Discovery january 2013 THE QUARTERLY NEWSLETTER OF KOCH COMPANIES Moving forward After another year of record results in 2012, Koch Nitrogen acquired South Dakota- Opportunity Koch Industries is pushing ahead with based Farmers Plant Food, Inc. To accomplish so much growth in so billions of dollars’ worth of expansions, These transactions are in addition to the many different areas, one of the first acquisitions and improvements in 2013. hundreds of millions of dollars’ worth challenges to overcome is finding the In just one month, last December, of plant expansions and improvements right employees. Koch companies announced several for FHR’s Pine Bend and Corpus Christi Koch already has at least 2,500 open significant developments that typify the refinery complexes announced earlier positions across all its companies. Finding growth and dynamism of the company. in the fourth quarter. even more people with the virtue and tal- On Dec. 13, Georgia-Pacific announced Innovation ents to succeed in the company’s market- its pending purchase of Temple-Inland based culture is a constant challenge. One of the common threads throughout Building Products assets from Interna- Space constraints have become an issue, tional Paper for $750 million. all this activity is a very strong emphasis on innovation. too. At Koch Industries’ Wichita head- Temple-Inland, founded in 1893, oper- quarters, more than 1 million square Charles Koch, the chairman and CEO ates 16 facilities in seven southern states feet of office space is no longer enough. plus Pennsylvania. It makes a variety of of Koch Industries, routinely challenges business leaders to make innovation a In December, Koch Industries announced products for residential and commercial plans to build a 210,000-square-foot office construction, including gypsum, lumber, key part of their vision and then build the necessary capabilities. building (pictured above) on its Wichita fiberboard and particle board. campus. When completed in 2015, the “When we say innovation, we’re not just Less than a week later, Koch announced three-story building will have enough it had purchased a minority stake (about talking about new technology or products,” room for 745 additional employees. 45 percent) in Guardian Industries, a Koch said. “We need innovation in every aspect of the company, including compli- Another and even more worrisome con- privately held manufacturer of architec- cern is the ongoing challenge of an ever- tural glass, automotive components and ance, recruitment, purchasing and legal services, to name a few. worsening regulatory environment. It is specialized coatings for plastics. difficult to justify billions in investments Based in Auburn Hills, Mich., Guard- “If we’re structuring an acquisition or and the creation of thousands of new jobs ian has nearly 18,000 employees in 25 other transaction, we need to think of if policymakers – whether in Brussels, countries, including Russia, Thailand, ways to improve that process to the Santiago, Toronto or Washington – Poland and India. It also has a presence benefit of all concerned, rather than keep making the rules more restrictive in 22 states. Ron Vaupel, the former head just using the same old boilerplate. and costly. of Koch’s business development group, is “Innovation can help us be safer, more “In a difficult environment like this,” now the president and CEO of Guardian. productive, less wasteful, more energy- Koch said, “the one constant has to be Last December was also the month efficient and more customer-focused. our commitment to our MBM® Guiding Flint Hills Resources acquired a Nebras- “We have to drive innovation faster than Principles. If we lose our integrity, fail to ka ethanol plant, INVISTA acquired our competitors to have any hope of long- be compliant or stop creating long-term a Dutch manufacturing facility and term success.” value, we cannot succeed.” this issue… Post-election letters pg 2 Perspective: Charles Koch pg 10 Year in review pg 5 The other Rock Islands pg 12 Postal Pipeline December – Koch company employees provided for almost 2,300 needy children during 2012 Salvation Army Angel Tree campaigns in (left-right) Wichita – 1,325 angels, Pine Bend – 283 angels, and Atlanta – 660 angels. All three of those totals were records. This was the 21st year for the Angel Tree campaign in Wichita. The same public that is screaming for who were in college and pursuing their Dear Charles, job creation fails to realize that success- own American Dreams. The Dean of the Graduate School ful businesses produce jobs, drive the Then she said something I’ll never forget: of Princeton University often began economy and grow our GDP. “What the rest of the world sees and speeches by saying: “What should be said About 10 years ago, I was talking to a this country fails to realize is that, in often goes unsaid…and so he said it.” lady who does pedicures for a living. She America, your poor people are fat.” I am grateful for your leadership in many told me she was from Ukraine, where she This speaks volumes to the prosperity causes of liberty. I am also grateful to be and her husband worked as engineers we have all enjoyed. included in your bi-annual conferences. until they emigrated to the U.S. in 1979. I fear that if government continues to I am the same age as you, and in the I felt sorry for her, because, based on gain favor and power, we’re on a collision past five years I have returned to work her occupation, I felt she had failed to course with real poverty. in the hope that I can generate more achieve the American Dream. significant dollars for the worthy causes Christopher Jarrett you espouse. When I asked if she missed Ukraine, she District sales manager Nate Bachman sharply replied “No!” and told me that American Cast Iron Pipe Co. The Bachman Group she and her husband had raised two sons Lake Mary, Fla. Cincinnati, Ohio Dear Charles and David, and economic development officials in Regarding what we might have done Topeka. Yours is the most positive eco- better and what we might do better for nomic development in Wichita in several the next election… years, and the most positive story for the state in 2012. I have been in the television business for a long time and I know it is not Compare that with the “border wars” in possible to sell a bad product when Kansas City, where Kansas and Missouri another choice is perceived to possibly are giving away tax dollars to companies be better. It is easy to create an image, that move across the border, with a net but very difficult to change an image. zero gain. What could be more senseless than luring companies to move where My bottom line is that the Republicans they don’t need to relocate? made it extremely difficult, if not impossible, to convince the American I am encouraging the Wichita Indepen- people to vote for their candidates. dent Business Association to make Koch Charles and David, please know that “Exhibit A” in economic development. you can count on me, my wife and our Studies tell us that approximately 90 per- family to stand foursquare with your cent of economic growth comes through ongoing efforts to preserve our unique It’s really good seeing Koch get some positive recognition, including the existing businesses. The key is making the American way of life. great cover story in the Dec. 24 issue economic climate beneficial to all busi- of Forbes and a very positive editorial nesses and let the free market determine the winners. Stanley S. Hubbard in The Wichita Eagle after your an- Chairman and CEO nouncement of expansion plans. Pete Schrepferman Hubbard Broadcasting, Inc. I think your story is one that should be Johnstone Supply Co. Saint Paul, Minn. continuously pushed to our legislators Wichita, Kan. 2 We are so thankful for the Fred and winter developed his troops Mary Koch Foundation’s continued into a unified fighting force. partnership in helping us forge free- Looking at the national stage, it’s easy dom in the hearts and minds of young to feel discouraged. Unemployment people. This idea of “forging freedom” threatens to climb higher and our debt was first envisioned during General Washington’s trying winter at Valley continues to grow, but “the greatness of Forge (a scene that adorns the cover America,” wrote Alexis de Tocqueville, of our annual review). “lies not in being more enlightened than any other nation, but rather in In the winter of 1777, a time when her ability to repair her faults.” progress seemed hopeless, Washing- ton rallied his men, and during that Last year, we readied 519,999 stu- dents to begin the process of repair- ing those faults. What’s more, we Charles and David Koch equipped 4,892 teachers, who will Dear Mr. Koch, each impact 100 students a year with historically grounded materials to tell Thank you, thank you, thank you – to the true story of our heroic Founders. your brother David and you – for being such fine and patriotic Americans. Together, we will restore a constitu- tional culture. The courageous and principled stands that you take to help us retain and Tony Woodlief restore our liberty are truly inspiring. President You are doing so much good for so many. Bill of Rights Institute www.BillofRightsInstitute.org Arlington, Va. Larry Saunders Registered commodities rep. Thank you for Koch Industries’ invest- Dear Mr. Koch, Franklin, Tenn. ment of $375,000. By choosing to invest I want to thank you and your family for in our organizational structure, Koch all you have done during this past election.