Belgium, Japan sites among 20 Dow will close

By Frank Esposito
Senior Staff Reporter

Published: November 2, 2012 6:00 am ET

Related to this story

Topics Materials, Suppliers

MIDLAND, MICH. (Nov. 2, 4:40 p.m. ET) — Plastics materials plants in Belgium and Japan are among the 20 plants that Dow Chemical Co. will close worldwide, as part of a restructuring program that will eliminate 2,400 jobs.

Plastics operations set to be closed include a high density polyethylene facility in Tessenderlo, Belgium, and an epoxy resins facility in Kina Ura, Japan.

Pointing the finger at sluggish markets, particularly Europe, the Midland, Mich.-based company said the restructuring program is “designed to accelerate cost-reduction actions and advance the next stage of the company’s transformation in the midst of persistently slow macroeconomic growth.”

The job losses amount to 5 percent of the company’s total workforce and the site closings are designed to cut annual operating costs by around $500 million by 2014, Dow said.

Dow added that it will cut capital spending and investment plans in non-core areas amounting to a additional $500 million.

“The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations — particularly in Europe — and mitigate the impact of current market dynamics,” Andrew Liveris, Dow’s chairman and CEO, said in an Oct. 23 news release.

Industry analyst Roger Young said the plastics plants being closed in Belgium and Japan are older plants. The Belgian plant also “wasn’t using key Dow technology,” he added.

Longer-term, Young said Dow “could be under some real pressure in Europe” since it uses feedstocks for ethylene-based products from naphtha, which is derived from crude oil. Plants in North America increasingly are using lower-priced ethane feedstocks from abundant natural gas supplies.

“As long as shale gas is around, Europe could be hurting,” he said.

The group made the restructuring announcement as it revealed a 10 percent fall in third-quarter sales to $13.6 billion — led, it said, by the downturn in Europe, where revenues were down by 10 percent, driven by “adverse currency conditions.” Dow’s third-quarter profit fell almost 35 percent to $591 million. Through the first nine months of 2012, Dow’s sales fell almost 7 percent to $42.9 billion, while profit slid almost 32 percent to less than $1.9 billion.

Dow said its Performance Plastics business, including polyethylene, generated third-quarter sales of $3.5 billion, down 15 percent, though volumes were up 5 percent. These gains were offset by a 10 percent decline in price, it added. The unit’s third-quarter pretax profit fell almost 12 percent to $737 million. Nine-month sales in Performance Plastics dropped 14 percent to $10.8 billion, while pretax profit sank 20 percent to $2.2 billion.

The group’s Performance Materials operation — including polyurethane, epoxies, plastic additives and automotive systems — saw sales down 8 percent at $3.4 billion. Volumes rose 4 percent, while prices fell 11 percent on an adjusted basis. The unit’s third-quarter pretax profit actually increased almost 3 percent to $491 million. Nine-month sales in Performance Materials dipped almost 8 percent to $10.3 billion, while pretax profit slumped almost 23 percent to less than $1.2 billion.

Dow said prices were down 9 percent, with double-digit decreases “in most businesses,” with Europe and China taking the lead at 12 percent and 11 percent, respectively.

Liveris said market conditions required an “agile and efficient response” from the company.

“The task before us is straightforward. We must deliver value to our shareholders by a continuing focus on improving return on capital, increasing cash flow and growing earnings.

“And with our new, streamlined operating model and management structure, our entire organization is focused on delivering against these three objectives,” he said in the company’s third-quarter earnings statement.

News of the job cuts and third-quarter slide sent Dow’s per-share stock price Oct. 23 down 4 percent to $28.55. But the price recovered and stood at $30.10 in late trading Nov. 1.

The announcement marks the second round of job cuts announced by Dow this year. In March, the firm said it was cutting 900 jobs worldwide and closing at least four plants making expanded polystyrene foam and polyurethane feedstocks. Officials said at the time that those job cuts and closings are the result of continued weakness in the European economy.

In April, Dow announced it had chosen Freeport, Texas, as the site of a new 3.3 billion-pound-capacity ethylene cracker. The cracker is slated to open in 2017 and is part of an overall investment of $4 billion in new ethylene and propylene capacity in the U.S. Gulf Coast. Those investments are being made possible by new supplies of natural gas found throughout North America by use of hydraulic fracturing, known as “fracking,” and horizontal drilling.


Comments

Belgium, Japan sites among 20 Dow will close

By Frank Esposito
Senior Staff Reporter

Published: November 2, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Blow molding machinery maker opens first plant in Taiwan

October 1, 2014 1:27 pm ET

Taiwanese equipment maker Kin Precision Industry Co. Ltd. has opened a 2,000-square-meter, 25-employee factory in Taichung, Taiwan, with an eye to...    More

Image

Global Plastics Summit puts PE prices in the spotlight

October 1, 2014 3:17 pm ET

Product manufacturers may start to shift away from polyethylene because of high prices, according to two major plastics processors.    More

Image

Speaker: Many issues can affect multi-cavity molds

October 1, 2014 2:02 pm ET

There are several conditions necessary across all cavities of a multi-cavity mold to ensure that all parts are produced the same. These include...    More

Image

Nucleation offers solution to shrinkage in HDPE closures

October 1, 2014 1:57 pm ET

For caps producers, nucleation can provide a practical solution to eliminate shrinkage variations in high density polyethylene beverage closures....    More

Image

Dow loses appeal in price fixing case

October 1, 2014 11:10 am ET

The Reuters press agency reports that a federal appeals court in Denver has rejected Dow Chemical Co.'s attempt to overturn a $1.06 billion fine impos...    More

Market Reports

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our industry analysis highlights macro industry trends and micro trends faced by companies that do business in Mexico. The report also provides key industry statistics and forecasts to anticipate future industry expansion.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events