The Gottwald Jinx

Brash, bold and bent on making it big, 73-year-old Floyd Dewey Gottwald of Richmond, Va., has been running up a remarkable record of swift starts and fast fades. In the early 1940s he turned a little paper company into the world's largest producer of blotting paper; then the blotter market rapidly dried up as the ballpoint pen caught on. Next, Gottwald converted his company into a maker of thick, waterproof paper bags for packaging fertilizer and chemicals, only to see that market crumble when plastic-lined bags came out. In 1962, with his two sons, Gottwald bought Ethyl Corp., the world's largest producer of lead antiknock compounds for gasoline. Now the Government has set auto pollution standards that should force most lead additives out of gasoline by the mid-1970s.

Together with his sons, Floyd Jr., 49, and Bruce, 38, Floyd Gottwald is trying to convince the Government and the automakers that his company's new "lead trap," a disposable filter attached to an auto muffler, will stop lead from being emitted into the air. Trouble is, Ethyl's device does not trap all the lead. Besides, automakers claim that lead must be kept out of the gasoline itself because it clogs catalytic mufflers. These are metal containers for the chemicals that will remove enough air pollutants from auto exhausts to meet federal standards set for 1975.* Says Gottwald: "We're the tennis ball between the auto companies and the Government and we're taking a helluva pounding."

Southern Comfort. Gottwald did not always have such problems. He began his career half a century ago as a clerk at Richmond's Albemarle Paper Manufacturing Co., frugally saved his salary, invested all he could in the company's stock, and continued to do so as he climbed the management ladder. Ultimately he became president--and the biggest shareholder. Gottwald's dollar-tight reputation endeared him to bankers, who deemed him a sound credit risk. Indeed Gottwald and his sons were able to borrow $200 million ten years ago to buy Ethyl Corp. from General Motors and Jersey Standard. Later they sold off Albemarle at a good profit. Now the family owns 14% of Ethyl's stock, worth $35 million.

Gottwald continues to spend money sparingly and has built a comfortable cash reserve of more than $140 million for Ethyl. But the company's net earnings declined 6% last year to $35 million on sales of $577 million. Since leaded antiknock compounds accounted for 36% of those sales and a hefty 60% of the profits, Ethyl may have more knocks ahead. But the company is not entirely pessimistic. It has high hopes for its mix of other products, including paper and polyethylene film for coating paper diapers.

Despite the Gottwalds' recent misfortunes, they live and work in pastoral Southern comfort. Ethyl is headquartered in two new Williamsburg-style buildings, with a painting of Robert E. Lee in the board room. Now the Gottwalds must decide how to defend their empire against the anti-lead threats. And diversifying into new fields seems to carry the promise of incurring the family jinx. When phosphates in detergents came under fire from environmentalists, Ethyl spent $2 million to study and design a plant for a substitute product called NTA. Before the Gottwalds could get it into production, the Government ordered detergent makers to stop using NTA.

The Gottwalds now talk about buying copper or other metal companies, but they also intend to stick with lead. It is possible that the Wankel rotary engine, currently being tested by General Motors and Ford as a replacement for the internal combustion engine, can be adapted to leaded gasoline and still meet antipollution standards. The family also hopes that the whole fuss over lead may blow over. Bruce Gottwald argues that regulations banning the future use of lead in gasoline were emotionally inspired by environmentalists. Brother Floyd adds: "In five years there will be a different President, different politicians --and a lot more realism about all this than we have today."

* Early this week the Environmental Protection Agency will begin hearings that may delay enforcement of these standards until 1976 or later. U.S. automakers charge that the standards are too rigid and would drastically increase car prices.

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