June 15 (Bloomberg) -- An early 1970s photo in a Huntsman Corp. annual report shows a smiling young Jon Huntsman Jr. holding a dozen eggs in polystyrene packaging, an innovation that helped make a fortune for the family business.
The chemical company and Huntsman name would later help the family scion win Utah’s governorship, make him a multimillionaire and position him for White House appointments, including as President Barack Obama’s ambassador to China. The company also is fodder for opponents as Huntsman prepares to formally announce his Republican presidential bid next week.
Huntsman Corp.’s revenue in China surged 57 percent from 2009 to 2010 during his ambassadorship, almost two decades after its entrance there, data compiled by Bloomberg shows. Its expansion in the world’s second-largest economy offers a target for rivals when U.S. unemployment is shaping the 2012 presidential race.
“China has become a bigger and bigger issue in recent elections, especially exporting jobs to China,” said John Feehery, a Republican strategist in Washington who isn’t working with any of the presidential campaigns. “If I were an opposition researcher, I would have a field day with this.”
Tepid job creation is poised to be the top issue in the campaign, with the economy struggling to gain strength amid 9.1 percent unemployment following the worst recession since the 1930s. Feehery said that environment could make recent comments by Huntsman’s chief executive officer problematic.
“We now employ more people between China and India than we do in North America, which is really quite phenomenal when you consider that about 90 percent of our associates 10 years ago were in North America,” CEO Peter Huntsman, 48, a younger brother of the potential candidate, told an industry conference on June 8.
He was referring to employment in all of Asia when he mentioned those figures, said Gary Chapman, a company spokesman.
“At Huntsman Corp., we have a rich history of creating good American jobs and providing quality American product to the rest of the world,” Chapman said in a statement. “Over the years, Huntsman Corp. has grown from a small family business into a global corporation that employs thousands of U.S. employees.”
Huntsman Corp. had 2010 revenue of $9.25 billion and about 12,000 employees worldwide, with about 2,000 of those in the U.S. Its chemicals and adhesives are used by a variety of companies, including by Boeing Co. for its new 787 Dreamliner. Before the company went public in 2005, it was the world’s largest privately owned chemical producer.
Like many companies, Huntsman Corp. has placed greater emphasis on China during the past decade. Now with a presence in cities such as Beijing and Shanghai, it has done business in the country since at least 1992, when it opened a technical service center, according to an April 2011 bond prospectus.
Its growth there has been through partnerships with Chinese companies that are typically majority-owned by the government. In May, weeks after Huntsman left his Beijing post to explore a presidential bid, his family’s company entered into its latest license agreement with a Chinese company.
An examination of Huntsman Corp. and its global expansion illustrates both the benefits and potential liabilities for Huntsman, 51, the eldest of nine children who parlayed the family business into a political career.
He joined the company in 1982, progressing to general manager of its international division before leaving in 1992 to become President George H.W. Bush’s ambassador to Singapore. He returned as a vice chairman in 1993 and left again in 2001 as a deputy U.S. trade representative in President George W. Bush’s administration. From mid-2009 to April, he served Obama as ambassador to China, calling on the Mandarin Chinese he learned to speak as part of a Mormon mission in Taiwan during college.
Huntsman declined an interview request through a spokesman, Tim Miller. “I am proud of my private-sector experience helping to grow our family business into a successful, global enterprise that has created thousands of high-paying American jobs,” Huntsman said in a statement provided by Miller. “The company’s global outreach brought capital back to America allowing it to greatly expand the number of American employees.”
In a 2006 Bloomberg News interview, Peter Huntsman predicted China sales would represent 15 percent to 20 percent of total revenue by 2010. The reality didn’t quite live up to those expectations; China revenue was 9.5 percent of company sales in 2010, its annual report shows. Other chemical companies also have experienced strong China growth. DuPont Co., for example, saw its revenue for China and Hong Kong increase 51 percent from 2009 to 2010, Bloomberg data shows.
Big Mac Clamshell
In a March interview with Bloomberg News, Peter Huntsman, who wasn’t made available for an interview for this story, said he voted for Obama in 2008, while adding he thinks his brother would make “an attractive candidate.” He said he’s as close to his brother “as anyone except his wife.”
Huntsman Corp., based in Salt Lake City and with an operations headquarters near Houston, started as a family business in 1970 and remains one in many ways. Its chairman is Jon Huntsman Sr., 73, who helped create the plastic egg carton and later the Styrofoam clamshell invented for Big Mac sandwiches sold by McDonald’s Corp.
Huntsman Sr., who has given away hundreds of millions of dollars to charities and institutions in Utah and elsewhere, told the Chronicle of Philanthropy in 2008 that his net worth was roughly $1.9 billion.
Family members and their foundation control 18.5 percent of the company’s stock, data compiled by Bloomberg shows. Huntsman Jr. divested his individual shares when the company went public.
Supporters have touted his business experience, even as Huntsman Corp. has recorded a mixed performance.
After daily operating responsibilities moved from the father to Peter Huntsman in 2000, one of the company’s commodity businesses ran into financial difficulty amid a recession, heavy debt and surges in natural gas prices that boosted the company’s costs. It failed to make interest payments in 2001 and 2002 on some of its bonds, and restructured its debt.
Its stock also hasn’t fared well since it went public at $23 in February 2005, a month after Huntsman Jr. was sworn in as governor of Utah for the first time. The stock closed yesterday at $17.72. Chapman said that price reflected “a very strong recovery” from its low of $2.11 in February 2009 after a merger deal collapsed.
One of the company’s units, Huntsman International, on May 26 agreed to pay $33 million to settle a lawsuit alleging it and other companies sought to fix the price of urethane chemicals sold in the U.S. from 1999 through 2004, Chapman said in a statement. The company admitted no wrongdoing.
Huntsman Jr., who was an executive of the company for most of the period covered by the allegations, “had no day-to-day involvement with the business” involved in the lawsuit, Chapman said.
As he makes public appearances, Huntsman Jr. often describes a working-class upbringing, complete with a story about how he met his wife when they were working at a Marie Callender’s Restaurant in Salt Lake City during high school.
“This dishwasher caught the eye of the salad girl,” he said during a May 7 commencement speech in South Carolina.
Before he graduated from high school, his father was a millionaire, at least on paper. Huntsman Jr. is now worth at least $15 million, according to a financial-disclosure form he completed in June 2009. The federal form, the most recent available, requires only broad ranges for assets values.
Huntsman Jr. has said he won’t use his personal fortune to finance a presidential bid.
“Unless you can raise it legitimately, you don’t win,” he told reporters on May 6 in South Carolina.
During his first successful run for governor in 2004, he loaned himself $275,000 and received contributions from family members, according to news reports. His family name was his most valuable asset.
“It made it much easier for him to raise money,” said Matthew Burbank, a University of Utah political science professor who has followed Huntsman’s career.
Huntsman Sr., a frequent contributor to Republican campaigns, was close friends with former Senator Jake Garn of Utah and also worked in the Nixon administration for H.R. Haldeman, the White House chief of staff who would later serve 18 months in prison for his role in the Watergate scandal.
The family patriarch has shown bipartisanship in his political giving, sending checks to the Democratic Senatorial Campaign Committee, Senate Majority Leader Harry Reid of Nevada and Democratic Representative Charles Rangel of New York, campaign-finance records show.
In the race for the Republican nomination, the challenge posed by those donations would pale in comparison to Huntsman Jr.’s most recent employment as the president’s envoy.
“As his good friends in China might say, he is truly the yin to my yang,” Obama said in March. “And I’m going to make sure that every primary voter knows it.”
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