Corporate Profile

Hoechst: The toxic brewmasters

by Philip Mattera

HOECHST IS ONE OF THE BIG THREE GERMAN chemical companies that formed the giant IG Farben combine in the 1920s and were split up again after World War II. Like BASF and Bayer, Hoechst enjoyed a dramatic resurgence during the 1950s and rose to the top tier of the industry.

 Hoechst is heavily involved in synthetic fibers and pharmaceuticals as well. It owns a majority interest in the French company Roussel-Uclaf, which is best known as the producer of the abortion pill RU 486. Hoechst has been accused of pressuring Roussel-Uclaf to limit the availability of RU 486 in the United States and other countries. Hoechst, which is 20 percent owned by the government of Kuwait, has also made major investments in the United States, including the $2.9 billion purchase of Celanese Corporation in 1987.

Hoechst's sordid history

 A chemist named Eugene Lucius founded Hoechst in a village of that name in 1863. The firm - originally called Meister, Lucius & Co. - aimed to join in the new business of synthetic dyes. The company rigged up a small engine and a boiler to mix anilin oil and arsenic acid, and soon it was producing fuchsia dye. This was only the first in what would be a huge portfolio of coloring agents created by the rapidly growing company.

 In 1883, the company made its first move beyond dyes when one of its chemists discovered Antipyrin, an early analgesic. This led to work on the anesthetic novocaine and on salvarsan, the first effective medication for syphilis. The company went on to achieve the first synthesis of adrenalin in 1906 and the isolation of insulin in 1923, by which time the firm had been renamed Hoechst.

 The dye industry in Germany (and other countries) commonly engaged in anti-competitive practices, with the major corporations joining cartels early in the twentieth century. In 1904, Hoechst joined the Dreiverband cartel; BASF and Bayer were part of another grouping called Dreibund. The cartels carved up the market among themselves and undermined the growth of the dye industry in countries like the United States. During World War I, the German dye companies altered their formulas to produce mustard gas and explosives.

In 1916, the two dye cartels joined forces to create the Interessengemeinschaft der deutschen Teerfarbenfabriken (Community of Interests of the German Tar Dye Factories). Known later as the Little IG, this combine exerted total control over the dye industry and soon acquired extensive coal mining operations to carry out a plan initiated by BASF to create liquid fuel through hydrogenation of coal.

 In the 1920s, dye industry leaders, led by Carl Duisberg of Bayer and Carl Bosch of BASF, successfully pushed for the merger of the dye makers into a single company. In 1925, the companies merged into the Interessengemeinschahft Farbenindustrie AG or IG Farben (Interest Community of the Dye Industry, Inc.)

 This huge corporation, which soon included related industries such as explosives and fibers, was the biggest enterprise in all of Europe and the fourth largest in the world, behind General Motors, United States Steel and Standard Oil of New Jersey.

In 1926, IG Farben entered into a non-competition arrangement with Jersey Standard for oil and chemicals while agreeing to cooperate on the development of synthetic rubber (though Jersey Standard later came under fire from the U.S. federal government because of evidence that the Germany company was impeding its progress in this crucial area).

 Although Carl Bosch, the head of IG Farben's managing board, opposed the anti- Semitism of the Nazis, the company gave financial support to Hitler and (without Bosch, who resigned in 1935) became indispensable to the German military effort during World War II. The company used slave labor, locating one of its synthetic rubber facilities in Auschwitz to be near the captive labor supply of the infamous concentration camp. Lethal gas made by IG Farben was used in the death camps. After the war, a group of IG Farben executives were convicted of war crimes at the Nuremburg trials. Several years later, in 1952, the company was divided into several independent firms, including BASF, Bayer and Hoechst. (IG Farben survived as a shell company and remains one today.)

 Unlike BASF and Bayer, Hoechst rebounded rapidly after the war, since its manufacturing facilities escaped heavy damage. The company emphasized synthetic fibers like polyester along with polyethylene and petrochemicals. By the 1960s, the company, once again a leader in the chemical industry, was making investments throughout Europe, in Holland, Austria, Spain and France. Hoechst also made a major investment in a French pharmaceutical company.

 That company was Roussel-Uclaf, founded in 1920 by Dr. Gaston Roussel and built over the following decades by him and his son, Jean-Claude Roussel, into one of Europe's leading producers of drugs, chemicals and related products. In 1968, the younger Roussel met a Hoechst director and was inspired to pursue a policy of "Europeanizing" his family's firm. Although the French government was uneasy about the deal, Roussel sold a 43 percent interest in the company to Hoechst.

 The two firms proceeded to share many of their marketing and research operations and jointly launched new products such as the broad-spectrum antibiotic Claforan. After Roussel was killed in a helicopter crash in 1972, Hoechst ended up taking a majority stake in the company. The French government held most of the rest but later sold a 35 percent interest to Rhône-Poulenc. Hoechst itself also came under partial foreign ownership: in 1982, government-owned Kuwait Petroleum took a 24 percent interest in the company (now down to 20 percent) and gained a representative on Hoechst's supervisory board.

 Meanwhile, Hoechst continued its international expansion, acquiring British paint maker Berger, Jenson and Nicholson (later sold) and Hystron Fibers in the United States, which strengthened Hoechst's position in the fields of colors and synthetic fibers. The company also has opened new foreign markets for its drugs, becoming a world leader in diuretics, oral insulin, steroids and hookworm medication.

During the 1980s, with biotechnology research in Germany stalled because of environmental protests, Hoechst made a 10-year, $70 million investment in a genetic laboratory at Massachusetts General Hospital (MGH) in Boston. The Hoechst-MGH agreement, which gave Hoechst exclusive licensing rights to MGH's inventions, came under fire from public officials and private commentators alike. At a congressional investigation into biotechnology, then-Representative Albert Gore, D-Tennessee, challenged the appropriateness of the agreement. "How should we react to the fact that you've signed this exclusive licensing agreement with a foreign chemical company," asked Gore of Dr. Ronald Lamont-Havers, director of research at MGH, "in light of the fact that the American taxpayers are providing $25, $26 million to your institution?" Gore charged that Hoechst was skimming the cream off of a publicly built and maintained resource.

 Hoechst undertook a bigger U.S. initiative in 1987, when it acquired Celanese, the eighth-largest chemical producer in the United States, for $2.9 billion. This put Hoechst at the head of the invasion of the U.S. market by the leading European chemical companies. Now called Hoechst Celanese, the U.S. operation is best known as a producer of clothing and home furnishings like Trevira.

Hoechst is one of the leading producers of polymers, especially high density polyethylene, with plants in Europe, the United States, Australia and (through a joint venture with Lucky-Goldstar) South Korea. The company is also a major producer of synthetic resins and paints used in automotive and other industries.

 Other Hoechst products include the artificial sweetener Sunett (Sunette in the United States), herbicides and insecticides, surfactants used in detergent production and superabsorbers used in disposable diapers.

Hoechst vs. women

 Despite its strength and size, Hoescht has refused to stand up to anti-abortion pressure and make its abortifacient RU 486 more widely available. Proponents of the drug claim that it is a safe and effective means of inducing abortion, and that it may be useful in treating cancer.

RU 486 is under the immediate control of Roussel-Uclaf, but officials of the French company have told feminist groups supporting wider distribution of the drug that the top management of parent company Hoechst has insisted on limiting availability. RU 486 has long been available by prescription in France and several other countries, and has recently been introduced in Britain.

 Hoechst justifies its position by claiming that the company does not want to get embroiled in public controversy in countries like the United States where there is significant opposition to abortion.

 This stance has been more difficult to maintain, however, with the increasing evidence that RU 486 may be effective in treating breast cancer, endometriosis and other diseases particularly affecting women. Cancer researchers in the United States have protested the federal government's ban on the use of RU 486 in cancer research, and scores of medical associations have gone on record to call for wider availability of the drug both for abortion and other applications. They charge Hoechst is withholding a medication that could save the lives of thousands of women every year in the United States alone.

 Another factor which may affect the drug's availability is the change in attitudes toward abortion in Germany following reunification. Women living in the former East Germany, who had come to take easy access to abortion for granted, have been pressuring Helmut Kohl's Christian Democratic government to soften its anti-abortion stance.

 Jennifer Jackman, director of the Feminist Majority Foundation (FMF), the leading group campaigning for distribution of RU 486 in the United States, believes that pressure from women in Eastern Germany has decisively changed the terms of debate. In Germany, Jackman says, "The question is no longer if RU 486 will be available, but when."

 Jackman admits that getting RU 486 into the United States will require greater effort. After several years of doing public education on the drug, the FMF has embarked on a campaign to bring economic pressure against Hoechst, Hoechst Celanese and their corporate and financial allies. Last year, FMF President Eleanor Smeal announced that the group had received a $10 million contribution from Peg Yorkin, chair of the FMF, specifically to pursue the RU 486 campaign. At the April 5, 1992 pro-choice march in Washington, D.C., the FMF began circulating a questionnaire to collect names of people who do business with banks, insurance companies and other companies that are tied to Hoechst through stock holdings, credit relationships and interlocking directorates.

Hoechst vs. the environment

 Hoechst has not racked up an environmental and health record as dismal as those of the other two big German chemical companies, BASF and Bayer, but its history is far from spotless.

 Hoechst may no longer be identified in the public mind with concentration camps, but it still has a long way to go before it can be deemed a model corporate citizen.