Dow Chemical Co. will end production of epoxy and vinyl ester resins in Sarnia, Ontario, on Aug. 1, and in a separate move, plans to form two joint ventures with a Kuwaiti firm.
Dow spokesman Dan Taylor said it was undetermined how many of the 19 epoxy-related employees in Sarnia will be affected by the move. Some will be offered early retirement, while others may be transferred to other plants at the site, where Dow makes polystyrene, low density polyethylene and several chemicals.
Overall, the Sarnia site is undergoing a restructuring that will cut 50-70 of the site's 500 jobs by the end of the year.
``We took into account our global supply chain, production levels for each plant, access to raw materials and a variety of other factors,'' Patrick Ho, epoxy products and intermediates vice president, said in a June 1 news release. ``Based on that review, we came to the difficult decision that we needed to close the Sarnia epoxy facility.''
The epoxy plant produced 7.7 million pounds of solid epoxy resins and 4.4 million pounds of Derakane-brand epoxy vinyl ester resins each year. Dow officials added that the site's epoxy capacity is underutilized because of changing global market dynamics.
Most of the plant's output was sold to customers in North America and the Asia-Pacific region. Those customers now will be supplied from plants in Freeport, Texas; Joliet, Ill.; and Zhangjiagang, China. The 88 million-pound-capacity Chinese plant opened a year ago to meet growing demand in that region.
Dow's epoxy resins are used in powder coatings and internal coatings of containers such as cans. Its vinyl esters are used in fiber-reinforced-plastic applications that require corrosion resistance and structural strength.
The Midland, Mich.-based firm recently announced it is cutting 3,000 jobs - 6 percent of its global workforce - in 2004. The firm cut 3,500 jobs in 2003.
Dow also plans to sell half of its PET and purified terephthalic acid business to Petrochemical Industries Co. (PIC) of Kuwait to form Equipolymers, a 50-50 joint venture. No purchase price was disclosed. Equipolymer's assets will include almost a billion pounds of PET capacity at plants in Schkopau, Germany, and Ottana, Italy, and PTA production in Ottana.
Dow announced the proposed deal June 2, the same day that it revealed plans to form a joint venture called MEGlobal, also with PIC. MEGlobal will manufacture and market glycol-based chemical feedstocks from Dow assets in Canada, half of which are being sold to PIC for an undisclosed sum.
PIC, a subsidiary of state-owned Kuwaiti Petroleum Corp., is expected to supply Equipolymers with paraxylene feedstock from a plant it is building in Kuwait.
The new ventures ``represent PIC's largest investment to date outside of Kuwait,'' said Saad Al-Shuwaib, PIC chairman and managing director.
A year ago, Dow and PIC formed two ventures in Ash Shu'aybah, Kuwait: one to build a polyethylene/ethylene complex by 2007; the other to build an ethylbenzene/styrene unit.