Thermoplastics are all under one roof at Dow Chemical Co., and Romeo Kreinberg couldn't be happier.
``This is the first time we've run plastics as one portfolio,'' Kreinberg said, while addressing the firm's recent reorganization during an Oct. 23 interview at K 2004 in Dusseldorf. ``Now we're going into the market with a broad product offering and with technology and research and development all in one place. It gives our customers the option to use the right polymer and it saves us time and cost.''
Midland, Mich.-based Dow initiated a major restructuring in December, splitting a majority of its businesses into three units: plastics; chemicals and intermediates; and performance chemicals and thermosets. Kreinberg was named the plastics unit's senior vice president at that time.
Dow's recent market maneuvers include adding production of its Versify-brand propylene ethylene copolymers in Tarragona, Spain. The firm will add 660 million pounds of capacity for specialty polyethylene there as well in 2006. Plans also are in place to add PE and other petrochemical production in Oman through a joint venture with the Sultanate of Oman and the Oman Oil Co. Construction on that project is set to begin next year.
On the new product front, Dow recently commercialized new grades of its Magnum-brand superhigh-impact, low-temperature ABS for automotive, leisure and sporting goods. Rigid packaging grades of Versify, Inspire-brand performance polymers and an advanced polystyrene recently were added as well.
Like many plastics executives, Kreinberg has kept an eye on skyrocketing natural gas and crude oil feedstock costs, which have led Dow and other resin makers to implement hefty price increases this year.
In spite of that upward spiral, Kreinberg said he does not believe prices are at the point where they could discourage plastics use.
``I don't believe there are limits for prices of resin, just like there are no limits for gasoline,'' said Kreinberg, a 27-year Dow veteran. ``We're continuing to use these goods. People who are using plastic aren't going to go back to paper.
``And even with polyethylene at 50 or 60 cents a pound and polystyrene at 80 or 90, that's a fraction of the cost of the end product. The end user pays a penny more.''
Dow was riding sky-high in the third quarter of 2004, racking up the first $10 billion sales quarter in the firm's history. In the first nine months of 2004, Dow's sales were up more than 20 percent to $29.2 billion, while its profit more than doubled to almost $1.8 billion.
In plastics and performance plastics, Dow's nine-month story was equally impressive, with combined sales up almost 22 percent to $14 billion. Pretax profit in those units was up 93 percent to more than $1.8 billion.
Overall, plastics-related businesses accounted for 48 percent of Dow's nine-month sales and about 49 percent of its pretax profits.
In Kreinberg's view, both Dow and its customers are more positive about the business now than they were at K 2001.
``We're seeing increased demand for our products and hearing enthusiasm from our customers,'' he said. ``Asia's developing more capacity and Eastern Europe and Latin America have excellent views of potential growth.''
Dow ranks as one of the world's largest makers of PE and PS. The plastics unit includes PE, polypropylene, PET, PS, engineering thermoplastics, fabricated products, automotive, wire and cable, and rubber and elastomers businesses.