Dow Epoxy Takes Action to Address Unacceptable Margins
MIDLAND, MI - Dow Epoxy, a
business unit of The Dow Chemical Co. (Dow), has announced plans to raise
prices in North America and other world regions as necessary, in response to
the current climate of rising costs and shrinking margins.
“Profit margins have substantially eroded in the face of step-change hydrocarbon and energy and other manufacturing costs, and the situation shows no signs of improvement,” said Patrick Ho, Business Group President, Dow Epoxy & Specialty Chemicals. “We have absorbed our share of the increased costs and done what we can to mitigate them, but we have no more room and must act immediately and definitively to ensure our business is healthy over the long-term to help our customers succeed.”
The business is currently meeting with customers to discuss market issues and upward price movement primarily driven by rising costs. On the cost side, Dow has incurred new hydrocarbon and energy costs of greater than $2 billion in the first quarter of this year alone and an additional $665 million so far in the second.
“Inaction on pricing means severe consequences,” said Ho. “Dow Epoxy has supported industry growth for more than 60 years through trusted supply of raw materials and delivery of new epoxy solutions. Our customers need trusted supply and continual innovation from us to help them win in their markets. They also expect us to meet ever-increasing performance and delivery standards across the world. We are rising to those challenges, but prices must be at reinvestment levels to sustain our ability to do so.”
Ho cited several recent technology and business initiatives to reinforce the importance of continual business investment in support of customers’ future growth, including: new global application centers and a new R&D lab in support of coatings and electrical laminates; increased investment in sustainable technologies that will lessen the industry’s reliance on costly petrochemicals; ongoing efforts to increase energy efficiency at Dow production facilities worldwide; two new production facilities – a 100,000-MTPA liquid epoxy resins and a 150,000-MTPA GTE plant – in Shanghai, scheduled to start up in 2010; multiple new epoxy products designed to meet needs ranging from high-temperature protection to halogen-free electrical laminates; and Dow Epoxy Systems, a new unit of Dow Epoxy focused on supporting the growth of specialty epoxy systems users in various industries.
“Profit margins have substantially eroded in the face of step-change hydrocarbon and energy and other manufacturing costs, and the situation shows no signs of improvement,” said Patrick Ho, Business Group President, Dow Epoxy & Specialty Chemicals. “We have absorbed our share of the increased costs and done what we can to mitigate them, but we have no more room and must act immediately and definitively to ensure our business is healthy over the long-term to help our customers succeed.”
The business is currently meeting with customers to discuss market issues and upward price movement primarily driven by rising costs. On the cost side, Dow has incurred new hydrocarbon and energy costs of greater than $2 billion in the first quarter of this year alone and an additional $665 million so far in the second.
“Inaction on pricing means severe consequences,” said Ho. “Dow Epoxy has supported industry growth for more than 60 years through trusted supply of raw materials and delivery of new epoxy solutions. Our customers need trusted supply and continual innovation from us to help them win in their markets. They also expect us to meet ever-increasing performance and delivery standards across the world. We are rising to those challenges, but prices must be at reinvestment levels to sustain our ability to do so.”
Ho cited several recent technology and business initiatives to reinforce the importance of continual business investment in support of customers’ future growth, including: new global application centers and a new R&D lab in support of coatings and electrical laminates; increased investment in sustainable technologies that will lessen the industry’s reliance on costly petrochemicals; ongoing efforts to increase energy efficiency at Dow production facilities worldwide; two new production facilities – a 100,000-MTPA liquid epoxy resins and a 150,000-MTPA GTE plant – in Shanghai, scheduled to start up in 2010; multiple new epoxy products designed to meet needs ranging from high-temperature protection to halogen-free electrical laminates; and Dow Epoxy Systems, a new unit of Dow Epoxy focused on supporting the growth of specialty epoxy systems users in various industries.
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