Dow Chemical’s chlor-alkali and chlor-vinyl facilities in Plaquemine are among 40 manufacturing plants that the company plans to sell or spin off along with most of its chlorine business.
The company also said other Plaquemine facilities on the block include the chlorinated organics facility; the brine operations and select assets supporting it; and energy operations. The plants employ around 300 people.
Overall, Dow employs 2,000 people in its Louisiana operations.
Louisiana Economic Development Secretary Stephen Moret said the announcement is not expected to impact total employment at Dow’s facilities in Louisiana, although it may result in some Dow employees shifting from Dow to another company or companies that purchase the assets that are for sale.
He noted that Dow’s facility in Plaquemine has about 19 operating units and only about a third are affected by the company’s decision. He said Dow’s smaller Grand Bayou operation in Assumption Parish might also be affected, but also with no change in total employment anticipated.
“This is not a light nor overnight decision,” Dow Chairman and Chief Executive Officer Andrew Liveris said during a Monday conference call with stock analysts and investors. “Dow has been in chlorine for over 100 years.”
But chlorine has become less important for the Midland, Mich.-based company over the last seven to eight years, Liveris said. Polychlorinated vinyl and the use of caustic soda, used in paper and detergents, are no longer part of Dow’s strategic focus.
The Plaquemine facilities, along with other chlorine-related assets, would be better served by new owners with better models for that line of business, Liveris said.
Dow’s Plaquemine plants make the ingredients used in soaps and bleach, cosmetics, shampoos, detergents and disposable diapers, trash and grocery bags, milkshakes and salad dressing, and automotive hoses, tubes and wires.
Although many of the facilities in Plaquemine and Freeport, Texas, are “very dated” and near the end of their useful lives, Liveris said, those plants have a huge cost advantage because of their access to cheap and plentiful supplies of natural gas.
Liveris said Dow’s decision to sell the chlorine assets doesn’t take away from their value. The plants’ expected annual revenue is $5 billion.
The 40 plants are at 11 sites in the United States, Germany, Italy, South Korea, China and Brazil. The facilities employ nearly 2,000 people.
Liveris said Monday’s announcement is a continuation of Dow’s shift to “downstream high-margin products and technologies” rather than cyclical commodity products.
In the last year, Dow has completed or announced deals to sell $700 million of its businesses. Those moves included the $500 million sale of Dow’s polypropylene licensing and catalysts business, including a plant in Norco, to W.R. Grace & Co. The sale closed Monday. The business segment employed around 90 people worldwide, with roughly 20 of them in Norco.
Liveris said over the past five years, Dow has sold non-core businesses with around $10 billion in revenue.
Those deals included selling Morton Salt for $1.7 billion to German fertilizer company K+S; TRN Refinery in The Netherlands to Total S.A. for $800 million; the Styron division, which makes chemicals and plastics, to Bain Capital Partners for $1.6 billion; and the propylene business for $323 million to Braskem S.A., a Latin American petrochemical giant.
At the same time, Dow has shifted its focus to more lucrative businesses such as electronics, coatings, agriculture, infrastructure and transportation. In 2009, the company paid $16.5 billion for Philadelphia-based Rohm & Haas, which became the core of Dow’s advanced materials business.
In March, Dow said it expected to generate $1.5 billion by shedding less-profitable lines of business. On Monday, Liveris said Dow has increased that total to between $3 billion and $4 billion during the next 18 to 24 months.
The other chlorine assets Dow plans to sell include chlor-alkali and chlor-vinyl facilities in Freeport, Texas, including Dow’s interest in the Dow Mitsui Chlor-Alkali joint venture; global chlorinated organics production plants in Freeport and Stade, Germany; the global epoxy business, including assets in Freeport; Roberta, Ga.; Rheinmuenster, Baltringen and Stade, Germany; Pisticci, Italy; Gumi, South Korea; Zhangjiagang, China and Guaruja, Brazil; and brine and select assets supporting operations in Freeport.