Item 1. Business
Item 1. BUSINESS
GENERAL
Olin Corporation (Olin) is a Virginia corporation, incorporated in 1892, having its principal executive offices in Clayton, MO. We are a manufacturer concentrated in three business segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products and potassium hydroxide, which represented 54% of 2022 sales. The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone, bisphenol, cumene and phenol), allyl chloride, epichlorohydrin, liquid epoxy resins, solid epoxy resins and systems and growth products such as converted epoxy resins and additives, which represented 29% of 2022 sales. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges, which represented 17% of 2022 sales. See our discussion of our segment disclosures contained in Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
GOVERNANCE
We maintain an Internet website at www.olin.com . Our reports on Form 10-K, Form 10-Q and Form 8-K, as well as amendments to those reports, are available free of charge on our website, as soon as reasonably practicable after we file the reports with the Securities and Exchange Commission (SEC). Also, a copy of our electronically filed materials can be obtained at www.sec.gov . Our Principles of Corporate Governance, Committee Charters and Code of Conduct are available on our website at www.olin.com in the Leadership & Governance Section under Governance Documents and Committees.
In May 2022, our Chief Executive Officer (CEO) executed the annual Section 303A.12(a) CEO Certification required by the New York Stock Exchange (NYSE), certifying that he was not aware of any violation of the NYSE’s corporate governance listing standards by us. Additionally, our Chief Executive Officer and Chief Financial Officer (CFO) executed the required Sarbanes-Oxley Act of 2002 Sections 302 and 906 certifications relating to this Annual Report on Form 10-K, which are filed with the SEC as exhibits to this Annual Report on Form 10-K.
PRODUCTS, SERVICES AND STRATEGIES
Chlor Alkali Products and Vinyls
Products and Services
We have been involved in the chlor alkali industry for approximately 130 years and consider ourselves the leading global chlor alkali and derivatives producer. Chlorine, caustic soda and hydrogen are co-produced commercially by the electrolysis of salt. These co-produced products are produced simultaneously, and in a fixed ratio of 1.0 ton of chlorine to 1.1 tons of caustic soda and 0.03 tons of hydrogen. The industry refers to this as an Electrochemical Unit or ECU.
Chlorine is used as a raw material in the production of thousands of products, including vinyls, urethanes, epoxy, water treatment chemicals and a variety of other organic and inorganic chemicals. A significant portion of chlorine production is consumed in the manufacturing of vinyls intermediates, ethylene dichloride (EDC) and vinyl chloride monomer (VCM), both of which our Chlor Alkali Products and Vinyls segment produces. A large portion of our EDC production is utilized in the production of VCM, but we are also one of the largest global participants in merchant EDC sales. In addition to marketing Olin produced EDC, we also purchase EDC for re-sale on a global basis. EDC and VCM are precursors for polyvinyl chloride (PVC), a material used in applications such as vinyl siding, pipe, pipe fittings and automotive parts.
Our Chlor Alkali Products and Vinyls segment is one of the largest global marketers of caustic soda, including caustic soda produced by Olin, as well as globally produced material purchased by Olin for re-sale. The diversity of caustic soda sourcing allows us to cost effectively supply customers worldwide. Caustic soda has a wide variety of end-use applications, the largest of which includes water treatment, alumina, pulp and paper, urethanes, detergents and soaps and a variety of other organic and inorganic chemicals.
Our Chlor Alkali Products and Vinyls segment also includes our chlorinated organics business which is the largest global producer of chlorinated organic products that include chloromethanes (methyl chloride, methylene chloride and chloroform)
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and chloroethanes (perchloroethylene and carbon tetrachloride). Our chlorinated organics business participates in both the solvent segment, as well as the intermediate segment of the global chlorocarbon industry with a focus on sustainable applications and in applications where we can benefit from our cost advantages. Intermediate products are used as feedstocks in the production of fluoropolymers, fluorocarbon refrigerants and blowing agents, silicones, cellulosics and agricultural chemicals. Solvent products are sold into end uses such as surface preparation, dry cleaning, pharmaceuticals and regeneration of refining catalysts. This business’s unique technology allows us to utilize both hydrochloric acid and chlorinated hydrocarbon byproducts (RCls), produced by our other production processes, as raw materials in an integrated system.
We also manufacture and sell other chlor alkali-related products, including hydrochloric acid, sodium hypochlorite (bleach) and potassium hydroxide. These products, along with chlorinated organics products and epoxy resins, generally consume chlorine as a raw material creating downstream applications that upgrade the value of the ECU. Our industry leadership in the production of chlorinated organics and epoxy resins, as well as other products, offer us eighteen integrated outlets for our captive chlorine.
The Chlor Alkali Products and Vinyls segment’s products are delivered by pipeline, marine vessel, deep-water and coastal barge, railcar and truck. We own, operate, and lease a geographically dispersed terminal infrastructure at our productions sites and other locations that expands our geographic coverage and enhances our service capabilities. At our largest integrated product sites, our deep-water access enables us to reach global markets. In North America we own and operate a private fleet of trucks and tank trailers that allow us to more effectively serve our domestic bleach and caustic soda customers.
Our Chlor Alkali Products and Vinyls segment currently maintains a reliable supply of key raw materials. Electricity, salt, ethylene and methanol are the major purchased raw materials for our Chlor Alkali Products and Vinyls segment. Electricity is the single largest raw material component in the production of Chlor Alkali Products and Vinyls’ products. Approximately 68% of our electricity is generated from natural gas or hydroelectric sources. We satisfy our electricity needs through a combination of market power, long-term contracts and the operation of our own power assets, which allow for cost differentiation at specific U.S. manufacturing sites. Approximately 73% of our salt requirements are met by internal supply. Ethylene is primarily supplied for the vinyls business under a long-term supply arrangement whereby we receive ethylene at integrated producer economics. Methanol is sourced domestically and internationally primarily from large producers. The high volume nature of the chlor alkali industry places an emphasis on cost management, and we believe that our scale, integration and raw material positions make us one of the low cost producers in the industry.
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The following table lists principal products and services of our Chlor Alkali Products and Vinyls segment.
Products & Services Major End Uses Plants & Facilities Major Raw Materials & Components for
Products/Services
Chlorine/caustic soda Pulp & paper processing, chemical manufacturing, water purification, vinyl chloride manufacturing, bleach, swimming pool chemicals and urethane chemicals Becancour, Canada
Charleston, TN
Freeport, TX
McIntosh, AL
Niagara Falls, NY
Plaquemine, LA
St. Gabriel, LA salt, electricity
Ethylene dichloride/vinyl chloride monomer Precursor to polyvinyl chloride used in vinyl siding, plumbing and automotive parts
Freeport, TX
Plaquemine, LA chlorine, ethylene, ethylene dichloride
Chlorinated organics intermediates
Used as feedstocks in the production of fluoropolymers, fluorocarbon refrigerants and blowing agents, silicones, cellulosics and agricultural chemicals Freeport, TX
Plaquemine, LA
Stade, Germany chlorine, ethylene dichloride, hydrochloric acid, methanol, RCls
Chlorinated organics solvents
Surface preparation, dry cleaning and pharmaceuticals
Freeport, TX
Plaquemine, LA
Stade, Germany chlorine, ethylene dichloride, hydrochloric acid, RCls
Sodium hypochlorite
(bleach) Household cleaners, laundry bleaching, swimming pool sanitizers, semiconductors, water treatment, textiles, pulp & paper and food processing Augusta, GA
Becancour, Canada
Charleston, TN
Freeport, TX
Henderson, NV
Lemont, IL
McIntosh, AL*
Niagara Falls, NY*
Santa Fe Springs, CA caustic soda, chlorine
Hydrochloric acid Steel, oil & gas, plastics, organic chemical synthesis, water & wastewater treatment, brine treatment, artificial sweeteners, pharmaceuticals, food processing and ore & mineral processing Becancour, Canada
Charleston, TN
Freeport, TX
McIntosh, AL
Niagara Falls, NY chlorine, hydrogen
Potassium hydroxide Fertilizer manufacturing, soaps, detergents & cleaners, battery manufacturing, food processing chemicals and deicers Charleston, TN electricity, potassium chloride
Hydrogen Fuel source, hydrogen fuel cells, hydrogen peroxide and hydrochloric acid Becancour, Canada
Charleston, TN
Freeport, TX
McIntosh, AL
Niagara Falls, NY
Plaquemine, LA
St. Gabriel, LA electricity, salt
* Includes low salt, high strength bleach manufacturing.
Strategies
Maximize returns to the ECU. Leverage our diverse and flexible chlor alkali derivatives portfolio via our strategic operating model to continually mitigate exposure and maximize value from the entire ECU by managing our production rates to the prevailing weaker side of the ECU.
Participate in global trade flow of the products we market. Access excess product available for global trade, complementing our internal produced product to serve a growing customer demand at the highest value.
Continually drive down costs through productivity. Our advantaged cost position is derived from low cost energy, scale, integration, and deep water ports. Maintaining a strong discipline on areas such as cost management, capital outlays, and asset maintenance are key to creating greater operating flexibility to maximize returns to the ECU.
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Epoxy
Products and Services
The Epoxy business was one of the first major manufacturers of epoxy products, and has continued to build on more than half a century of history through product innovation and technical excellence. We believe the Epoxy segment is one of the largest fully integrated global producers of epoxy resins, curing agents and intermediates. The Epoxy segment has a favorable manufacturing cost position, primarily in North America, driven by a combination of scale and integration into low cost feedstocks (including chlorine, caustic soda, allylics and aromatics). The Epoxy segment produces and sells a full range of epoxy materials and precursors, including aromatics (acetone, bisphenol (BisA), cumene and phenol), allylics, such as allyl chloride (Allyl) and epichlorohydrin (EPI), resins such as liquid epoxy resins (LER) and solid epoxy resins (SER) and systems and growth platform products such as converted epoxy resins (CER) and additives.
The Epoxy segment serves a diverse array of applications, including wind energy, electrical laminates, consumer goods and composites, as well as numerous applications in civil engineering and protective coatings. The Epoxy segment has important relationships with established customers, some of which span decades. The Epoxy segment’s primary geographies are North America and Western Europe. The segment products are delivered primarily by marine vessel, deep-water and coastal barge, railcar and truck.
Allyl is used not only as a feedstock in the production of EPI, but also as a chemical intermediate in multiple industries and applications, including water purification chemicals. EPI is primarily produced as a feedstock for use in the business’s epoxy resins, and is also sold in the merchant market. LER is manufactured in liquid form and cures with the addition of a hardener into a three-dimensional thermoset solid material offering a distinct combination of structural strength, adhesion, electrical insulation, thermal or chemical resistance and corrosion protection that is well-suited to coatings and composites applications. SER is processed further with BisA to meet specific end market applications. While LER and SER are sold externally, a significant portion of LER production is further converted through our systems and growth platform into CER and other additive products where value-added modifications produce higher margin resins for specific customer applications.
Our Epoxy segment maintains a reliable supply of certain key raw materials, such as benzene and propylene, under long-term, cost based contracts. The Epoxy segment’s production economics benefit from its integration into chlor alkali and aromatics which are key inputs in epoxy production. This fully integrated structure provides both access to low cost materials and significant operational flexibility. The Epoxy segment operates an integrated aromatics production chain producing cumene, phenol, acetone and BisA for internal consumption and external sale. The Epoxy segment’s consumption of chlorine enables the Chlor Alkali Products and Vinyls segment to generate caustic soda production and sales. Chlorine and caustic soda used in our Epoxy segment is transferred at cost from the Chlor Alkali Products and Vinyls segment.
The following table lists principal products and services of our Epoxy segment.
Products & Services Major End Uses Plants & Facilities Major Raw Materials & Components for Products/Services
Allylics (allyl chloride, epichlorohydrin and glycerin) & aromatics (acetone, bisphenol, cumene and phenol) Manufacturers of polymers, resins and other plastic materials and water purification Freeport, TX
Stade, Germany
Terneuzen, Netherlands benzene, caustic soda, chlorine, propylene
Resins: liquid epoxy resin/solid epoxy resin Adhesives, marine and protective coatings, composites and flooring Freeport, TX
Guaruja, Brazil
Stade, Germany bisphenol, caustic soda, epichlorohydrin
Systems and Growth Platforms: Converted epoxy resins and additives Electrical laminates, paint and coatings, wind blades, electronics and construction Baltringen, Germany
Freeport, TX
Guaruja, Brazil
Gumi, South Korea
Pisticci, Italy
Rheinmunster, Germany
Roberta, GA
Stade, Germany
Zhangjiagang, China liquid epoxy resins, solid epoxy resins
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Strategies
Focus on Return to the ECU. The Epoxy segment is focused on maximizing return to the ECU by targeting participation and improving margins in EPI, LER, and derivative applications with the highest return to the ECU.
Drive Productivity to Sustain Our Cost Advantage. The Epoxy segment continues to drive productivity cost improvements through the entire supply chain to build on our position as the low cost producer of EPI and LER in the Americas and Europe.
Focus on Systems and Growth Platforms. The Epoxy segment is focused on expanding our market participation in higher value add platform products aligning with growing end-use markets.
Winchester
Products and Services
In 2023, Winchester is in its 157 th year of operation and its 93 nd year as part of Olin. Winchester is a premier developer and manufacturer of small caliber ammunition for sale to domestic and international retailers (commercial customers), law enforcement agencies and domestic and international militaries. We believe we are a leading U.S. producer of ammunition for recreational shooters, hunters, law enforcement agencies and the U.S. Armed Forces. Winchester also manufactures industrial products that have various applications in the construction industry.
On October 1, 2020, Winchester assumed full management and operational control of the Lake City Army Ammunition Plant (Lake City) in Independence, MO. The United States Army selected Winchester to operate and manage Lake City in September 2019. The contract is for the production of small caliber military ammunition, including 5.56mm, 7.62mm, and .50 caliber rounds, as well as certain cartridges and casings. The contract also allows for the production of certain ammunition for commercial customers. The contract has an initial term of seven years and may be extended by the United States Army for up to three additional years.
Our legendary Winchester ® product line includes all major gauges and calibers of shotgun shells, rimfire and centerfire ammunition for pistols and rifles, reloading components and industrial cartridges. We believe we are a leading U.S. supplier of small caliber commercial ammunition.
Winchester has strong relationships throughout the sales and distribution chain and strong ties to traditional dealers and distributors. Winchester has also built its business with key high-volume mass merchants and specialty sporting goods and outdoor merchandise retailers. Winchester has consistently developed industry-leading ammunition, which is recognized in the industry for manufacturing excellence, design innovation and consumer value.
In November 2021, Winchester introduced Shoot United TM , a dynamic initiative designed to promote the shooting sports and drive increased participation. Shoot United embodies engaging content that will continue to be shared nationwide through mainstream media and on ShootUnited.com. The content is meant to entertain, inform and foster a healthy and transparent dialogue. In addition, grassroots events will continue to be coordinated throughout the U.S. for people to join, with the mission to drive awareness and introduce new participants to the sport.
During 2022, the U.S. Army awarded Winchester the second year of a five-year contract to manufacture 5.56 mm, 7.62 mm and .50 caliber rifle ammunition as well as a new five-year pistol contract for .38 caliber, .45 caliber and 9mm handgun ammunition. The rifle contract was made under the third consecutive “Second Source” ammunition contract Winchester has received from the U.S. Army. The pistol contract maintains Winchester’s longstanding position as the leading supplier of pistol ammunition to the U.S. military.
During 2022, the U.S. Army awarded Winchester contracts to support the 6.8mm Next Generation Squad Weapons (NGSW) program at the Lake City Army Ammunition Plant, including the design of the NGSW ammunition manufacturing facility.
During 2021, Winchester received the exclusive .308 Winchester/7.62x51 NATO FBI sniper contract, the first of its kind in this caliber, as well as a 9mm duty and training contract, both of which were renewed in 2022.
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In May 2021, Winchester was recognized with the Overall Supplier of the Year award by Academy Sports and Outdoors, Incorporated (Academy), one of the nation’s largest retailers of sporting goods products and outdoor merchandise. The Overall Supplier of the Year is Academy’s highest merchandising supplier award across all categories and departments; Winchester was chosen from more than 1,800 merchandise suppliers for superior performance, consistent reliability, valued relationships at all levels, and overall contribution to the company during 2020.
In October 2021, Winchester was recognized by the National Association of Sporting Goods Wholesalers (NASGW) with the group’s 2021 Ammunition Manufacturer of the Year award for providing outstanding value and service to NASGW distributor members.
Winchester’s new ammunition products continue to receive awards from major industry publications and organizations, with recent awards including: American Rifleman magazine’s Golden Bullseye Award as “Ammunition Product of the Year” in 2020 and 2022; Guns & Ammo magazine’s “Ammunition of the Year” award in 2021.
Winchester purchases raw materials such as copper-based strip and ammunition cartridge case cups and lead from vendors based on a conversion charge or premium. These conversion charges or premiums are in addition to the market prices for metal as posted on exchanges such as the Commodity Exchange, or COMEX, and London Metals Exchange, or LME. Winchester’s other main raw material is propellant, which is purchased predominantly from one of the U.S.’s largest propellant suppliers.
The following table lists principal products and services of our Winchester segment.
Products & Services Major End Uses Plants & Facilities Major Raw Materials & Components for Products/Services
Winchester ® sporting ammunition (shotshells, small caliber centerfire & rimfire ammunition)
Hunters & recreational shooters, law enforcement agencies East Alton, IL
Independence, MO*
Oxford, MS brass, lead, steel, plastic, propellant, explosives
Small caliber military ammunition Infantry and mounted weapons East Alton, IL
Independence, MO*
Oxford, MS brass, lead, propellant, explosives
Industrial products (8 gauge loads & powder-actuated tool loads) Maintenance applications in power &
concrete industries, powder-actuated tools in construction industry East Alton, IL
Oxford, MS brass, lead, plastic, propellant, explosives
*Government-owned, contractor-operated (GOCO) facility
Strategies
Maximize Existing Strengths. Winchester will increase our value by strengthening our leadership position in small caliber ammunition through all of the customer segments that we serve – Commercial, Military, Law Enforcement, and Industrial. Through our Shoot United TM strategic initiative, Winchester will focus on promoting shooting sports and drive increased participation. With one of the world’s largest small caliber ammunition manufacturing footprints, we will leverage employee engagement, engineering, and process excellence across our three production sites.
Innovative Solutions. Winchester will continue building on our strong reputation as an industry innovator with a long record of meeting the needs of recreational shooters, first responders, and the modern warfighter. We will drive value for our business through developing market driven new products and delivering engineered solutions for our customers.
Productivity Improvement. Winchester will leverage our continuous improvement process to increase productivity through optimizing our people, processes, and equipment. We will continue to modernize our facilities and equipment for productivity as well as improved safety and environmental impact.
INTERNATIONAL OPERATIONS
Olin has an international presence, including the geographic regions of Europe, Asia Pacific and Latin America. Approximately 39% of Olin’s 2022 sales were generated outside of the U.S., including 33% of our Chlor Alkali Products and Vinyls 2022 segment sales, 68% of our Epoxy 2022 segment sales and 8% of our Winchester 2022 segment sales. See Note 19 “Segment Information” of the notes to consolidated financial statements contained in Item 8, for geographic segment data. We are incorporating our segment information from that Note into this section of our Form 10-K.
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CUSTOMERS AND DISTRIBUTION
Products we sell to industrial or commercial users or distributors for use in the production of other products constitute a major part of our total sales. We sell some of our products, such as epoxy resins, caustic soda and sporting ammunition, to a large number of users or distributors, while we sell other products, such as chlorine and chlorinated organics, in substantial quantities to a relatively small number of industrial users. During 2022, no single customer accounted for more than 10% of sales.
We market most of our products and services primarily through our sales force and sell directly to various industrial customers, mass merchants, retailers, wholesalers, other distributors and the U.S. Government and its prime contractors.
Sales to all U.S. Government agencies and sales under U.S. Government contracting activities in total accounted for approximately 4% of sales in 2022. Because we engage in some government contracting activities and make sales to the U.S. Government, we are subject to extensive and complex U.S. Government procurement laws and regulations. These laws and regulations provide for ongoing government audits and reviews of contract procurement, performance and administration. Failure to comply, even inadvertently, with these laws and regulations and with laws governing the export of munitions and other controlled products and commodities could subject us or one or more of our businesses to civil and criminal penalties, and under certain circumstances, suspension and debarment from future government contracts and the exporting of products for a specified period of time.
BACKLOG
The total amount of estimated backlog was approximately $838 million and $1,928 million as of January 31, 2023 and 2022, respectively. The backlog orders are associated with contractual orders in our Winchester business. Backlogs in our other businesses are not significant. Backlog is comprised of all open customer orders which have been received, but not yet shipped. The backlog was estimated based on expected volume to be shipped from firm contractual orders, which are subject to customary terms and conditions, including cancellation and modification provisions. During 2021, consumer purchases of ammunition increased significantly above historic demand levels. Approximately 95% of contracted backlog as of January 31, 2023 is expected to be fulfilled during 2023, with the remainder expected to be fulfilled during 2024.
COMPETITION
We are in active competition with businesses producing or distributing the same or similar products, as well as, in some instances, with businesses producing or distributing different products designed for the same uses.
Chlor alkali manufacturers in North America, with approximately 16 million tons of chlorine and 17 million tons of caustic soda capacity, account for approximately 16% of worldwide chlor alkali production capacity. In 2022, we have the largest chlor alkali capacity in North America and globally. While the technologies to manufacture and transport chlorine and caustic soda are widely available, the production facilities require large capital investments, and are subject to significant regulatory and permitting requirements. There is a worldwide market for caustic soda, which attracts imports and allows exports depending on market conditions. This industry includes large diversified producers in North America and abroad, including multiple producers located in China. Other large chlor alkali producers in North America include The Occidental Petroleum Corporation (Oxy), Westlake Chemical Corporation (Westlake), Formosa USA, and Shintech Inc., a subsidiary of Shin-Etsu Chemical Co., Ltd (Shintech). We are also a leading integrated global producer of chlorinated organic products with a strong cost position due to our scale and access to chlor alkali feedstocks. This industry also includes large diversified producers such as Oxy, Westlake, Nobian Industrial Chemicals B.V. (Nobian), Inovyn (an Ineos company), and KEM ONE Group SAS, as well as multiple producers located in China and India.
We are a major global fully integrated epoxy producer, with access to key low cost feedstocks and a cost advantaged infrastructure. With its advantaged cost position, the Epoxy segment is among the lowest cost producers in the world. The markets in which our Epoxy segment operates are highly competitive and are dependent on significant capital investment, the development of proprietary technology and maintenance of product research and development. Among our competitors are Huntsman Corporation (Huntsman), Westlake, Kukdo Chemical Co. Ltd. (Kukdo) and Kumho P&B Chemicals (Kumho) as well as multiple other producers located in Asia.
We believe our Winchester business is one of the largest global manufacturers of commercial small caliber ammunition. Our Winchester business and Vista Outdoor Inc. (Vista) are among the largest commercial ammunition manufacturers in the U.S. The ammunition industry is highly competitive with Olin, Vista and numerous smaller domestic manufacturers and
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foreign producers competing for sales to the commercial ammunition customers. Many factors influence our ability to compete successfully, including price, delivery, service, performance, product innovation and product recognition and quality, depending on the product involved.
HUMAN CAPITAL
At Olin, we believe that our employees are critical to our success. Our established Lifting Olin People core principles fuel the actions that our Lifting People pillars - Opportunity & Fulfillment, Communication & Connection, and Trust - take during the year to enhance the engagement of our employees. Lifting People is about creating work environments for our global workforce that are inclusive, supportive, and empowering while encouraging and incentivizing the highest level of performance. We support our global workforce through a variety of factors, including benefits and compensation, recognition and rewards, a focus on diversity and inclusion, workplace flexibility, community engagement and volunteerism, and professional development, all of which are included in the overall employee value proposition. We commit to provide our employees with a safe and supportive environment and maintain a steadfast commitment to safely producing and distributing our products, which we believe is fundamental to the achievement of our goals.
Olin senior management provides oversight for the benefits programs and compensation of our workforce. This includes conducting periodic compensation benchmarking, implementing health and other employee benefit programs and reviewing certain employee post-retirement benefits and accessibility of employee assistance programs. Our human resources department manages and administers these programs to ensure our total rewards programs are competitive. We have both salaried and hourly employee structures in place to compensate employees. Our benefits and compensation structures allow Olin to attract and retain a talented workforce which fosters achievement of Olin’s goals and objectives. Separately, our Board of Directors maintains a Compensation Committee which sets policies, develops and monitors strategies for and administers the programs that are used to compensate our CEO and other senior executives.
Olin is committed to lifting people through diversity and inclusion and maintaining work environments where all employees are comfortable bringing their authentic selves to work each day. We believe the insights provided by our workforce through their unique skills, backgrounds and experiences will lead us to future innovations that will reduce costs, reduce our environmental footprint, improve our ability to serve the world and keep our employees healthy and safe. We encourage our employees to be creative and to participate in the dialogue taking place across the company to help develop innovative solutions that lead to lasting, positive impacts for our customers, employees, communities, and shareholders. Our largest concentration of employees is located in the U.S., of which 30% are minorities. In our support of diversity and inclusion objectives, approximately 26% of our global workforce is comprised of women, and approximately 27% of our management roles are held by women, and 13% by minority employees in the U.S. Our goal is to expand women in leadership positions to approximately 30% by 2025, an increase of approximately 10% against a 2018 baseline.
We also strive for continued professional development of our workforce. We never stop learning and Olin provides a wide range of employee development and productivity programs, that include assignment based opportunities, job shadowing, mentoring and foundational programs for employees new in their Olin careers. These programs help our employees improve and grow, and reinforce our values, in particular of Lifting Olin People. Our learning platform focuses on providing a variety of educational opportunities that support career and professional development for our employees, including undergraduate and graduate tuition assistance to eligible employees up to a maximum of $10,000 per year. We regularly review talent development and succession plans to identify and develop a pipeline of talent to maintain and continuously improve business operations. We make purposeful moves to accelerate the development of high potential employees. We also have a well-established performance management process, which encourages ongoing feedback throughout the year and includes, at a minimum, annual year-end reviews and development discussions.
As of December 31, 2022, we had approximately 7,780 employees, with 6,600 working in the U.S., and approximately 1,180 working in foreign countries. Of our total global workforce, approximately 9% are located in Europe, Middle East, Africa, and India, 3% in Asia Pacific, 2% in Canada, and 1% in Latin America. Approximately 48% of our total employees are employed in our Chlor Alkali Products and Vinyls and Epoxy businesses, 49% are employed in our Winchester business, including approximately 1,566 employees at the Lake City Army Ammunition Plant, which is a Government Owned Contractor Operated (GOCO) facility, and 3% are employed in Corporate functions. Various labor unions represent a significant number of our hourly-paid employees for collective bargaining purposes. In the U.S., bargaining unit employees comprise 34% of the total workforce. In 2023, we have labor agreements that are due to expire in the U.S., representing approximately 6% of our global workforce.
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RESEARCH ACTIVITIES; PATENTS
Our research activities are conducted on a product-group basis at a number of facilities. Company-sponsored research expenditures were $18.3 million, $20.4 million and $16.6 million in 2022, 2021 and 2020, respectively.
We own or license a number of patents, patent applications and trade secrets covering our products and processes. We believe that, in the aggregate, the rights under our patents and licenses are important to our operations, but we do not consider any individual patent, license or group of patents and licenses related to a specific process or product to be of material importance to our total business.
SEASONALITY
Our sales are affected by economic downturns and the seasonality of several industries we serve, including building and construction, coatings, oil and gas, infrastructure, electronics, automotive, water treatment, refrigerants and ammunition. The seasonality of the ammunition business is typically driven by the U.S. fall hunting season. Our chlor alkali businesses generally experience their highest level of activity during the spring and summer months, particularly when construction, refrigerants, coatings and infrastructure activity is higher. Our Epoxy segment also serves a number of applications which experience their highest level of activity during the spring and summer months, particularly civil engineering and protective coatings and other construction materials, including composites and flooring.
RAW MATERIALS AND ENERGY
Basic raw materials are processed through an integrated manufacturing process to produce a number of products that are sold at various points throughout the process. We purchase a portion of our raw material requirements and also utilize internal resources and finished goods as raw materials for downstream products. We believe we have reliable sources of supply for our raw materials under normal market conditions. However, we cannot predict the likelihood or impact of any future raw material shortages.
The principal basic raw materials for our production of Chlor Alkali Products and Vinyls’ products are electricity, salt, ethylene and methanol. Electricity is the predominant energy source for our manufacturing facilities. Approximately 68% of our electricity is generated from natural gas or hydroelectric sources. We satisfy our electricity needs through a combination of market power, long-term contracts and the operation of our own power assets, which allow for cost differentiation at specific U.S. manufacturing sites. A portion of our purchases of raw materials, including ethylene, are made under long-term supply agreements, while approximately 73% of the salt used in our Chlor Alkali Products and Vinyls segment is produced from internal resources. Methanol is sourced domestically and internationally primarily from large producers.
The Epoxy segment’s principal raw materials are chlorine, caustic soda, benzene, propylene and aromatics, which consist of cumene, phenol, acetone and BisA. A portion of our purchases of raw materials, including benzene, propylene and a portion of our aromatics requirements, are made under long-term supply agreements, while a portion of our aromatics requirements are produced from our integrated production chain. Chlorine and caustic soda is predominately sourced from our Chlor Alkali Products and Vinyls segment.
Lead, brass and propellant are the principal raw materials used in the Winchester business. We typically purchase our ammunition cartridge case cups and copper-based strip, and propellants pursuant to multi-year contracts.
We provide additional information with respect to specific raw materials in the tables set forth under “Products and Services.”
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ENVIRONMENTAL AND TOXIC SUBSTANCES CONTROLS
As is common in our industry, we are subject to environmental laws and regulations related to the use, storage, handling, generation, transportation, emission, discharge, disposal and remediation of, and exposure to, hazardous and non-hazardous substances and wastes in all of the countries in which we do business.
The establishment and implementation of national, state or provincial and local standards to regulate air, water and land quality affect substantially all of our manufacturing locations around the world. Laws providing for regulation of the manufacture, transportation, use and disposal of hazardous and toxic substances, and remediation of contaminated sites have imposed additional regulatory requirements on industry, particularly the chemicals industry. In addition, implementation of environmental laws has required and will continue to require new capital expenditures and will increase operating costs.
We are a party to various government and private environmental actions associated with former waste disposal sites and past manufacturing facilities. Charges to income for investigatory and remedial efforts were $24.2 million, $16.2 million and $20.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. These charges may be material to operating results in future years. These charges do not include insurance recoveries for costs incurred and expensed in prior periods.
See our discussion of our environmental matters contained in Note 20 “Environmental” of the notes to consolidated financial statements contained in Item 8 and under the heading “Environmental Matters” in Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
CORPORATE RESPONSIBILITY
At Olin, we are committed to corporate responsibility to ensure the long-term success of our business, our collective global society and the well-being of our environment. We focus our corporate responsibility efforts on the areas of: (1) environment, health, safety and security stewardship, (2) sustainability and governance and (3) product stewardship. We value collaboration and commit to working with other organizations to encourage collective action for improving corporate responsibility. Additional information related to our corporate responsibility initiatives, practices, activities, goals and related information, as well as future updates, can be found in the Corporate Responsibility section of our website at www.olin.com, including our Sustainability Report under the section Sustainability Success. Our progress against environmental, social and governance (ESG) and sustainability targets is included within our ESG Scorecard, found in the Sustainability section of our website. The contents of our website referenced in this section are not, and should not be considered to be, part of this report.
Environment, Health, Safety and Security Stewardship
Olin is strongly committed to excellence in protecting the environment, health, safety and security of our employees and those who live and work around our plants. Our operations worldwide comply with all local requirements and implement additional standards as required to protect the environment, health, safety and security of our operations. We use our management system to drive continuous improvement and achieve excellence in environmental, health, safety, process safety and security performance. Our safety, health and environmental strategy and goals are designed to sustain our drive to zero incidents. Relentlessly and responsibly, we constantly emphasize the importance of monitoring the safety, security and environmental impact of our plants and processes. Through our day-to-day vigilance, Olin strives to continue to be recognized as one of the industry’s best performers.
Our corporate values — Act with Integrity, Drive Innovation and Improvement and Lift Olin People — are part of our culture. These values are also reflected in our Environment, Health, Safety and Security (EHS&S) policy and practice. Olin leadership visibly performs and guides the organization to conduct business in a manner that protects and increasingly benefits our employees, business partners and the communities in which we live. All employees have responsibilities within our management systems necessary to sustain our drive to zero incidents. Olin continues its downward trend in personnel and process safety incidents.
Sustainability and Governance
We strongly believe in meeting the needs of the present without compromising the needs of future generations. We recognize the impact our company has on our natural resources and our responsibility to stewardship of people and the planet. This means striving for a company culture responsible to the ongoing ESG ideals of our employees and shareholders.
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At Olin, we integrate sustainability into everything we do as a responsible corporate citizen. We value and respect our people, the communities in which we operate, our customers and the environment. We commit to making a contribution to protecting the world and its future condition through the safety and efficiency of our business practices - from supply to manufacturing to delivery and ultimately the end-use of our products. Executing on our sustainability strategy, we believe Olin will increase value for our investors, employees, and customers by enhancing our strategic operating model through focused ESG actions. These actions include:
• Protecting our employees and communities through our industry-leading occupational and process safety programs
• Proudly strengthening United States defense, international defense, law enforcement, and conservation through our Winchester ammunition brand
• Significantly reducing our environmental impact by taking concrete steps through technology and commercial innovation to lower our carbon footprint, net water usage, and resource consumption
• Developing and enabling sustainable solutions within the value chain through our product and service offerings
• Consistently upholding our values and governance standards as we amplify our culture of inclusion and cultivate our diverse workforce
We believe Olin’s industry leadership, focused ESG actions, and our engaged workforce will create a positive, long-lasting impact on our communities and the environment.
Product Responsibility
We take great pride in distributing and handling our products safely and enabling our customers to do the same. Our product stewardship and quality practices are aligned with our core values and other globally recognized standards. We apply these standards to our chemical business segments and relevant subsidiaries to ensure compliance with applicable global regulations, evaluation, continuous improvement and transparency of relevant production and product or formulation information. Additionally, Winchester ammunition is designed and manufactured in accordance with the voluntary industry standards published by the Sporting Arms and Ammunition Manufacturers’ Institute. Our goal is to meet or exceed guidelines in every instance. Olin leadership demonstrates its commitment to these standards through active participation and communication concerning product safety, within our organization and to external stakeholders. We are deeply committed to ammunition education and advocate strongly for owners and participants to take the necessary steps to be trained and educated when handling, storing or using a firearm for recreational purposes, both for experienced and novice participants. Winchester dedicates an increasing share of its online content to safety education materials for all to responsibly and confidently own and use Winchester products.