The Dow Chemical Company announced today that it intends to build several new, specialty material production units aligned to its high value Performance Plastics franchise on the U.S. Gulf Coast.
The move further connects the Company’s U.S. manufacturing operations with cost-advantaged feedstocks available from increasing supplies of shale gas in North America, while also creating thousands of new, high-paying jobs across the country’s manufacturing sector.
Collectively, Dow expects the new Performance Plastics facilities will employ up to 3,000 workers at construction peak. Over the next five to seven years, Dow estimates that these projects, together with all other planned projects previously announced as part of the Company’s comprehensive U.S. Gulf Coast investment plan, will employ approximately 5,000 workers during peak construction and support over 35,000 jobs in the broader U.S. economy.
“These new facilities will include a wide range of technologies that will produce differentiated, high performance materials for the fastest growing segments in Dow’s existing markets, while providing access to new markets and applications,” said Jim Fitterling, Dow Executive Vice President. “These investments are also aimed at businesses that have consistently delivered a higher return on capital, which is clearly aligned with our long-term strategy. This, coupled with an enhanced market and value chain focus in our high value Performance Plastics franchise, will deliver faster growth with lower earnings volatility.”
Production Units Enter FEED Phase, Target Dow’s Fastest Growing Markets
The new facilities are in the Front End Engineering and Design (FEED) phase that will be completed in 2014. These facilities will manufacture competitively advantaged materials for several of the Company’s fastest growing market segments, including Packaging; Hygiene and Medical; Electrical and Telecommunications; Transportation, Sports and Leisure and Consumer Durables. The new capacity will be targeted at projected growth in North and South America in addition to select export opportunities over the coming decade. Dow is currently exploring specific location options on the U.S. Gulf Coast, with final investment locations to be determined at a later date.
Specific production units include the following:
- Previously announced Next Generation NORDEL™ metallocene Ethylene Propylene Diene Monomer (EPDM) for Transportation, Infrastructure, Electrical & Telecommunications;
- High Melt Index (HMI) Elastomers for Dow’s AFFINITY™ brand of Hot Melt Adhesives;
- ELITE™ Enhanced Polyethylene for high performance flexible packaging and hygiene & medical applications;
- Specialty Low-density polyethylene (LDPE) to serve demand growth in packaging and electrical & telecommunications market segments.
Strategically Aligned Growth
These moves directly support Dow’s transformational strategy to create additional competitive advantage for Dow’s Performance businesses by expanding access to advantaged natural gas-based feedstocks. These new units will utilize building block materials from a new, previously announced ethylene production facility slated for start-up in 2017.
Dow Progresses Comprehensive U.S. Gulf Coast Growth Plan
Additional projects within the Company’s U.S. Gulf Coast investment strategy are moving forward according to schedule.
Actions to improve ethane feedstock flexibility and increase ethylene supply at the Company’s Louisiana Operations site in Plaquemine, La. in 2015 are progressing on schedule.
Construction work for a new propylene production facility at Dow Texas Operations commenced in January 2013, and the project is on track towards a scheduled start-up in 2015. The construction project is expected to create 1,300 jobs at its peak and will provide building blocks for Dow’s epoxies and polyurethanes franchises.
Plans to construct a new, world-scale ethylene facility at Dow Texas Operations are progressing in alignment with Company targets. Dow’s Board of Directors recently authorized capital to progress the project through detailed engineering and purchase long lead time equipment for the facility. This unit will be the primary supply to the newly announced Idemitsu / Mitsui joint venture.
In addition, an ethylene production unit at Dow St. Charles Operations successfully restarted in December 2012, meeting Company targets to re-start the plant by year-end 2012.
Dow also announced today an initial agreement for a long-term ethylene off-take arrangement with a new joint venture to be formed between Idemitsu Kosan Co., Ltd., and Mitsui & Co., Ltd., of Tokyo, Japan. Idemitsu and Mitsui will form the joint venture to construct and operate a world-scale, Linear Alpha Olefins unit on the U.S. Gulf Coast. The JV will utilize an integrated supply of ethylene from Dow’s U.S. Gulf Coast production grid to produce Linear Alpha Olefins used as comonomers throughout Dow’s high value Performance Plastics franchise.