The plastics joint venture between Dow Chemical Co. and Kuwait's Petrochemical Industries Co. has a name and a leader now it just needs to pick a city in Michigan for its headquarters.
The venture, which will operate as K-Dow Petrochemicals, will be led by 24-year Dow veteran James Fitterling, officials said in a July 15 news release. Fitterling will be KDP's first chief executive officer, vacating his current title of business group president for Dow basic plastics.
Officials said KDP will be based in a city in southeast Michigan, pending incentive approvals. The unit has not decided whether it will build a plant or occupy an existing site. Dow is based in Midland, Mich. State-owned PIC is based in Safat.
Dow spokesman Chris Huntley listed cultural diversity and proximity to an international airport such as Detroit's as factors affecting the headquarters location. ``These are all things that are being considered, in light of how they'll affect the staff of the joint venture,'' he said.
KDP is expected to employ about 800 at its new location. The workforce will be some combination of employee transfers from Dow and PIC in Kuwait, as well as newly created jobs, Huntley said.
Cities in the targeted region include Ann Arbor, Troy and Ford Motor Co.'s home city of Dearborn, which has a large Arab-American population.
PIC agreed in December to pay $9.5 billion for half of Dow's polyethylene, polypropylene and polycarbonate assets. The JV is expected to have annual sales of about $11 billion.
KDP will rank as the world's largest producer of low density and linear low density PE. In global high density PE, the firm will rank third. It also will have significant North American market shares in PP and PC.
In total, KDP will employ more than 5,000 at almost 30 plants worldwide. The deal is expected to close by the end of the year. It does not include three pre-existing Dow-PIC petrochemical joint ventures Equate Petrochemical Co., Equipolymers and MEGlobal.
When the deal is completed, most of Dow's commodity plastics production no longer will be included in the firm's financial reporting, since KDP will report its results separately. Dow still produces specialty plastics as part of its performance plastics unit.
Plastics accounted for almost 52 percent of Dow's $53.5 billion sales total in 2007. Pretax profit in Dow's basic plastics unit including PE, PP and polystyrene was flat in 2007, while in performance plastics including PC and Saran pretax profit fell 15 percent. Dow's overall profit fell 23 percent in 2007 to less than $2.9 billion.