Everything about Dow Chemical Company totally explained
The Dow Chemical Company is an
American multinational corporation headquartered in
Midland, Michigan. As of 2007, it's the second largest chemical manufacturer in the world (after
BASF).
Dow Chemical is a provider of plastics, chemicals, and agricultural products with presence in more than 175 countries and employing 46,000 people worldwide. It spends more than $1 billion annual expenditure in R&D. Its stated mission under the current CEO,
Andrew N. Liveris, is:
"To constantly improve what is essential to human progress by mastering science and technology" with the vision: "to be the largest, most profitable, and most respected chemical company in the world".
The company was founded in 1897 by Canadian-born chemist
Herbert Henry Dow, who had invented a new method of extracting the
bromine that was trapped underground in
brine at Midland, Michigan. While at first the company sold only
bleach and
potassium bromide, Dow today has seven major operating segments, with a wide variety of products offered by each. The company's 2005 sales totaled
$46.3 billion, with a net income of $4.5 billion. Traded on the
New York Stock Exchange, as of 2005 Dow has about 105,000 shareholders.
Dow has been called the "Chemical companies' Chemical company" in that most of their product is sold to other manufacturers rather than to end users. At varying points in time Dow has sold directly to customers, primarily in the Human and Animal Health markets as well as Consumer Products.
Dow Chemical is an active member of the
American Chemistry Council, and an active partner in different programs and initiatives in both the
World Bank and
United Nations.
Products
Dow is the world's largest producer of
plastics, including
polystyrene,
polyurethanes,
polyethylene,
polypropylene, and synthetic
rubbers. It is also a major producer of the chemicals
calcium chloride,
ethylene oxide, and various
acrylates,
surfactants, and
cellulose resins. It produces many agricultural chemicals, perhaps being most famous for its
pesticide Lorsban. Its most well-known
consumer products include
Styrofoam brand insulation. Former Dow product lines,
Saran wrap,
Ziploc bags and
Scrubbing Bubbles have been sold to
S. C. Johnson & Son.
Performance plastics
Performance Plastics make up 25% of Dow's sales, with many products designed for the
automotive and
construction industries. The
plastics include
polyolefins such as
polyethylene and
polypropylene, as well as the
polystyrene most often seen in
Styrofoam insulating material. A complete range of
epoxy resin intermediates and products are manufactured by Dow, including
bisphenol A and
epichlorohydrin.
Polyurethane, polyether polyols and specialty
acrylates are all derived from
ethylene oxide (EO). The
Saran range of resins and films is based on
polyvinylidene chloride (PVDC).
Performance chemicals
The Performance Chemicals (17% of sales) segment produces materials for
water purification,
pharmaceuticals, paper
coatings, paints and advanced
electronics. Major product lines include nitroparaffins such as
nitromethane, used in the pharmaceutical industry and manufactured by ANGUS Chemical Company, a wholly owned subsidiary of the Dow Chemical Company. Important polymers include Dowlex
ion exchange resins,
acrylic and polystyrene
latex, as well as Carbowax
polyethylene glycols. Specialty chemicals are used as starting materials for production of agrochemicals and pharmaceuticals.
Agricultural sciences
Agricultural Sciences (
Dow AgroSciences) provides 7% of sales, and are responsible for a range of
insecticide s (such as
Lorsban),
herbicides and
fungicides. Genetically modified plant seeds are also an important, growing area. Dow AgroSciences sells seeds commercially under the following brands: Mycogen (grain corn, silage corn, sunflowers, alfalfa, and sorghum, Atlas (soybean) and PhytoGen (cotton).
Basic plastics
Basic plastics (26% of sales) end up in everything from
diaper liners to beverage
bottles and oil tanks. Products are based on the three major polyolefins – polystyrene (such as Styron resins), polyethylene and polypropylene.
Basic chemicals
Basic chemicals (12% of sales) are used internally by Dow as raw materials, and are also sold worldwide. Markets include dry cleaning, paints and coatings, snow and ice control and the food industry. Major products include ethylene glycol,
caustic soda,
chlorine,
vinyl chloride monomer (VCM, for making
PVC) and
calcium chloride.
Ethylene oxide (EO) and
propylene oxide and the derived alcohols
ethylene glycol and
propylene glycol are major feedstocks for the manufacture of plastics such as polyurethane and
PET.
Hydrocarbons and energy
The Hydrocarbons and Energy operating segment (13% of sales) oversees energy management at Dow, succeeding in raising energy efficiency by 92% since 1990. Fuels and oil-based raw materials are also procured. Major feedstocks for Dow are provided by this group, including
ethylene,
propylene,
1,3-butadiene,
benzene and
styrene.
History
Early history
The company originally sold only
bleach and
potassium bromide, achieving a daily bleach output of 72 tons a day in 1902. Early in the company's existence, a group of
British manufacturers attempted to drive Dow out of the bleach business by cutting prices. Dow survived by cutting prices in response and, although losing about $90,000 in income, began to diversify its
product line. In 1905 German bromide producers drastically reduced their price of bromides in the US in an effort to prevent Dow from expanding its sales of bromides in Europe. Dow was able to purchase German-made bromides in the US, ship them back to Europe and still sell them at a lower price than the German producers were charging. Even in its early history, the company set a tradition of rapidly diversifying its
product line. Within twenty years, Dow had become a major producer of
agricultural chemicals, elemental
chlorine,
phenol and other
dyestuffs, and
magnesium metal.
In the 1930s, Dow began production of plastic resins, which would grow to become one of the corporation's major businesses. Its first plastic products were
ethylcellulose, made in 1935, and
polystyrene, made in 1937.
Diversification and expansion
In 1940-1, Dow built its first plant to produce
magnesium extracted from
seawater rather than underground brine. This marked the first time man had 'mined the ocean for metal'.
Growth of this business made Dow a strategically important business during
World War II, as magnesium became important in fabricating lightweight parts for
aircraft. Also during the war, Dow and
Corning began their joint venture,
Dow Corning, to produce
silicones for military and later civilian use. In 1942 Dow began its foreign expansion with the formation of Dow Chemical of Canada in
Sarnia, Ontario to produce
styrene for use in
styrene-butadiene synthetic rubber.
In 1940, Dow began plant construction in Freeport, Texas. This is now the home to Dow's largest site - and one of the largest integrated chemical manufacturing sites in the world. One of the first plants to come on stream was the first facility to extract magnesium from seawater. The site grew quickly - with power, chlorine, caustic soda and ethylene also soon in production. Based on 2002-2003 data, the Freeport plants (known as Texas Operations internally) produced 27 billion pounds of product - or 21% of Dow's global production.
In the post-war era, Dow began expanding outside North America, founding its first overseas subsidiary in
Japan in 1952, with several other nations following rapidly thereafter. Based largely on its growing plastics business, it opened a consumer products division beginning with Saran wrap in 1953. Based on its growing chemicals and plastics businesses, Dow's sales exceeded $1 billion in 1964, $2 billion in 1971, and $10 billion in 1980.
Vietnam war: Napalm and Agent Orange
During the
Vietnam War, Dow became the sole supplier of
napalm to the
United States military. Napalm, an
incendiary liquid used as a weapon in Vietnam, led to human casualties that were widely displayed in the news media. Protests of Dow took place at many colleges but Dow's board of directors voted to continue production of napalm (after attempting to persuade the
U.S. Department of Defense to accept responsibility for napalm and exculpate Dow's management).
Agent Orange, a chemical
defoliant containing
dioxin, was also manufactured by Dow in
New Plymouth,
New Zealand and in America for use by the U.S. military during the Vietnam War; the dioxin from the defoliant made its way into the
food chain and was linked to a major increase in
birth defects among Vietnamese people. In 2005, a lawsuit was filed by Vietnamese victims of Agent Orange against Dow and
Monsanto, which also supplied Agent Orange to the military. The companies argued that no link between Agent Orange and the alleged health problems had been proven, and furthermore that the companies are not responsible for the manner in which their products are used by the military. The lawsuit was thrown out. In 2006, a court in
South Korea did order Dow and Monsanto to compensate
South Korean veterans of the Vietnam War and their families for Agent Orange-related injuries.
245-T and DDT was also used on New Zealand farmland from the 1950's to the 1980's, currently the New Zealand government provides free medical checkups to individuals who believe they're affected, however affected individuals feel this is vastly insufficient.
Breast implants
A major manufacturer of silicone
breast implants, Dow Corning was successfully sued in 1977 for damages arising from a woman whose implants ruptured; it was the first such successful suit, and Dow Corning paid $170,000 in a settlement. During the 1980s,
Ralph Nader's
Public Citizen Health Research Group publicised its belief that the implants were cancer-causing; in December of 1990, an episode of
Face to Face with Connie Chung addressed the then-alleged dangers of silicone implants. More lawsuits, as well as
Food and Drug Administration reviews,
Congressional hearings, and scientific studies took place in the ensuing years; as of December 1991, 137 individual lawsuits were filed against Dow Corning, a figure that would rise to 3,558 in December 1992, and 19,092 by December 1994. Amidst the flurry of lawsuits in May 1995, Dow Corning filed for
Chapter 11 bankruptcy protection; several judgments against Dow Corning and Dow Chemical were handed down in lawsuits.
Several panels of independent experts, including the
Institute of Medicine, have since found that silicone breast implants don't appear to cause any systemic diseases or cancers.
Per the 2005 10-K for The Dow Chemical Company filing "On October 6, 2005, all such cases then pending in the District Court against the Company were dismissed. Should cases involving Dow Corning’s breast implant and other silicone medical products be filed against the Company in the future, that'll be accorded similar treatment." The Dow Chemical Company - 10-K Filing - 2005
DBCP
Until the late 1970s, Dow produced
DBCP (1,2-dibromo-3-chloropropane), a soil fumigant and
nematicide sold under the names the Nemagon and Fumazone. Workers at Dow's DBCP production were made sterile by exposure to the compound. These male reproductive effects were consistent with animal experiments showing that DBCP sterilized rabbits. The workers successfully sued the company, and most domestic uses of DBCP were banned in 1977. Amid growing concerns over the chemical's effects on male workers, Dow ceased production and reclaimed DBCP that had been shipped to its users. Despite warning from the company about its health effects,
Dole Food Company, who was using the chemical on its
banana plantations in
Latin America, threatened to sue Dow if it stopped DBCP shipments, so Dow shipped half a million gallons of DBCP to Dole, much it reclaimed from other users. Plantation workers who became sterile or were stricken with other maladies subsequently sued both Dow and Dole in Latin American courts, alleging that their ailments were caused by DBCP exposure. While the courts agreed with the workers and awarded them over $600 million in damages, they've been unable to collect payments from the companies. A group of workers then sued in the United States, and, on
November 5,
2007, a Los Angeles jury awarded them 3.2 million dollars. Dole and Dow vowed to appeal the decision.
1990's – transition from geographic alignment to global business units
In the early 1990s, Dow embarked on a major structural reorganization. The former reporting hierarchy was geographic based, with the regional president reporting directly to the overall company President and CEO. The new organization groups together the same businesses from different sites, irrespective of which region they belong (for example the vice president for Polystyrene is now in charge of these plants all over the word), almost reducing the regional president to a figurehead.
Chlorpyrifos
Chlorpyrifos, marketed by Dow as Dursban, is well known as a home and garden
insecticide, and until 2000 it was one of the most widely used household
pesticide in the US. The pesticide is also a nerve toxin and suspected
endocrine disruptor and has been associated with
carcinogenicity, reproductive and developmental
toxicity, and
acute toxicity. One study claims that Dow has contributed to 80% of the Chlorpyrifos burden of the US.
In 1995, Dow was fined $732,000 for not sending the EPA reports it had received on 249 Dursban poisoning incidents. In June 2000, Dow withdrew registration of chlorpyrifos for use in homes and other places where children could be exposed, and severely restricted its use on crops. The company, however, continues to market Dursban in industrializing countries, including India, where Dow's sales literature claimed Dursban has "an established record of safety regarding humans and pets."
In 2003, Dow agreed to pay $2 million - the largest penalty ever in a pesticide case - to the state of New York, in response to a lawsuit filed by the Attorney General to end Dow's illegal advertising of Dursban as "safe".
Union Carbide merger
At the beginning of August 1999, Dow agreed to purchase
Union Carbide Corporation for $9.3 billion in stock. The combined company would be the second largest chemical company, behind
DuPont. This led to protests from some stockholders, who feared that Dow would become responsible for Union Carbide's role in the
Bhopal disaster. In 1984, a Union Carbide plant in
Bhopal, India had leaked toxic gas. According to
Amnesty International, over 20,000 people died as a result of the Bhopal disaster, with an additional 100,000 "living with chronic illnesses".
Union Carbide maintained that the company met its legal responsibility by reaching a settlement with the Indian government in 1989 which required the Indian state government of
Madhya Pradesh to clean up the disaster site. As part of the settlement, Union Carbide gave the Indian government $470 million. By 1998, the Indian government had disbursed $230 million to victims of the disaster and earmarked the rest for cleanup and additional aid to residents. The survivors of the disaster sued, and in 2004 the Indian government began disbursing the remainder of the money. Survivors have also filed a criminal case against Dow in the hopes that the company's Indian assests can be seized. According to Union Carbide, the explosion was caused by sabotage. In 2004, Amnesty International released a report indicating areas they consider Union Carbide failings, and accused the company of withholding information critical to medical treatment.
Today, Dow is the world's largest producer of plastics; with its 2001 acquisition of
Union Carbide, it has become a major player in the
petrochemical industry as well.
Restructuring
On
August 31,
2006 Dow announced that it had plans to close facilities at three locations:
- It will shut down all of its production in Sarnia, Ontario by the end of 2008. Sarnia had been Dow's first manufacturing site in Canada. In 1942, the Canadian government invited Dow to build a plant there to produce styrene (an essential raw material used to make synthetic rubber for World War II). Dow then built a polystyrene plant in 1947. Up to the early 1990s, the Chemical Valley site contained numerous plants, while Dow Canada's headquarters were located at the Modeland Centre, and a new River Centre complex was opened which housed Research and Development. Since then, several plants on the site have been dismantled and Dow Canada headquarters were moved to Calgary, Alberta, while the Dow Fitness Centre was donated to YMCA of Sarnia-Lambton, and the Modeland Centre was sold to Lambton County and the City of Sarnia. In 2000, Sarnia Site was the location of a pilot plant for ethylene-styrene interpolymer (ESI) but ending up production never progressed and the project was ended. In 2002, the old steam plant was demolished and land on the site was sold to TransAlta which built a new natural gas power plant. As of 2003, the remaining plants on the site produce Polystyrene, Low Density Polyethylene (LDPE), Epoxy Resins, Polyols (Propylene Oxide Derivatives), and Latexes.
- One plant (Dow terminology for a production unit) at its site in Porto Marghera (Venice), Italy, which had been shut down for planned maintenance earlier that month, won't be restarted.
- Two plants at its major site in Fort Saskatchewan, Alberta were to be shut down by the end of October 2006.
Areas along Michigan's
Tittabawassee River, which runs within yards of Dow's main plant in
Midland, were found to contain elevated levels of the cancer-causing chemical
dioxin in November 2006. The dioxin was located in sediments two to ten feet below the surface of the river, and, according to the
New York Times, "there is no indication that residents or workers in the area are directly exposed to the sites". However, people who often eat fish from the river had slightly elevated levels of dioxin in their blood.
In December 2007, Dow announced a series of moves to revamp the company. A
December 4 announcement revealed that Dow planned to exit the automotive sealers business in 2008 or 2009. Within several weeks, Dow also announced the formation of a joint venture with the Petrochemical Industries Company, a subsidiary of
Kuwait Petroleum Corporation. In exchange for $9.5 billion, Dow sold a 50% interest in five of its global businesses: polyethylene, polypropylene and polycarbonate plastics, and ethylenamines and ethanolamines.
Environmental Record
Based on year 2000 data, researchers at the Political Economy Research Institute determined that Dow Chemical was ranked eleventh among corporations in a measure of toxicity of airborne pollutants emitted in the United States, releasing more than 14 million pounds of toxins into American air in that year. (The statistics given are not correlated to the volume of production.) According to
United States Environmental Protection Agency (EPA) documents Dow has some responsibility for 96 of the United States' worst
Superfund toxic waste dumps, in tenth place by number of sites. One of these, a mining site, is listed as the sole responsibility of Dow: all the rest are shared with numerous other companies. Fifteen sites have been listed by the EPA as finalized (cleaned up) and 69 are listed as "construction complete", meaning that all required plans and equipment for cleanup are in place.
In 2007, Dow was awarded an American Chemical Council (ACC) award of 'Exceptional Merit' in recognition of its longstanding energy efficiency and conservation efforts. Between 1995 and 2005, Dow reduced energy intensity (BTU per pound produced) by 22%. This is equivalent to saving enough electricity to power eight million US homes for a year. The same year, Dow subsidiary Dow Agrosciences won a United Nations Montreal Protocol Innovators Award for its efforts in helping replace methyl bromide - a compound identified as contributing to the depletion of the ozone layer. In addition, Dow Agrosciences won an EPA "Best of the Best" Stratospheric Ozone Protection Award.
(External Link
). The
United States Environmental Protection Agency (EPA) named Dow as a 2008
Energy Star Partner of the Year for excellence in energy management and reductions in
greenhouse gas emissions.
Dow Corning
Equally owned by Dow and
Corning, Inc. (formerly Corning Glass Works), Dow Corning was founded in 1943 by the two companies as a joint venture. The company's focus is
silicon-based products and technology. Dow Corning in turn owns 63% of the
Hemlock, Michigan-based
Hemlock Semiconductor Corporation, which manufactures
polycrystalline silicon for
semiconductor chips.
Dow Corning manufactured silicone
breast implants, which were the cause of controversy and legal liability in the 1980s and 1990s (
see below.)
Board of directors
Current members of the
board of directors of The Dow Chemical Company are
Arnold Allemang (who is also a senior adviser to the company); chemistry professor
Jacqueline Barton; former
Boeing manager
James A. Bell;
Whirlpool Corporation chairman and CEO
Jeff Fettig; former
U.S. Secretary of Commerce Barbara Franklin; Dow chairman and CEO
Andrew N. Liveris; Dow CFO
Geoffery E. Merszei; Illinois Tool Works Inc. vice chairman
James Ringler;
Duke Energy Corporation president
Ruth Shaw; and Claris Capital chairman
Paul Stern (who is Dow's presiding director and a member of the
Council on Foreign Relations.)
2007 dismissals
On
April 12,
2007, Dow dismissed two senior executives for "unauthorized discussions with third parties about the potential sale of the company." The two figures are executive vice president Romeo Kreinberg, and director and former
CFO J. Pedro Reinhard. Dow claims they were secretly in contact with
JPMorgan Chase; at the same time, a story surfaced in Britain's
Sunday Express regarding a possible
leveraged buyout of Dow. The two executives have since filed lawsuits claiming they were fired for being a threat to CEO Liveris, and that the allegations were concocted as a pretext.
Major Sponsorships
In September 2004, the company obtained the naming rights to the Saginaw County Event Center in
Saginaw, Michigan; the center is now called the
Dow Event Center. The
Saginaw Spirit (of the
Ontario Hockey League) plays at the Center, which also hosts events such as
professional wrestling and live theater.
In October 2006 the company bought the naming rights to the stadium used by the
Great Lakes Loons, a
Single-A minor league baseball team located in its hometown of Midland, Michigan. The stadium, which opened in April 2007, is called
Dow Diamond. The Dow Foundation played a key role in bringing the Loons to the city.
The company also sponsors a global running relay to highlight the need for better drinking water in locations around the globe. The run will roughly follow the 41st North parallel and cover nearly . The run is organized by the Blue Planet Run Foundation.
Outlook
Dow CEO
Andrew N. Liveris called 2005 the company's "best year ever" with operating profits of $5.4 billion, a jump of 56.5% compared with the previous year. Net income rose more than 60% to $4.5 billion, on sales of $46.3 billion. 2006 looks as if it could be even better, with first-quarter net earnings of $1.2 billion. All this is occurring in the context of adverse operating conditions, caused by high energy and raw material costs, and the effects of two damaging hurricanes.
Liveris supports the vertically integrated approach used at Dow, which produces everything from basic chemical feedstocks to high value products such as pesticides and reverse osmosis membranes. These value-adding product chains, along with Dow's wide product range, help the company to weather the storms of the global economy. Despite this, high energy and feedstock costs may begin to take their toll, particularly if global demand begins to fall just as supply is rising.
Like many chemical companies, Dow is facing pressures of regulation in the US and
Europe, particularly as the
EU introduces its new
REACH policy. Litigation costs in the US taken over by Dow as a result of its 2001 takeover of
Union Carbide also remain a concern.
For these reasons the company is looking to the Middle East and Asia for new projects. In
Kuwait, Dow is constructing (with
PIC of Kuwait) a new world-scale
ethane cracker for production of
ethylene, along with an
ethylene oxide/
ethylene glycol plant and (for 2008) a facility for production of
aromatic hydrocarbons. In
Oman, the company is working with the Oman government to build a new world-scale
polyethylene plant. In China, the company is collaborating with
Shenhua Group (the country's largest
coal mining company) to improve
catalyst efficiency to allow viable conversion of
coal to
olefins. Dow is also seeking to expand its
R&D presence in Asia, adding 600 jobs in
Shanghai by the end of 2007, and the company may open up a large R&D center in India.
The joint ventures planned for Asia are typical of Dow's "asset-light" approach, which works by offering a combination of intellectual property and money in exchange for a share in a world-scale production facility. At the same time, the company is considering selling a share of some of its existing assets in order to free up cash.
In June 2006 Liveris announced Dow's
safety and
environmental goals for 2015:
Get more info on 'Dow Chemical Company'.
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