Iodine is everywhere, and much of it passes through a small Kansas City company on its way to a multitude of uses worldwide.

For 10 years, IodiTech has been a major U.S. dealer in iodine, a sea-born mineral with derivative uses ranging from cleaning solutions to medicine to heat-resistant plastics found in lawn mowers, car engines and jet plane tires.

IodiTech is a story of how a small company spun off from a large one and expanded its niche, seizing opportunities while navigating gyrating prices in the world marketplace.

Curt Thomas and Peter Sunderman acquired the iodine derivatives portion of West Agro Inc.—now known as DeLaval—in 2003. Thomas had been product manager for West Agro’s iodine users and ran the company’s plant in the West Bottoms, where IodiTech still operates.

Thomas, with a background in chemistry and animal health, is president of IodiTech. Sunderman, a CPA and former senior financial analyst at Sprint, is chief financial officer.

“It was a pretty good fit for this business,” Sunderman said. “Some businesses such as this might have people with the accounting knowledge, but not the chemistry background. We had both.”

The two men had tried a few startup businesses 25 or so years ago, “but nothing we made any money in,” Sunderman said.

IodiTech is a different story, generating about $35 million in annual revenue.

The iodine business was a sideline for West Agro, a worldwide company in the dairy industry, Thomas said. “They were not interested in selling industrial chemicals,” Thomas said. “It just wasn’t strategic.”

But the iodine business as its own entity made sense, Sunderman said.

“It wasn’t anything to them, but to us, it’s a very nice business,” he said. “What some people think of as trash can be someone else’s treasure. A lot of businesses have something they don’t want to do that someone else would have a lot more interest in doing.”

“Around You Every Day”

Thomas had became an authority on iodine, something most people think of as a liquid antiseptic for wounds, but which actually has thousands of other derivative uses.

Iodine is mined from kelp beds found in places where oceans receded millions of years ago. It comes primarily from Japan and Chile, with a small amount mined in Oklahoma. It is mixed in water and dried into purplish chunks, which is how it arrives at IodiTech.

When Thomas and Sunderman formed IodiTech, the company produced only basic iodine products for a few limited industrial uses. They have since branched into a wide range of consumer products, packaged at their plant and sold through a network of outside distributors.

Shortly after starting IodiTech, the company also formed a joint venture with another company and bought out an iodine derivative business in England.

“What we’ve tried to do is diversify and to expand our ag and consumer products,” Sunderman said.

The company’s iodine now goes into animal feed and medicines, soaps, cleaning solutions, metal finishings, bath salts, mineral oils and many nylon-based materials.

“We have two completely different product lines—the raw materials and all those other things we are making,” Thomas said. “Those are the finished goods.”

Kansas City, centrally located and in an agricultural region, is an ideal place for an iodine products facility, Thomas said. All of the shipping is done by truck, much of it to distributors in the Kansas City region, he said.

Nylon is the primary end-use for iodine in flexible products that must withstand high heat, such as jet plane tires, machine conveyor belts and plastics that come in close contact with engines, including car air bags.

“We are actually around you every day, and you don’t realize it,” Sunderman said “That air bag in your car has to be able to take the heat and not explode.”

IodiTech now produces about 30 to 40 more products than it did when the company began a decade ago. The company grew from nine to 22 employees three years ago to handle its expanded product line.

“Every year, the demand for iodine gets larger,” Sunderman said. “But it’s just kind of a limited resource.”

Coping with Aftershocks

The finite availability of iodine makes it vulnerable to fluctuating prices, especially when nature intervenes.

In March 2011, an earthquake-induced tsunami in Japan impacted an area that produces about half of that country’s iodine. Limited access to the iodine and increased local demand reduced the available supply. That was important because Japan accounted for one-third of the world’s iodine production.

The slowdown of iodine from Japan, coupled with mine problems in Chile in late 2010, meant the world was only getting about 75 percent of the iodine it needed, sending prices soaring.

Thomas and Sunderman had to determine the highest priority customers for their iodine while charging much higher prices because they had to pay more to suppliers.

“That really threw the whole market into turmoil,” Sunderman said. “Iodine is a product that you can’t really substitute for.”

Sunderman and Thomas assured customers that they would eventually get their iodine, but the crisis tested everyone’s patience. “We were fair, we didn’t gouge anyone,” Sunderman said. “We don’t want to put any industry out of business.”

Prices stabilized in 2012, more so than at any time since 2002, but they are still about twice as high as in January 2011, before events in Japan and Chile reduced supply.

Only two other corporations—one in Atlanta and one in Canada—compete with IodiTech in producing iodine products.

“I would tell you that now is a really competitive time,” Thomas said. “When the prices change every day, it’s a battle to see where your prices need to be. Just because there are only three companies doing this doesn’t mean the competition isn’t fierce.”

Building Up to a Move

IodiTech has outgrown its circa-1920s brick building that used to be a Sealy mattress factory. The company will move in May to a building Thomas and Sunderman bought at 951 North Topping in Kansas City’s East Bottoms. While the current plant is 40,000 square feet, the new one will be 48,000 square feet and designed to make better use of the space, Sunderman said.

Iodine has been processed in the existing IodiTech plant since the 1960s, but the space is outdated, too small and hard to keep clean, Sunderman said.

“The new building is going to be gleaming,” Sunderman said. “The floors will be coated and totally cleanable.”

The new facility will be designed for the production of more pharmaceutical ingredients, Sunderman said.

“We really have been limited as to what we can do at our building now,” he said. The new plant also will have a lot of new equipment, he said.

Untangling Red Tape

Moving a business to a newer facility is a mixed blessing, Thomas said.

“To me, it’s more stressful than exciting,” Thomas said. “For one thing, you are taking on a lot of debt. We bought the building. Then there are the permits and the city occupancy license. It’s quite a bit of red tape.”

Red tape is an unfortunate fact of life for many businesses, and a factor to be considered in starting one, Thomas said.

IodiTech must abide by myriad regulations and permit requirements of the Environmental Protection Agency, the Drug Enforcement Administration, the Department of Transportation, the Occupational Safety and Health Administration and Homeland Security. There also are state rules to follow on emergency response procedures, Thomas said.

“That’s the downside of having a business like this—it is heavily regulated, and I find that to be very difficult,” Thomas said. “It’s a reality people should stop and think about.”

The Growth Imperative

Thomas and Sunderman have another piece of advice for new businesses: take care of your employees.

“Curt and I both have been in large businesses, and we never liked the way they treated employees,” Sunderman said. “A large company takes all the money, and the employees don’t get anything. We don’t have that philosophy.”

Sunderman said IodiTech is known for providing health, disability, dental, profit-sharing and 401(k) plans that are among the best in Kansas City. The benefits help attract and retain employees, he said.

“Our employees come in and say they have never seen anything like it,” Sunderman said.

Sunderman said IodiTech will add employees as the business expands in the new building.

The iodine industry will remain one of changing supply, demand and inventory cycles, but more stability is expected. Chile’s mining practices are becoming more modern and dependable, Sunderman said.

Like any good business, Sunderman said, the goal of IodiTech is to get bigger. He has some favorite quotes to that effect posted on the wall beside his desk. One sums it up best, he said: “Growth, very simply, is the one business imperative.”