Praxair, Inc. History

39 Old Ridgebury Road
Danbury, Connecticut 06810

Telephone: (716) 879-4077
Toll Free: 1-800-
Fax: (716) 879-2040

Public Company
Incorporated: 1907 as Linde Air Products Co.
Employees: 24,271
Sales: $5.16 billion (2001)
Stock Exchanges: New York
Ticker Symbol: PX
NAIC: 325120 Industrial Gas Manufacturing; 332812 Metal Coating, Engraving (Except Jewelry and Silverware) and Allied Services to Manufacturers

Company Perspectives:

For Praxair to be successful, our employees must work towards a single vision, possess shared values, and demonstrate behaviors that support both the vision and values. Praxair's Vision: To be the best performing industrial gases company in the world as determined by our customers, employees, shareholders, suppliers, and the communities in which we operate. Praxair's Values: Total customer satisfaction. Results driven. Integrity. People excellence. Safety and environmental excellence. Increasing shareholder wealth. Praxair's Behaviors. Personal Accountability. Teamwork Externally driven. Urgency of action. Winning--making money.

Key Dates:

Linde Air Products Company is founded.
Linde joins Union Carbide.
Linde Division is renamed Union Carbide Industrial Gases.
Praxair is spun off.
CBI/Liquid Carbonic is acquired.
William Lichtenberger, CEO since 1992, retires.

Company History:

With operations in 40 countries around the world, Praxair, Inc. is one of the world's top suppliers of industrial gases. The company's Praxair Surface Technologies subsidiary applies high-performance metal coatings for a variety of industries.

Formerly the Linde Division of chemical giant Union Carbide Corporation, Praxair was spun off to shareholders in 1992 as an independent company. Over half of the firm's sales are generated outside the United States. The company's surface coatings business, developed in the 1950s, supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to many industries. Industrial gases by far constitute the greatest portion of Praxair's operations, contributing 86 percent of 2001 sales. Industrial gas products include atmospheric gases like oxygen, nitrogen, and argon, and process gases such as helium, hydrogen, and acetylene. Many of Praxair's largest customers, and an increasing number of smaller volume customers, utilize on-site distribution, wherein a dedicated plant is built on or adjacent to the customer's site to supply the product directly. On-site delivery constituted about 24 percent of Praxair's 2001 sales. Merchant liquid delivery involves transportation of medium-sized volumes of gases by tanker truck or railroad tank car to on-site storage containers owned and maintained by Praxair. This segment contributed 30 percent of the company's 2001 sales. Customers requiring small volumes of industrial gases receive them in metal cylinders or tanks. This packaged gases business constituted one-third of sales.


Praxair's origins may be traced back to 19th-century Germany, where a professor of mechanical engineering at the College of Technology in Munich started experiments in refrigeration. Karl von Linde's research came to fruition with the 1895 development of a cryogenic air liquefier. Von Linde built his first oxygen production plant in 1902. His continuing research led to the establishment of the first plant for the production of pure nitrogen two years later. The entrepreneur-scientist went on to build air separation plants throughout Germany and Europe during the first decade of the 20th century.

Karl von Linde's 1907 foundation of Linde Air Products Company in Cleveland, Ohio, established the first firm in the country to produce oxygen from air using a cryogenic process. Although oxygen distillation was relatively inexpensive--the raw material is, after all, free--the storage and transportation of gases in heavy containers was very costly. With its foundation in scientific inquiry, the Linde Air Products Company made research and development a priority. As a result, the industrial gas business evolved into a very capital-intensive enterprise; in 1992, Chemical Week estimated that every dollar of annual sales cost over a dollar in assets.

The Linde Company's relationship with Union Carbide started around 1911, when the two competitors undertook joint experiments regarding the production and application of acetylene. Union Carbide had been formed in 1898 to manufacture calcium carbide, a catalyst for the production of metal alloys. The partners had hoped that acetylene--a flammable, gaseous by-product of alloying calcium carbide with aluminum--could be marketed for street and household lighting. While acetylene gas lighting was extensively used especially in rural areas and was also used for auto lights, Thomas Edison's invention and commercialization of electric incandescent light bulbs distracted some emphasis away from acetylene gas lighting. Fortunately, a French researcher's discovery that acetylene could be burned in oxygen to produce a hot, metal-cutting flame launched a whole new market for the gas.

Company Joins Union Carbide 1917

In 1917, Linde pooled its resources with National Carbon Co., Inc., Prest-O-Lite Co., Inc., Electro Metallurgical Co., and Union Carbide Co. to form Union Carbide and Carbon Corporation. The new entity was organized as a holding company, with its five members acting relatively autonomously and cooperating where their businesses converged. As a subsidiary of one of the United States' largest chemical companies, Linde soon became one of the world's largest producer of such industrial gases as acetylene, hydrogen, and nitrogen, which formed the foundation of the petrochemical industry. The companies' combined research efforts coincided with a national push for new technologies to help win World War I, and new applications for industrial gases came in rapid succession. Cooperative research and development among Union Carbide companies used Linde's gases to facilitate production of corrosion and heat-resistant ferroalloys used in skyscrapers, bridges, and automobiles.

Linde also earned a reputation as an innovator in the industrial gases industry by developing new applications for industrial gases, especially in conjunction with the growing chemicals operations of its parent. During the 1940s, for example, Linde participated in Union Carbide's contribution to the development of the atomic bomb. Linde scientists perfected a refining process for treating uranium concentrates through gaseous diffusion.

In the late 1940s, Union Carbide executives attempted to centralize the traditionally autonomous nature of the corporation through a reorganization. The holding company arrangement was dissolved, and subsidiaries were transformed into divisions. Each division, however, retained the word "company" in its name, suggesting that a decentralized corporate culture still endured at Union Carbide.

Postwar Ups and Downs

The Linde Division benefited from Union Carbide's mid-1950s to mid-1960s globalization and retained its position as America's top producer of industrial gases through continuous innovation. The development of oxygen-fired furnaces for steel manufacture and application of nitrogen as a refrigerant increased Linde's markets during the 1960s. The industrial gas company was even able to benefit from the energy crisis of the 1970s, when the rapidly rising costs of traditional fuels made oxy-fuel an attractive alternative to air-fuel because one received maximum heat from fuel. Applications of industrial gases in the food industry during this period included the use of hydrogen in hydrogenated cooking oils and nitrogen to quick-freeze foods.

However, Linde's steady performance throughout the 1970s and 1980s was largely obscured by the succession of financial, environmental, and human disasters endured by parent company Union Carbide, including the infamous disaster at its pesticide plant in Bhopal, India, in December 1984. Union Carbide's market value plummeted 75 percent to less than $3 billion in the aftermath, and the chemical giant was compelled to take on massive debt to repulse a takeover threat. Divestments scaled the parent company back to its three primary businesses (industrial gases, chemicals and plastics, and carbon products) in the late 1980s, but its debt load curbed research and development, diversification, and international expansion.

By the early 1980s, Linde was a $1 billion contributor to Union Carbide's $9 billion annual sales. However, over the course of the decade, Linde began to lose U.S. market share, particularly to U.S. rival Air Products and Chemicals, Inc. By the late 1980s, Linde was ranked second in nitrogen and hydrogen production and distribution. Linde maintained its reputation for innovation, including a small, profitable business segment with the development of such coatings processes as acetylene detonation, which metallurgically bonded protective coatings to metal surfaces. High-tech acetylene detonation and diffusion processes were used in aircraft engines and rolled steel, while also having applications in the automotive industry, most notably in the production of Rolls Royce cars. In 1989, the industrial gas company introduced a technological breakthrough in its primary market, air separation. Robert Reitzes, then an analyst with New York's C.J. Lawrence, predicted that the economical, noncryogenic, vacuum pressure swing adsorption (VPSA) technology would consume 20 to 25 percent of the merchant market by the year 2000. In fact, by 2000 the company would estimate that more than 40 percent of the merchant liquid market is served by noncryogenic systems, of both the VSPA and Membrane variety.

Company Spun Off in 1992

In 1988, the Linde division was renamed Union Carbide Industrial Gases, and in June 1992 its shares were distributed to Union Carbide shareholders on the basis of one share of the new Praxair, Inc. for each share of the parent. The new company maintained some ties to its former parent; Union Carbide was still one of its largest customers, and the two continued to share a common headquarters. The name Praxair was derived from the Greek praxis, or practical application, plus the name of the company's primary product.

Praxair emerged with over $2.5 billion in annual sales, more employees (18,600) than its former parent (16,000) and a debt-to-capital ratio of over 60 percent. Debt reduction was a high priority for CEO H. William Lichtenberger, who devised several corporate goals in the early 1990s: reducing overhead, doubling profitability, effecting 15 percent annual net income growth, and expanding Praxair's global presence, especially in Asia and South Africa. Expense reduction commenced immediately under a "work process improvement initiative," and the company's work force was reduced by 10 percent in Praxair's first year of independence. The establishment of joint ventures in Indonesia and China was expected to help Praxair catch up quickly with its competitors in the region. Two joint ventures in Beijing and Shanghai were expected, according to press releases, to "give Praxair the largest representation in China among industrial-gases companies."

In 1994, Praxair earned one of the most comprehensive quality system certifications issued by the International Organization for Standardization (ISO). Covered by the ISO 9002 certificate were all 54 bulk-gas operating sites; 12 customer service centers; distribution facilities, including the company's North American Logistics Center; plant operations center and two pipeline control centers; and more than 250 on-site air separation plants in the United States, Canada, and Puerto Rico.

Growth in the Mid-1990s

By 1995, Lichtenberger had largely delivered on the ambitious goals he set after the company was spun off in 1992. Rejecting a new share offering or a sell-off of assets, Praxair raised its margins by focusing on productivity and cost reductions, which saved an estimated $50 to $60 million a year. Lichtenberger told the Financial Times, "The only sustainable way to improve productivity is to grow your top line while containing the increases in your costs."

One way Praxair did this is by installing new plants faster at customers' sites. In the mid-1990s, the company had a hundred on-site plants in the design or construction stages. It was also installing the world's largest oxygen plant for the Jindal Vijayanagar Steel Ltd.'s facility in Kamataka, India.

New or expanded uses for industrial gases contributed to Praxair's bottom line. Use of oxygen in the glass, steel, coal, and paper industries could improve quality while reducing toxic emissions. Demand for hydrogen was up from the petroleum refining industry and from NASA.

In early 1996, Praxair acquired CBI Industries, an Oak Brook, Illinois-based carbon dioxide provider, in a $2.2 billion hostile takeover. The buy helped Praxair expand its Gulf Coast operations. Oil refining there was a large market for hydrogen.

CBI subsidiary Liquid Carbonic was the world leader in carbon dioxide, with sales of $440 million a year and twice that figure in total gases revenues. CBI's product lines merged well with those of Praxair, then a stranger to the carbon dioxide business. The buy also extended Praxair's presence in South America, Poland, and Thailand. In addition, Praxair was now investing in China and India.

Praxair was also making smaller acquisitions of cylinder gas operations in the United States. The company had exited the packaged gas business under Union Carbide. North American cylinder sales in 1999 were $900 million--$250 million of this due to the Liquid Carbonic acquisition. To contain costs, the packaged gas business was established as a subsidiary, Praxair Distribution.

Praxair sales were $4.83 billion in 1998. However, two key problems surfaced the next year. The steel industry in North America was being pummeled by cheap competition abroad, and Brazil, another major market, devalued its currency.

Following an industry trend, Praxair and German chemicals giant Merck KGaA began shipping each other's products. Their geographic ranges were entirely complementary. In March 1999, Praxair and BOC Group plc of Great Britain announced plans to combine to create the world's largest industrial gas company. Praxair was outbid, however, and BOC's assets were divided between Air Liquide and Air Products in an $11 billion deal. In fact, Praxair would be one of the few industrial gases companies not involved in a merger at the turn of the millennium.

Praxair stopped using the Linde name in 1999. In a deal brokered three years earlier, Praxair agreed to sell North American rights to the name to Linde AG of Germany for $60 million. Linde AG and its predecessors had been using the name in Europe and elsewhere in the world since its incorporation in 1895.

Lichtenberger Retires in 2000

After the retirement of President and Chief Operating Officer (COO) Edgar Hotard in early 1999, Lichtenberger set up a temporary three-person "office of the chairman" manned by himself, Chief Financial Officer John Clerico, and Executive Vice-President Paul Bilek. Lichtenberger himself retired as CEO and chairman in November 2000 upon turning 65. His replacement, Dennis H. Reilley, was formerly a COO at DuPont.

Under the new leadership, a restructuring at Praxair was announced in December 2000 that would see plants closed and 750 employees laid off (3 percent of the total Praxair work force). Hoping to exploit some specific growth markets beyond its traditional industrial gases business--semiconductor materials, health care, metals technologies, and electronic coatings--the company nevertheless met with unfavorable economic conditions as a global recession ensued in 2001. Another series of layoffs was announced in late 2001. Still, the company seemed to meet the challenges; sales continued to climb as did Praxair stock prices, which outperformed the Standard & Poor 500 Index in 2001. Early in 2002, Praxair began plans to build two new hydrogen plants to supply its Gulf Coast pipeline.

Principal Subsidiaries: Praxair Asia, Inc. (Singapore); Praxair Canada, Inc.; Praxair Mexico S.A. de C.V.; Praxair Holding N.V. (Belgium); Praxair Surface Technologies, Inc.; S.A. White Martins (Brazil; 69%).

Principal Competitors: Air Liquide S.A.; Air Products & Chemicals, Inc.; Airgas Inc.; The BOC Group plc.

Further Reading:

  • Brown, Robert, "Industrial Gases Industry Becomes Stronger in the Wake of the BOC Deal," Chemical Marketing Reporter, August 9, 1999, pp. 5, 27.
  • Canning, Kathie, "Oxygenator Reduces Air Pollution from Wastewater Treatment, Study Confirms," Pollution Engineering, January 1999, pp. 13-15.
  • Chapman, Peter, "Praxair Is Entering Revived CO2 Market," Chemical Marketing Reporter, January 15, 1996.
  • Dennis, Anita, "Becoming a Business Partner," Journal of Accountancy, March 1997, pp. 72+.
  • Freedman, William, "Praxair Seeks CO2 Entry Through CBI," Chemical Week, November 8, 1995, p. 16.
  • Harris, Barbara R., and Mark A. Huselid, "Strategic Human Resource Management at Praxair," Human Resource Management, Winter 1999, pp. 315ff.
  • Hunter, David, "Industrial Gases: Focus on Costs, Mix, and Geography," Chemical Week, February 23, 1994, pp. 25-7.
  • Hunter, David, Debbie Jackson, and Marjorie Coeyman, "Industrial Gases: Quickening Pace in the Americas," Chemical Week, April 7, 1993, pp. 21-3.
  • Jarvis, Lisa, "Industrial Gas Prices Show Firmer Tone as Producers Face Runup," Chemical Market Reporter, August 14, 2000, pp. 5f.
  • Moore, Samuel K., "DuPont's Reilley Takes Top Spot at Praxair," Chemical Week, March 1, 2000, p. 10.
  • ------, "From Cash Cow to Bull," Chemical Week, March 17, 1999, pp. 18-21.
  • ------, "Praxair Hikes Prices for Bulk Products," Chemical Week, February 2, 2000, p. 16.
  • Nielsen, Karol, "Praxair Cut Jobs, Closes Plants; Takes a $150-Million Charge," Chemical Week, December 20, 2000, p. 12.
  • ------, "Praxair Shuffles Management," Chemical Week, January 5, 2000, p. 16.
  • Plishner, Emily S., "Breaking Free at Carbide: Hydrogen Propels Growth of Industrial Gases Unit," Chemical Week, May 13, 1992, pp. 56-7.
  • ------, "ISO 9000--Praxair: Learning From International Experience," Chemical Week, November 10, 1993, p. 73.
  • ------, "Mergers and Acquisitions Become Demergers and Spinoffs," Chemical Week, October 7, 1992, pp. 24-5.
  • ------, "Praxair Promises More Profits," Chemical Week, March 16, 1994, p. 13.
  • ------, "Reconstructing Balance Sheets," Chemical Week, October 7, 1992, pp. 22-4.
  • ------, "Unchained Melody," Financial World, August 29, 1995, p. 32.
  • "Praxair Names Reilley of DuPont to Succeed CEO Lichtenberger," Wall Street Journal, February 23, 2000, p. A4.
  • Shapiro, Lynn, "Checks and Balances in Executive Pay," Chemical Business, October 1993, pp. 11-12.
  • Warren, Susan, Matthew Rose, and Paul M. Sherer, "Praxair, BOC Discuss Potential Merger to Form Largest Industrial-Gas Concern," Wall Street Journal, May 12, 1999, p. A19.

Source: International Directory of Company Histories, Vol. 48. St. James Press, 2003.