Corrected: Dow to close several plants to cut costs

31 August 2006 16:47  [Source: ICIS news]

Correction: In the ICIS news article headlined “Dow to close several plants to cut costs” published on 31 August, please read in the fifth paragraph “The low density polyethylene (ldPE) plant…” instead of “The linear low density polyethylene (lldPE) plant…”.

A corrected article follows:

Dow axes plants in Europe, CanadaLONDON (ICIS news)--Dow Chemical will shut a number of plants worldwide to reduce structural costs by around $160m (€124m) a year, and will incur charges of $550m-650m in the third quarter as a result, the US based chemicals major said on Thursday.

The most significant shutdowns will take place at Dow’s facilities in Sarnia and Fort Saskatchewan, Canada, and the Porto Marghera plant in Italy, the company said.

In Sarnia, all production activities will cease by the end of 2008, reflecting the outcome of individual assessments by each of the four businesses located at the Ontario facility.

“The assessments, which were triggered by the recent suspension of ethylene shipments through the Cochin Pipeline, highlighted a variety of issues related to the effectiveness, efficiency and long-term sustainability of the Sarnia-based assets,” said Dow.

The low density polyethylene (ldPE) plant will be shut over the coming weeks; polystyrene (PS) production will cease before the end of this year; and the latex production from the UES facility as well as the polyols plant will shut down by year-end 2008.

In Fort Saskatchewan, the company said it would close its chloralkali and direct chlorination ethylene dichloride (EDC) plants by the end of October.

“This decision was driven by the substantial capital costs required to maintain long-term operations at the 27 year-old facilities – an investment that could not be justified based on expected rates of return,” said Dow.

In Porto Marghera, the company said it had made the decision to not restart production of its 118,000 tonnes/year toluene diisocyanate (TDI) facility, which was closed for planned maintenance in early August.

“Fundamentals in the TDI business remain weak due to excess global production capacity,” it added.
Dow also said it would be writing off obsolete technology assets and capital project spending that has been determined to be of no further value.

“One of the fundamental drivers of Dow’s future success is the company’s commitment to maintain a sharp focus on financial discipline and low cost to serve,” said Andrew Liveris, Dow’s chairman and chief executive, in a statement.

“Part of that commitment involves continually looking for ways to enhance our efficiency and our cost-effectiveness – through good times as well as bad – to ensure we remain competitive across every business and in every geographic region,” he added.

“During the past three years, the company has shut down more than 50 manufacturing facilities across the globe – yielding a significant reduction in structural costs – while continuing to invest in long-term growth,” said Liveris.

In making the announcement, Liveris said he acknowledged the concern this would cause at the affected sites and in surrounding communities.

“We well recognise the impact of these decisions on our employees, their families and those living in the communities around our sites; we will work hard to minimise the negative consequences of these necessary business decisions,” he said.


By: Hilde Ovrebekk
+44 20 8652 3214



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