THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, July 10, 1995 TAG: 9507080496
SECTION: BUSINESS WEEKLY PAGE: 10 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY TARA TROWER, BUSINESS WEEKLY
LENGTH: Long : 156 lines
When Robert Walker Jr. opened Marine Chemist Service Inc. in 1966, only four Tidewater firms competed with him. Almost 30 years later, at least two dozen firms are scrapping for a shrunken market.
It's no wonder that Marine Chemist, the largest-staffed firm of its kind on the East Coast, has lost money the past three years.
The Newport News-based company has ridden a roller coaster of soaring profits in the '80s and plunging sales in the '90s.
Now the family-owned firm, which employs 30 people in Newport News and Norfolk, foresees the long-awaited bottom to the business cycle. If this proves true, it could relieve a hard pressed Tidewater industry.
What's happened to Hampton Roads' shipyards is well known. Yards slumped as the Navy scaled back from 580 ships in 1990 to 370 by June. Lesser known is the tale of firms like Marine Chemist that service the yards.
The bonanza of Navy work in the '80s was magnified by the proliferation of environmental rules and regulations. Marine Chemist's main business - testing confined spaces on ships for harmful gases - evolved into identifying asbestos on vessels and examining waste for hazardous material.
The growing number of environmental rules issued in Washington in the '80s spawned a crowded industry in Hampton Roads. Many of the new environmental testing firms sought Navy business as well.
Then came the crunch. Navy work diminished. So did government spending for environmental projects.
Marine Chemist lost money and in turn cut prices, spread work among fewer employees, looked for ways to modernize, and sought more commercial business outside the shipyards. Now company officials are taking an optimistic view.
``The losses the last two years have not been as great,'' said Marine Chemist vice president Robbie Walker, a son of the founder. ``Last year was not as bad as the year before. This year I'll look for us to break even or even turn a little profit.''
Robert Walker Jr. started Marine Chemist Service in his home as a part-time consulting practice. He had graduated with a bachelor's degree in science and chemistry from Hampden-Sydney College, then worked for nine years at Newport News Shipbuilding.
The original work was straight forward. Marine Chemist inspected ships for gases that might explode or injure workers performing chores such as welding inside huge tanks. Walker also purified and sold water for ships generating steam in port, depending at first on orders deemed too small by larger suppliers.
After his eldest son, Robbie, graduated from Old Dominion University in 1980 with a master's degree in chemistry, Walker began to diversify. He opened his own laboratory in Oyster Point Industrial Park in Newport News.
It was an opportune time. The environmental business was to flourish with the Clean Water Act, Superfund and the Resource Conservation and Recovery Act.
Shipyards that had been using Marine Chemist for harmful gas inspections began asking it to find the location and amount of asbestos on ships.
By the mid '80s, Marine Chemist operated a general environmental lab, sampling waste material generated by a variety of industries on and off the waterfront. And its petroleum lab sampled the cargo aboard seagoing oil tankers. This assured oil terminals, for example, that the fuel was free of unnecessary chemicals or water.
The diversification helped make Marine Chemist a family affair.
Robert Walker Jr. served as president. Sally Walker was secretary-treasurer. And their four children came into the company:
Robbie took responsibility for the harmful gas inspections and water purification; Gary headed field operations for asbestos and the general environmental lab; Greg became the purchasing manager, office manager and computer system manager; Cindy, a recent James Madison University graduate, became the payroll and receivables bookkeeper.
Walker plans to gradually turn over the business to his children in the next few years. What he'll turn over is a business that substantially changed in the '80s.
The original marine chemist business now represents about 20 percent of sales. It's overshadowed by the general and asbestos labs, which each account for about a third of sales. Water purification represents 10 percent of sales, and the petroleum lab 5 percent.
The water plant and the marine chemist service are housed in Norfolk near Lamberts Point, while the other departments are in Newport News.
Marine Chemist has shed seven employees through attrition, a workforce drop of almost 20 percent, but hasn't cut wages. The '80s diversification effort has helped the company ease away from an overwhelming reliance on the Navy.
``We have done real well not to have had layoffs or across the board salary cuts,'' Robbie Walker said. ``We have kept every department we had. What we have tried to do is become more efficient, to lower our operating costs. We're doing with 30 people what we used to do with 37.''
While the shipyards remain important customers, the number of clients off the waterfront has grown, said Robert Walker Jr.
Walker estimated that until five years ago, the Navy composed 90 percent of his business. Today, the Navy accounts for about 60 percent of his sales, while the commercial sector makes up 40 percent.
``The only way to make it in this business is to diversify or have a tremendous volume,'' Walker said. ``The labs that are strictly laboratories have to turn over results quickly....I know of certain labs that will do tests that take three days by definition and give the results after only one day.
``If you're giving results before the test is complete, obviously the analysis hasn't been done correctly,'' Walker said. ``But the desire to make a dollar causes some firms to engage in that type of behavior.''
While the steady flow of regulations from Washington has been welcomed by environmental firms, Robert Walker Jr. has reservations about the country's collective effort to clean up its pollution.
``We are becoming a squeaky clean country, but we can't afford to,'' Walker said. ``It sounds like a good idea, except we've taken it too far and it is retarding our growth.''
With Congress threatening to slash budgets, though, Robbie Walker doesn't complain.
``It's those regulations that are making up the difference for the drop in military contracts,'' he said.
Not that the environmental business surged in the '90s. ``Al Gore came in saying that he was the environmental vice president, but that (surge in orders) never happened,'' Robbie Walker said. ``Now it is tough to tell which way it's going to go.''
Robbie Walker figures the business has touched bottom. He assumes the Republicans in Congress will pump more money into defense. And he realizes the Navy's ship maintenance program will have to rebound.
``You can only get by with limited maintenance until things start falling apart,'' he said.
It's not the defense industry, though, that holds the key to the future for Marine Chemist, he said. It's the commercial side of the business, a side he senses the company must cultivate to attract more customers.
``We still pretty much operate by word of mouth,'' he said. ``We've been in the business for almost 30 years, so our reputation has been good for us. I still us having to streamline. Somehow, we have to get out and do real marketing.'' ILLUSTRATION: Color staff photo by VICKI CRONIS
Marine Chemist Service's Robbie Walker returns from a tank
inspection. Tidewater environmental firms like Walker's survived the
Navy downsizing crunch and foresee an upturn with commercial
accounts.[color cover photo]
``We have done real well not to have had layoffs or across the board
salary cuts,'' Robbie Walker says. ``We have kept every department
we had. What we have tried to do is become more efficient, to lower
our operating costs. We're doing with 30 people what we used to do
with 37.''
Robbie Walker dons his jumpsuit aboard a launch boat set for a ship
inspection.
Color staff photos by BILL TIERNAN
Laurie Dearing of Newport News, a lab technician at Marine Chemist,
tests for oil and grease content.
``The only way to make it in this business is to diversify or have a
tremendous volume,'' says Robert Walker Jr., president of Marine
Chemist Service Inc.
by CNB