If your baby doesn't cry when you wash its hair, there's a good chance the reason can be found not far from Germany's Rhine River. Same thing if, after washing your windows, there's not a streak to be seen. Cognis, a giant chemical company headquartered near Düsseldorf, makes it happen. And not surprisingly, demand for their products is high. Indeed, in 2000 the company made a tidy profit of 109 million ($143 million) after taxes.
Half a decade later, demand for Cognis products is still high, with sales through the roof. Profits, though, are a thing of the past. In fact, in 2005, the company was deeper in the red than it had ever been. The total loss for the year was 136 million ($178 million). The company continues to limp along but is now on the auction block, likely heading for bankruptcy. Dozens of workers have been laid off.
So what happened? The answer has more to do with a recent development in the global economy than it does with Cognis management itself. In 2001, Cognis fell victim to a private equity firm, those companies trolling the world economy for lightening quick returns on their investments.