Raj Gupta, the former Rohm & Haas chief, raises fortunes from the wreckage of industrial America

Rajiv L. Gupta’s last day job was as chief executive of Rohm & Haas, the Philadelphia-based chemical giant that vanished in 2009, bought by Dow Chemical Co. for $15 billion.

But Gupta didn’t go away. He has spent the years since slimming down and modernizing America’s aging industrial economy.

At age 75, he is chairman of:

At each, he hired top managers, closed or updated aging U.S. and European factories, and bought others around the world. He also helped take each firm public by selling shares to outside investors, to the vast profit of himself and his fellow insiders. (He is also a director of the Du Pont Co., run by his friend and Florida winter-home neighbor, Edward Breen, which is going through its own epic restructuring.)

Shares of Avantor, based in Radnor, topped $30 in January for the first time, more than double its IPO debut at $14 a year ago. Similarly, Aptiv, based for tax purposes in Ireland but run from a Detroit suburb, rose more than 800% since going public in 2011, and this month topped $150 for the first time.

Both those returns are far ahead of the S&P 500 big-stock average, Gupta is fond of pointing out.

In an interview, Gupta talked about his companies and the future of American industry.

“Bold” moves built Avantor from a collection of slow-growing chemical brands into a hot biotech stock, he says.

He hired McKinsey consultant Michael Stubblefield as CEO in 2014 and bought lab supplier VWR for $6 billion in 2017. Gupta’s team also boosted sales to fast-growing gene-therapy developers, who spend heavily for the custom glassware and specialty chemicals that Avantor now sells.

The transformation is not complete. Avantor was embarrassed last year when Mexican officials reacted angrily to news in a Bloomberg report that a chemical the company made there had become heroin makers’ reagent of choice. Avantor pulled the product.

At Aptiv, Gupta and his team made a similar bet on new technologies. “We divested from Delphi’s traditional markets, gasoline and diesel engines, and focused more on hybrid and electric cars,” a far smaller but faster-growing market, with an appetite for premium-priced parts, he says.

That’s in contrast to a longtime rival, Carl Icahn’s Federal-Mogul auto parts. Unlike Aptiv’s plants, which are now mostly outside the United States, Federal-Mogul’s Midwestern U.S. plants focused on traditional car parts. Icahn also made big investments in the U.S. oil industry.

As oil prices fell instead of rising — and demand for gasoline-based car parts dragged — Icahn, now 85, sold Federal-Mogul in 2018, leaving uncertain the future of his Philadelphia-based car service chains, Pep Boys and Aamco Transmissions.

Will the kind of business transformation pioneered by Gupta put American industry further under the control of the billionaire private-equity managers who finance big corporate deals?

He doesn’t think so.

“The market for private equity has changed. Assets are fully valued. There are no bargains anymore,” Gupta said. “The old model, to buy assets at low value and then flip them to new owners and make money and not worry about what happens to them, has changed. They have to invest in people for the long term.”

That’s why Gupta has taken his companies public, instead of continuing under private ownership with investment firms as partners overseeing his actions and making sure they get paid. These days, the markets are so hot that it’s easier to raise funds by selling shares.

“There is plenty of money. It’s cheap,” said Gupta. “What you need is talent, on the ground, at all levels. So we have employees in India, China, Israel.”

I asked about recent calls for American companies to explicitly serve “stakeholders” — communities, employees, customers — alongside shareholders. “It is common sense,” Gupta said. “We are only going to be successful in the long term if we take care of our employees, customers and communities.”

Wherever they may be. Most of Aptiv’s North American plants are now in Mexico.

Can those manufacturing jobs return to the U.S.? “With robotics, some specialized manufacturing will come back. But it’s hard to see how very labor-intensive manufacturing can.”

How anchored are these global firms to America? It’s a thoughtful question, said Gupta. COVID-19 closures have accelerated industrial changes, and not necessarily to America’s advantage. ”Who thought you could work 90% of your functions remotely?” Gupta said. ”Knowledge work is probably going to become more globalized than it has been.”

Isn’t that dangerous for our social fabric? Why should American tax law and public opinion tolerate wealthy investors, and executives such as Gupta, closing down our remaining labor-intensive factories, and sourcing information jobs around the world?

”Does it cause disruption? For sure. That we are witnessing,” said Gupta. “What it means for government and policies, I am no expert in that.”

But what’s the alternative? he asked. “I do know that companies that have been in business for 50 or 100 years need to think about how they will be relevant. Half of S&P 500 companies disappear every 10 or 15 years. You have to position yourself to be relevant.”