William Stavropoulos is not wasting any time in his second stint as chief executive officer at Dow Chemical Co.
Less than a week after taking over for Michael Parker, Stavropoulos announced plans that could lead to plant closings and job cuts in an attempt to save the Midland, Mich.-based plastics and chemicals giant more than $1 billion in cash flow in 2003.
``This effort is going to be far-reaching, touching every part of the company, and putting everything on the table,'' Stavropoulos said in a Dec. 18 live satellite broadcast to Dow employees. ``The bottom line is, we only spend money on the essentials.''
Dow spokeswoman Rebecca Evans said no details were available regarding impacts on individual business units or plants.
Through September, Dow's 2002 sales were down more than 4 percent to $20.5 billion compared with 2001. Its pretax profit was flat at about $1.2 billion. Plastics-related businesses accounted for about half of Dow's total sales in that period.
Parker, a 34-year Dow veteran, lasted only two years at the top before stepping down Dec. 13. During that time, low earnings forced Dow to borrow to pay its quarterly dividends, according to Stavropoulos.
Stavropoulos' plans call for ``accelerating [Dow's] decision-making around closing underutilized or undercompetitive plants'' and ``examining the profitability to Dow of [its] customers, account by account.''
He also announced plans to step up Dow's Six Sigma quality control efforts in order to achieve more than $700 million in pretax earnings in 2003. The firm also will reduce capital spending, but not at the expense of the safety or long-term viability of its plants.
``Our vision of zero injuries and zero incidents, including leaks, breaks and spills, remains paramount,'' said Stavropoulos, who joined the firm in 1967 and served as president from 1993 to 2000 and as CEO from 1995 to 2000.
``If we do everything right financially, and do not get the safety part right, we will have failed.''
Stavropoulos' return has had little immediate impact on Dow's per-share stock price. It was $29.50 when his return was announced Dec. 13 and stood at $29.25 in early trading Dec. 20. It began the year around $35.
Dow's Plastics unit - including polyethylene, polypropylene and polystyrene - saw sales drop almost 6 percent to $4.8 billion in the first nine months of 2002. In spite of that drop, Dow's linear low density PE volumes should finish the year up about 8 percent, North American polyolefins business director Bob Beil said in a recent phone interview.
``Half of the growth appears to be a rebound from last year and half looks to be organic growth,'' Beil said. ``You can't really point to any one application as driving the growth, although trash bags are pretty much recession-proof and food packaging continues to grow.''
