Dow targets big growth in silicones

Source: ICIS News

2018/09/14

HOUSTON (ICIS)--Dow is aiming to aggressively grow its silicones business in coming years to meet growing global demand, Mauro Gregorio, president of Dow’s consumer solutions business, told ICIS in an interview on Friday.

The company will build on the $5bn in sales the business generated last year, aiming at growth rates well above GDP - depending on the region and market sectors, which include, among others, construction; labeling, sealing and packaging; silicone elastomers; and consumer and home care.

“The total addressable global market is very, very large, more than $20bn,” said Gregorio, who has been with Dow for more than 30 years.

The executive previously led the integration of the Dow Corning silicone business into Dow, following Dow’s decision in 2015 to take full control of the 50:50 joint venture with Corning.

Silicones is now part of Dow’s Consumer Solutions business, which consists of performance silicones, silicone feedstocks and intermediates, as well as home and personal care.

Dow is in fact “the largest player in the silicones industry”, with 18 manufacturing sites globally, including upstream siloxane production in the three main growth markets: the US, in Europe and in China, Gregorio said.

The upstream siloxanes assets are back-integrated into the key raw material, silicon metal.

Earlier this week, Dow announced the start of a feasibility study for the construction of another world-scale siloxane plant, with the location of the project to be determined as an outcome of the study.

Silicones key part of Dow’s chemistry offering

Gregorio stressed that going forward silicones will remain part of the Dow materials science business due to be separated from DowDuPont, and he firmly ruled out that silicones may be spun off in the future.

“This business is well, well connected with the material science business that we are about to launch on 1 April next year,” he said.

Silicones is an integrated part of Dow’s unique combination of material science technologies, namely cellulosics, acrylics, polyoelfins, urethanes and silicones, he said.

“It is the combination of those five chemistries that allows us to do many things” for customers that competitors cannot offer, he said.

He stressed that since combining Dow Corning with Dow, silicone business revenue grew 25% and profit doubled.

Dow implemented more than $600m of cost synergies and is well ahead of targeted growth synergies – “and all of those growth synergies come exactly from the combination with the other chemistries we offer”, he said.

“This shows the power of being together, this [growth] would not have happened in isolation,” he added.

Innovation

While the basic quartz and silicon metal raw materials are widely available and silicone can be produced almost anywhere, Dow’s strength in the market comes from its back-integration, and, above all, constant innovation.

“We basically invented silicone, 75 years ago, it’s a long story,” he said.

The raw material was important, but key to surviving and growing in this high-performance business was innovation – which meant working with customers on improving and bringing out new products all the time, he said.

“We are developing products combining silicones with acrylics, silicones with olefins, silicones with urethanes – nobody else in the industry can do that,” he said.

He also pointed to Dow's digital e-commerce platform for silicone customers - “it’s the Amazon of the consumer solutions industry”, he said.

Well-positioned in trade dispute

As for the ongoing US-China trade dispute, Gregorio sees Dow’s silicones business in a “very strong position” as it has integrated manufacturing in all the main geographies.

“We probably have to make some adjustments, deciding what to make where, but we have the infrastructure to react” to the tariffs, if and as necessary, he said.

Only a world recession or other catastrophic event would hamper Dow’s growth plans in silicones, he indicated.

“Silicones is a high-performance business that demands innovation, we are the innovation company, and we have the conditions to grow and are benefiting from everything else that Dow offers us,” he said.

Interview article by Stefan Baumgarten