our products will be exported out of the United States, considering the costs of transport, with the exception of our new, patented dry product, which has garnered some interest overseas.

Municipal Water Leader: What are your main industry lines?

Terry Badwak: The products we manufacture sometimes have multiple functions. Aluminum sulfate, for instance, is a widely used product in water treatment, but it’s also used in catalyst manufacturing and titanium dioxide pigment manufacturing. However, we mainly focus our time and effort on water treatment, specifically municipal water treatment.

For water treatment, our products remove suspended solids from the water prior to filtration. In many municipal wastewater treatment products, aluminum reacts with phosphorus, which in certain areas is an issue, and removes it from the water. In the Susquehanna River and the Chesapeake Bay region, phosphorus limits for wastewater plants are low, so most of the plants there practice some type of phosphorus removal using a chemical.

Municipal Water Leader: What is distinctive about your company’s products?

Terry Badwak: This goes back to Delta Chemical. Some of our products are specialty lines rather than commodities. We offer technical assistance to our customers and will come out and do lab work to identify the best products for their applications. Then we will do a plant trial to demonstrate our services at a full-scale level. Our staff provide a technical service, not just a commodity. The other thing that differentiates USALCO from many of our competitors is that we own and operate our own trucking company, which allows us to ensure on-time delivery. It also helps to keep costs down.

Municipal Water Leader: Does USALCO continue to use the brands established by the companies it has acquired?

Terry Badwak: We continue to use the Delta Chemical name in the interest of brand recognition. Delta Chemical developed a product line called DelPac, which is a trademarked polyaluminum chloride solution that can provide customers with longer filter runs, reduce or eliminate the need for pH adjustment, and reduce sludge residuals. Our workhorse product, which we developed in 1995, is called DelPac 2020. That is a benchmark product in the industry. AlChem and CalCHEM make some of the same products that USALCO makes. In the short term, we’ll continue with the AlChem and CalCHEM names, since they are what customers know.

At this point in time, we have the old Delta names from 25 years ago, we have some USALCO-branded products, and now we have AlChem- and CalCHEM-branded products. At some point, we need to bring everything together under one umbrella. I foresee potentially rebranding everything in 2022.

Municipal Water Leader: What new products are you now bringing to the market?

Terry Badwak: There is a product that we’ve worked on for a number of years and have branded under the USALCO name: AlcoPAC 6. We have patents for the process and the product, and we’re beginning to roll it out now. The plant in Little Rock, Arkansas, was specifically built to bring that product to market.

Municipal Water Leader: What is your message to customers who may be experiencing revenue changes due to the COVID‐19 pandemic?

Terry Badwak: We have kept safety foremost in our deliveries. Early in the pandemic, we put additional safety protocols in place for our drivers and the people at our operations centers. We continue to follow all the protocols to operate in a safe and efficient manner from a COVID‐19 standpoint and simply because we are a chemical manufacturer. We will continue to do that and to ensure that there’s a supply chain to our customers. These products are critical components for water treatment; if treatment plants don’t get their material, they would quickly have to shut down.

Municipal Water Leader: Has the pandemic changed your sales approach?

Terry Badwak: It’s made sales much more difficult. We’ve done a lot more phone calls and video meetings and fewer onsite visits. At the end of the day, however, we still need to get into the plants and do laboratory work.

Municipal Water Leader: What should the plant operations personnel know about the outcome of USALCO’s acquisition of AlChem and CalCHEM?

Terry Badwak: USALCO has gained a greater research and development team to develop new products that will help our customers meet new challenges as regulations tighten up. USALCO has the additional manufacturing capabilities and expanded geographic coverage to meet those needs.

Terry Badwak is the vice president of sales and marketing at USALCO. He can be contacted at tbadwak@usalco.com. For more about USALCO, visit www.usalco.com.