As part of its restructuring, Dow Chemical Co. will close three plants that make plastic feedstocks in Louisiana.
In a July 1 news release, officials with Midland, Mich.-based Dow said an ethylene cracker and an ethylene oxide/ethylene glycol unit would be closed in Hahnville, La. Ethylene is a feedstock used in production of polyethylene and PVC, while ethylene glycol is used in PET production.
An ethylene dichloride and vinyl chloride monomer plant in Plaquemine, La., also will be closed. VCM is a PVC feedstock.
The closings will affect about 100 jobs, although Dow spokesman Bob Plishka said by phone July 1 that most of those employees will be reassigned to other jobs at Dow. Production capacity totals for the affected plants weren't available, but Plishka said the Hahnville ethylene cracker was a smaller site whose output no longer was needed because of other changes the firm had made to its product mix.
The moves will create more than $100 million in annual savings and are tied in to Dow's recent $15.3 billion acquisition of specialty chemicals firm Rohm and Haas Co. That purchase is expected to eliminate 2,500 jobs and result in annual cost synergies of $1.3 billion.
We continue to take quick and aggressive action to right-size our manufacturing footprint, especially in our basics portfolio, Dow Chairman and CEO Andrew Liveris said in the July 1 release.
Since late 2008, Dow has closed several other plants, including a low density PE unit in Freeport, Texas, and a chlorinated PE plant in Plaquemine. Those moves, combined with the just-announced steps, will reduce Dow's U.S. Gulf Coast ethylene demand by 30 percent, allowing the company to eliminate its ethylene purchases from the merchant market, according to Dow officials.
Those purchases had equaled about 3 billion pounds annually.
Dow's first-quarter sales fell 39 percent to $9.1 billion when compared with the first quarter of 2008. First-quarter profit fell 97 percent to $24 million in the same comparison.
Plastics-related businesses accounted for about 47 percent of Dow's 2009 first-quarter sales.