Materials giant Dow Inc. will idle three polyethylene resin plants and two elastomer plants in the Americas for at least one month in response to the COVID-19 crisis.
Midland, Mich.-based Dow announced those moves in a presentation in advance of the firm's first-quarter earnings call on April 30.
Officials also said that Dow's polyurethanes unit would run at reduced global rates for MDI and propylene oxide until industrial demand improves. The firm's silicones unit also would run at reduced siloxanes rates globally, while maintaining "full flexibility" in finished silicone applications.
All of these moves are being made to balance production with demand, officials said. In an email to Plastics News, a Dow spokesperson said that the firm is not announcing layoffs associated with the temporary PE and elastomers closings.
"Depending on business needs, we may reduce hours or furlough some of our contractor workforce, but any such actions would be consistent with how we constantly evaluate and adjust our staffing needs based on business conditions," the spokesperson said.
The PE plants being idled are in Freeport and Seadrift, Texas; and Bahia Blanca, Argentina. The elastomers plants are in Plaquemine, La. In total, the plants represent about 10 percent of Dow's global capacity for those materials.
Overall, Dow will trim expenses by $350 million and reduce its capital expenditures target for 2020 from $2 billion to $1.25 billion.
First-quarter sales in Dow's Packaging and Specialty Plastics unit — including PE — were down 10 percent to $4.6 billion. Sales volume was flat, as growth in consumer-staple packaging applications was offset by lower ethylene sales. Taking out Hydrocarbons and Energy, Packaging and Specialty Plastics sales volume for the quarter was up 1 percent, as gains in Asia-Pacific and Latin America more than offset declines in the U.S./Canada and Europe/Middle East/Africa.
Sales in Dow's Industrial Intermediates and Infrastructure unit, including PU, were down almost 13 percent in the first quarter to just over $3 billion.
"I am proud of the Dow team's determination and resilience in the midst of the global pandemic and rapid decline in global energy prices," Chairman and CEO Jim Fitterling said in a news release. "We ensured the safety and security of our people and operations, maintained business continuity, and rapidly established an effective crisis management response."
He added that Dow "showcased the necessity and value of our products as we met strong demand from our customers in food packaging, health and hygiene, and cleaning end markets."
"Our volumes and operating rates reflected divergent demand patterns, as we met increasing needs for consumer staple nondurable goods, which countered lower requirements for discretionary durable goods," Fitterling said. "We partly offset the headwinds with stranded cost removal, effectively managing our working capital, and demonstrating our operational responsiveness and agility."
Dow has been active in COVID-19 relief efforts, donating $3 million worldwide and converting some of its plants to hand sanitizer production. Some materials made by the firm also are used in the production of personal protection equipment for health care workers.
Like many public firms, Dow's per-share stock price has been battered by COVID-19. The price began the year around $55 but was near $37 in late trading April 30 for a decline of almost 33 percent.