James J. O'Brien Jr.
1955–



Chairman and chief executive officer, Ashland Inc.

Nationality: American.

Born: 1955, in Circleville, Ohio.

Education: Ohio State University, BBA, 1976.

Career: Ashland Chemical Company, 1976–1992, management positions of increasing responsibility in Foundry, Specialty Polymers, and General Polymers; 1992–1994, executive assistant to the chairman and CEO; Ashland Petroleum Company, 1994–1995, vice president and general manager of branded marketing; Ashland Inc., 1995–2001, president of Valvoline and vice president of Distribution and Specialty; 2001–2002, senior vice president and group operating officer; 2002, president and COO; 2002–, chairman and CEO.

Address: Ashland Inc., 50 East River Center Boulevard, P.O. Box 391, Covington, Kentucky 41012-0391; http://www.ashland.com.

■ The transportation and chemical-materials executive James J. O'Brien Jr. was the CEO and chairman of the Covington, Kentucky-based Ashland. O'Brien was employed by the company beginning in 1976 and during his 28-plus years there gained an enormous amount of experience in most of Ashland's operations, including petroleum, chemicals, and motoroil marketing.

ASHLAND

Ashland, a Fortune 500 company, was an oil-products and specialty-chemical company that provided services, products, and solutions for the chemical, construction, energy, and transportation industries. The company operated in the United States and in over 120 countries around the world through four wholly owned divisions: Ashland Paving and Construction (APAC), which paved streets and built bridges, mostly in the midwestern and southern United States, and supplied asphalt and highway materials to the construction and transportation industries; Ashland Distribution, which bought plastics and chemicals, then mixed and repackaged them for distribution in North America and Europe; Ashland Specialty Chemical, which produced specialty adhesives, chemicals, and polymers and resins for water treatment; and Valvoline, which operated an oil-change chain comprising over 600 outlets and marketed Zerex antifreeze and Valvoline motor oil.

BACKGROUND WITH ASHLAND

O'Brien began his employment with what was then known as Ashland Chemical Company in 1976. During the next 16 years he took on managerial assignments of increasing responsibility within the Foundry, Specialty Polymers, and General Polymers divisions. In 1992 O'Brien was named executive assistant to John R. Hall, then Ashland's chairman and CEO; for two years O'Brien left the well-known operations side of Ashland's business in order to assist Hall through what was a globally unstable political and economic period for the petroleum-refining industry.

In 1994 O'Brien was hired as the vice president and general manager of branded marketing for Ashland Petroleum Company. At this time he took on the difficult assignment of revitalizing Ashland's branded gasoline-marketing operations. In 1995, when the company changed its name to Ashland, O'Brien was promoted to president of Valvoline, the smallest division, as well as corporate vice president. With sales having fallen below projected performance rates over the preceding few years, O'Brien refocused Valvoline's operations and developed an improved and very successful brand strategy that entailed building a competitive management team to concentrate on enlarging the product line into new, expanding markets. Specifically, O'Brien guided the branded-product line into the European and Chinese markets, purchased the Eagle One brand of waxes and car-care products, and launched a new development laboratory responsible for products such as Valvoline Max Life motor oil.

In November 2001 O'Brien was named senior vice president and group operating officer for two of Ashland's divisions: Distribution and Specialty Chemicals. As group operating officer he was responsible for developing new initiatives that would revise the Distribution division's business model with the goals of bettering efficiency, increasing revenues, and restoring returns. At the same time O'Brien sharpened the Specialty Chemical division's market focus in order to achieve more growth from its existing product lines.

In October 2002 O'Brien began to serve as president, chief operating officer, and member of the board of directors for Ashland. In these positions O'Brien's areas of responsibility included chemical operations and their related support units, such as the European shared-services center. He also supervised corporate functions, including business-development, environmental, health-and-safety, and human-resources operations. Within the month O'Brien became CEO, succeeding Paul Cheligren. In November 2002 he became chairman.

FOCUSING A TURNAROUND

When he took over its leadership position, O'Brien decided to transform Ashland into a better-focused, more energetic company so that it could once again deliver reliable results to shareholders and superior products to customers. At this time many financial analysts who covered the company were hopeful that O'Brien would turn Ashland around as he had done with Valvoline—which had gone from being Ashland's smallest divisions to one of its best performers.

TROUBLING TIMES

However, as O'Brien began his reign at Ashland, troubling times were plaguing the company as well as the oil industry in general. The possibility of war with Iraq had brought the supplies and prices of oil and all of its derived products into a state of uncertainty. With this global uncertainty came a disappointing 2002 fiscal year, in which Ashland's sales fell 2 percent to $2.1 billion and net earnings fell 61 percent to $47 million. Disappointments continued into the first quarter of 2003, when O'Brien announced a loss of $92 million.

Ashland shareholders were also troubled for some time with regards to asbestos litigation that had hampered Ashland over recent years. After an analysis was performed on past insurance claims, O'Brien increased the amount of money within the company's asbestos reserves by $95 million in order to relieve those concerns. O'Brien was happy with the company's management of its asbestos liability over the preceding 15 years but admitted that estimates on future claims could prove to have been low.

PROFITABILITY-IMPROVEMENT PLAN

During his first couple of years at Ashland's helm, O'Brien transformed the company from one whose business revolved strictly around oil to one involved in a wider array of transportation, chemical, and oil businesses. Its products and services were far ranging, encompassing Valvoline motor oil, water-purification chemicals, and highway construction along with a joint venture with Marathon Ashland Petroleum. However, management at Ashland had been unable to get these various groups of products and services to work together smoothly. O'Brien remained optimistic when he detailed a profitability-improvement plan at the company shareholders' meeting in January 2003. He assured listeners that he would direct the company to sharpen its focus, increase efficiency, and deliver greater value to its shareholders. With the help of movements in the right direction that had been made by his predecessor, O'Brien aimed to further restructure the company so that Ashland could realize its full potential.

After his statement to the board O'Brien cut about 450 jobs from Ashland's global workforce of 24,300 employees. He also restricted future commitments to the Ashland Foundation, a project initiated to improve the communities in which offices were based, although he promised to continue with the commitments to which the company had previously agreed.

REDUCING DEBT

O'Brien aimed to reduce the company's debt-to-capital ratio from 45 to 35 percent, mostly through the discontinuation of acquisitions. His profitability plan entailed research on whether portions or the entirety of the Distribution unit, along with particular assets of the Specialty Chemicals and APAC divisions, would need to be sold in order to improve profitability and allow the company to become more focused on processes within existing markets.

O'Brien directed a major restructuring of Ashland's distribution business in order to bring marketing activities together into regional territories and place businesses such as the North American and European Plastics Distribution operations under one management team. In August 2003 O'Brien completed the sale of Ashland's Electronic Chemicals business group to the Allentown, Pennsylvania–based Air Products and Chemicals in a cash transaction valued at approximately $300 million. In addition the Brenntag and Solvadis companies were sold from within the Distribution division.

O'Brien next sold the company's stake in its joint venture with Marathon Oil Corporation. The 38 percent interest that Ashland had controlled in Marathon Ashland Petroleum, the country's fifth-largest refiner and marketer of petroleum products, was sold for about $3 billion in 2004. The action ended Ashland's involvement in oil refining and gasoline retailing, the latter of which had included the company's line of Speedway gasoline stations. O'Brien also completed the sales of two other businesses to Marathon Oil, including 61 Valvoline Instant Oil Change centers in Michigan and northwest Ohio and operations concerning maleic anhydride, the starting material used in the formulation of resins within the chemical, paint, plastics, and food industries. As a result of these last major actions—which were expected to be finalized at the end of 2004 with cash inflows of about $2.7 billion—O'Brien was able to concentrate solely on Ashland's primary businesses of road construction, specialty chemicals, lubricants, car-care products, chemicals and plastics distribution, and transportation fuels. The company's brands included Eagle One appearance products, Pyroil performance products, Valvoline motor oils, and Zerex antifreeze. The last sale eliminated the vast majority of Ashland's outstanding debts of $2 billion and gave the company cash credit of about $500 million.

2004 RESULTS

Due to O'Brien's measures in cutting costs and refocusing core businesses, Ashland's stock price rose about 75 percent in 2003. O'Brien decided it would then be appropriate to add complimentary businesses in order to expand the company's core chemical, transportation, and construction divisions. O'Brien hoped to focus on creating a balanced mix of interrelated operations in order to improve profitability among all of its wholly owned businesses. He wished to achieve growth while delivering a more predictable and stable overall performance throughout the company.

VOLUNTEERING AND SERVING

O'Brien served his alma mater, Ohio State University, as a member of the Dean's Advisory Council for the Fisher Graduate College of Business. He was a volunteer big brother with Big Brothers/Big Sisters of the Bluegrass in Lexington, Kentucky; he also served on the organization's national board of directors. He was a member of the American Chemistry Council, the American Petroleum Institute, and the National Petroleum Refiners Association. He was a member of the board of directors for Fifth Third Bank and the Cincinnati Zoo; chairman of the board of trustees for Midway College in Midway, Kentucky; and a member of the Association of Governing Boards of Universities and Colleges. O'Brien was a graduate of the 1994 class of Leadership Kentucky, a nonprofit educational organization that brought together people possessing a variety of leadership abilities, career accomplishments, and volunteer expertise in order to gain insight into the issues facing the state.

See also entry on Ashland Inc. in International Directory of Company Histories .

sources for further information

"Directors and Officers," Ashland Inc. Web site, http://www.ashland.com/ashland/directors_officers.asp?selid=4 .

"Our Milestones," Ashland Inc. Web site, http://www.ashland.com/ashland/our_milestones.asp?selid=2 .

"Vision, Mission, and Values," Ashland Inc. Web site, http://www.ashland.com/ashland/mission_vision.asp?selid=1 .

—William Arthur Atkins



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