MIDLAND, Mich.—Dow Polyurethanes set a course for further global expansion in 2009 and it hasn't let the recession alter its plans.
The business group of Dow Chemical Co. launched two key projects that significantly boost its operation, mostly in Asia where it sees great growth potential, while it kept a close eye on its overall costs, according to Guillermo Novo, business vice president for Dow Polyurethanes and global business director of Dow Polyols.
The separate projects involve construction of a hydrogen peroxide to propylene oxide facility and a propylene oxide plant by SCG-Dow Group, a joint venture between Dow and Siam Cement Group. The venture is partnering with Solvay Peroxythai Ltd. on the HPPO project. Both are being built in Map Ta Phut, Thailand, with the PO plant expected to come on line in 2011.
As the company grew in 2009, it also continued to implement lean technologies throughout its 45 manufacturing facilities, 10 research and development centers, and seven customer service centers worldwide.
The poor global economy had a negative impact on the company as it did on most businesses but, Novo said, the urethane technology leader had an advantage because its PU operation is divided into several different segments.
Dow Polyurethanes' volumes varied by segment and geography, he said. “But overall volumes did hold up well.” The two worst segments the company serves were automotive and construction in both the U.S. and Europe.
A bigger concern for the Midland-based firm was and continues to be the fall and rise of raw material prices. Costs slowly dropped last year, which impacted the company, but are on the rise again in 2010, creating a different set of challenges for Dow Polyurethanes, which is made up of its Propylene Oxide/Propylene Glycol, Isocyanates and Polyols businesses.
In most cases the firm will need to pass on raw material price hikes to defend its margins, Novo said.
Covering all bases
The company currently is evolving and will continue to do so for the remainder of the year. It invested close to $1 billion in its polyurethanes business in 2009, one company official said late last year.
During the recession, Dow Polyurethanes did a little of everything to maintain its leadership role—it consolidated, took advantage of growth opportunities with expansions and acquisitions, and controlled costs worldwide—but primarily focused on remaining close to its customers, which is essential in the way the firm runs its business, according to Novo.
He said he expects the business to grow further in 2010 and 2011.
For instance, the new HPPO and PO facilities projects in Map Ta Phut are part of the firm's plan to build a bigger presence in Asia. The area also houses a hydrogen peroxide plant, a specialty elastomers facility, and power utilities and infrastructure. A nearby liquids cracker will come on stream this year.
Once complete, the PO facility will produce PO via HPPO technology jointly developed by Dow and BASF Corp.
Novo said that Dow Polyurethanes' footprint calls for it to make a number of investments in Asia, the Middle East and Africa.
The company is strong in North America, South America and Europe, where it's been expanding over the last several years.
It completed several growth projects in some of those regions last year, including polyol production expansions at its facilities in Freeport, Texas, and Terneuzen, Netherlands; methylene diphenyl diisocyanate capacity expansions at Freeport and Estarreja, Portugal; and, in a joint venture with BASF, a new HPPO plant in Antwerp, Belgium.
A transaction parent Dow Chemical made—the purchase of Rohm and Haas in April 2009—was not done with Dow Polyurethanes in mind, but it did bring Novo to the urethane operation.
He had been vice president for Rohm and Haas' Process Chemicals and Biocides business and became global business director for Polypropylene and Licensing for Dow Polyurethanes after the transaction was complete. In October, he assumed his present duties.
Novo joined Rohm and Haas in 1986, and handled a number of different responsibilities over the next 23 years, serving as a polymers and resins financial analyst in Latin America, market manager for construction products in North America, country manager in Indonesia, regional business manager in Asia-Pacific, Latin American regional director, a member of the Rohm and Haas leadership council, and vice president for its Consumer and Industrial Specialties business before becoming the Process Chemicals and Biocides business vice president.
Innovation and consistent growth are the approach Dow takes to its urethane operation, he said. The company stands out in its field because of its technology innovation, its relationships with customers, its position as the top polyol producer in the world and its global infrastructure.
The company should remain strong for some time to come, Novo indicated, as long as it properly manages and stays focused on its raw material pricing and, as the recession ends, handles the expected increases in plant operations and stays close to its customers.
“It won't be uniform improvement every place around the world at the same time,” he said. “The dynamics for each market are clearly very different, and we'll deal with that.”