Office of Labor Education Research Cornell ILR School Koch Industries, Inc. Strategie Corporate Research Report Patrick Young, Ed Yoo, Robert Wesley Hannah, Iris Packman, and Jordan Wells Under the supervision of Kate Bronfenbrenner Labor Education Research Cornell University School of Labor and Industrial Relations June 2006 1. Executive Sum m ary...................................................................................... .................................. .1 1.1 Description of Firm and its Operations....,,.............................. ..................................................1 1.2 Profit Centers............... ............ .......... ....................................................................................... 1 1.3 Growth Plan................ ................................................................................................................ 1 1.4 Key Decision Makers...................................................................................................... ........... 2 1.5 Key relationships............... ............................................................................................. ............ 3 2. Introduction ............................ ............................ ........... ................................................................... 4 2.1 Basic information................................... ............................................. ........................ ............... 4 2.2 Company history.............................................................................. .........................................,.5 2.2.1 The Birth of a Giant..............................................................................................................5 2.2 Georgia-Pacific Buy Out...... ...................................................... ...................... .........................6 2.3 Growth Structure................... .................................................................... ................................6 3. Operations.............................................................. ............................................................................. 7 3.1 Paper Operations......................................................................................................... ................7 3.1.1 Overview................. ............................................................................................ ..................7 3.1.2 Products..................... .......... ............................................................................................... .7 3.1.3 Workforce........................................... ............ .....................................................................9 3.1.4 Facilities.................... ................................................. ........... ........... .................................10 3.1.5 Raw Materials/Suppliers................................................ .................................................... 11 3.1.6 Customers and Clients..................................................................... ..................................11 3.2 Petroleum Operations.... .............. ............. ............................................. .................................12 3.2.1 Overview................................. ................................................................................ ...........12 3.2.2 Products..................................................... ........... ...............................................................12 3.2.3 Workforce................................................................................................ ........... .............. 13 3.2.4 Facilities...................................................................... ........................................................ 14 3.2.5 Raw Materials / Suppliers.................................................. ......... ......... ........................... 16 3.2.6 Customers / Clients...................................................................... ............ .........................17 4. The Industry and Competitors..... ................................................................................................... 17 4.1 Energy and Utilities.................................................................................................................... 17 4.2 Paper and Paper Product Manufacturing................... ........... ................................................. IS 5. Financial Analysis........................................................................................................................... 18 6. Command and Control....................................................................................................................20 6.1 Management......................................................................... ..................................................... 20 6.1.1 Shakeup in Management after GP Takeover................................................................... 21 6.1.1.1 Charles Koch................................................. ........................ ......................................21 6.1.1.2 David H. K och................................... .......... ........... ................................... ........... ....23 6.1.1.3 David L. Robertson............................................................................... ......... ............ 24 6.1.1.4 Joseph (Joe) W. M oeller.............................................................................................25 6.1.1.5 Richard Fink................................................................................................................ 25 6.2 Board of Directors..... ............... ............ ........................ .......... ..................................... ........... 26 6.3 Business Strategy and Growth Plan............... .......................... ...............................................26 6.3.1 Georgia-Pacific Strategy................................ ....................................................................27 6.3.2 INVISTA Strategy................. ............ ............................ ...................................................28 6.4 Stockholders..................... ......................... ................................................................................28 6.5 Lenders....................................................................... ................................... .......... ................29 7. Outside Stakeholders............................................................................................................... .......29 7.1 Safety and health................. ...................................................................................................... 29 7.1.1 Trends in Health and Safety Violations................................................................. .........30 7.2 Environmental..... .................................................................... ..................................................32 7.3 Regulatory / Legal............... ...................................................................................................... 33 7.3.1 Legal.............. .....................................................................................................................33 7.4 Community.............. .......... ................... ................................................................................... 34 7.4.1 Georgia-Pacific Community Relations................... ........... ........................ ....................34 7.4.2 Community Issues with Koch.................................................... ......................................35 7.4.3 Potential Allies............................ ............................................................................. .........36 7.5 Political...................................................... ...................................... .......................................... 37 7.5.1 Political Contributions................ ......................................................................................37 7.5.2 Top Management in Politics.............................................................................................. 37 8. Conclusion................................ ............. .................................. ................................................... ...38 8.1 Profit Center............................................................................... ............................................... 38 8.2 Growth plans.,,......................................... ............................................ .....................................38 8.3 Key decision makers............................................................. ...................... .............................38 8.4 Key relationships........................................................................... ............................................39 9. Appendices............................................. ..........................................................................................42 9.1 Organization and Operations 9.1.1 Koch Industries (Non-Georgia-Pacific) UNICORE 9.1.1.1 Organized facilities 9.1.1.2 Unorganized facilities 9.1.2 Georgia-Pacific UNICORE 9.1.2.1 Organized facilities 9.1.2.2 Unorganized facilities 9.1.3 Koch Industries subsidiaries