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Koch Industries: A Company Founded On Innovation

June 21, 2012

Koch Industries, Inc. is a conglomerate that has businesses in a wide range of industries.  It has been well-known for its oil and oil processing and manufacturing activities. It may seem that oil was the original source of the company wealth but it’s not. If all began with a technological innovation.

Fred C. Koch joined Lewis E. Winkler an MIT classmate at an engineering company in Wichita, Kansas in 1925. The company was renamed Winkler-Koch Engineering Company.  The technological innovation that they developed was a more efficient process for turning crude oil into gasoline.

Instead of being embraced by the established oil manufacturing companies, the innovation was viewed as a threat. Patent suits forced them to close business in the U.S. The company went abroad and in Russia Winkler-Koch built 15 cracking units from 1929 to 1932.

Fred C. Koch co-founded Wood River Oil & Refining Company in 1940. He purchased Spring Creek Ranch in the Kansas Flint Hills the following year. By 1946 Wood River obtained Rock Island Oil & Refining Company’s refinery and crude oil gathering system in southwestern Oklahoma.  From there it has been a story of growth and acquisition for the company which was renamed Rock Island Oil & Refining Company in 1959.

Fred C. Koch died in 1967 and was succeeded by his son Charles.  In 1968 Rock Island was rename Koch Industries, Inc. in honor of Fred C. Koch. Charles proves to be a competent executive further expanding the company and entering new areas of business like fertilizer production.  The Koch family has had its own share of drama with brothers Charles and David buying out their other brothers Frederick and William for $1.1 billion in 1983. Charles and David now equally own 84 percent of the privately held company.

Today the Wichita, Kansas based company has presences in almost 60 countries and employs 67,000 individuals.  Back in 2009 revenue was at $100 billion. It businesses include asphalt, chemicals, fibers, energy, pulp and paper, and agriculture.

Like other large conglomerates it has its share of controversies. Charles and David Koch have also been in the news lately with their vocal opposition to President Obama.  Koch Industries has provided the brothers with great wealth and influence. Yet this all began with a new technological innovation back in 1927.

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