MALCOM, Iowa—When BASF Corp. came knocking on ITWC Inc.'s door with an offer to buy the polyurethane chemicals business, Walt Smith wasn't quite ready to sell.
He listened anyway. After all, he figured, companies like BASF don't come calling very often. The more they talked, the more Smith realized the time was right to let the company grow under a new owner.
The 64-year-old chairman and majority owner of ITWC and Thombert Inc. sold ITWC to BASF in early July for an undisclosed amount. The deal was good for Smith, ITWC and its employees, and BASF, he said.
“I knew this was the best thing for ITWC,” he said a week after the sale, because BASF will invest in the operation he formed in Malcom, Iowa, in 1988. He brokered a pact that guaranteed all 80 ITWC employees—except for him—kept their jobs and the plant will continue operating in Malcom.
About 17 percent of ITWC's owners were former or present company employees. “All employees have had the ability to buy into the company if they wanted,” Smith said. Those who had stock options cashed in when he sold the firm.
“It's a way of walking away from the business and sharing the success with those who helped create it,” he said.
Focus on Thombert
After completion of the transaction, Smith, his family and some friends set off on a railway trip—first class both ways—from Chicago to San Francisco. Then he planned to take a few trips to other parts of the country.
He said he needed to step back and take it easy for awhile.
Once his excursions are complete, he'll return to Thombert in Newton, Iowa, and continue to serve as chairman and CEO. But he doesn't plan to run the business.
“Dick Davidson, the president of the company, has worked for me for 35 years, and he's done a great job,” Smith said. “My particular skill is not screwing it up. Part of the success I've had is that I trust the people who run the businesses.”
Smith said the sale of ITWC means Thombert's future in Newton is more assured than ever. “It's a great little business. We have the largest share of forklift tires and wheels for electric trucks in the U.S.”
He also might get involved in the creation of another company, an existing business or projects within the urethane sector. “But it won't be in the chemical end of the business,” said Smith.
Some of those projects could occur at Thombert.
“We still have new technology and manufacturing methods that we want to improve upon,” he said. “So we're focused on that.”
When it comes to operating his companies, Smith's philosophy is that it isn't all about him, “it's about a lot of people; it's about investing in the business. Everybody (connected with the company) should win. If you can do that, you've done your job well.”
Rolling the dice
Smith became involved in the urethane industry at age 14.
He worked during the summer at Thombert, which his father Robert and uncle Thomas Smith launched in 1946.
“I started out making polyurethane elevator rollers 50 years ago,” Smith said. “And I'm still here.”
Walt Smith grew up watching his father and uncle take risks—sometimes successfully, sometimes not—to expand the business.
He always has followed that example, willing to “roll the dice,” he said recently at a Polyurethane Manufacturers Association meeting.
Smith attended the first official meeting of the PMA in the early 1970s and the friendships he's gained through the association are among his fondest memories.
The small, upstart PMA went on to become a formidable opponent when government agencies tried to ban the polyurethane curative MOCA because of allegations it can cause cancer.
The PMA ultimately won that fight, and Robert and Walt Smith played key roles at the PMA during the struggle.
Walt Smith, who remains active with the association, worked at Thombert after he graduated from college for almost 10 years before he began running the company in 1980 after his father resigned to become mayor of Newton.
In 1981, he branched out and launched molding firm Petrolast to sell components to the oil industry. Then oil prices, which peaked at $45 a barrel in 1982, fell to $6 a barrel, and Smith folded the company.
Petrolast consumed 95 percent of Thombert's net worth, but Smith was able to guide Thombert to success, and recovered the money lost in the Petrolast venture.
The Petrolast setback didn't prevent Smith from launching ITWC and in-line skate manufacturer Cyko Inc. in 1992. Like ITWC, Cyko prospered, and Smith sold the company in 2004 to focus on Thombert and ITWC, both of which expanded over the next several years.
He said he hires exceptional professionals to keep the businesses running smoothly, and as CEO focuses on other aspects of the companies.
Smith believes that if you fail, you pick yourself up and learn from your mistakes, and when another opportunity presents itself, you take advantage of it. Entrepreneurs must be able to deal with failure as well as success to survive, he said.
“I was born in Newton, Iowa, and I've gone nowhere,” he quipped. “I was raised to find my fortune in my own backyard. It's what my father and uncle did Ã and what they preached to me. So I went out and found diamonds in my backyard.”