Dow talks to business people, residents

www.ourmidland.com Kathie M. Marchlewski , The Midland Daily News 03/21/2003     There soon will be increased earnings and steady growth at The Dow Chemical Co., its leader told Tri-City business people and residents Thursday.     The company has struggled through eight quarters of poor performance and negative cashflow, but Bill Stavropoulos, chairman, president and CEO, at a community meeting assured an audience of about 175 that a turnaround is in sight.     "There’s no doubt these are challenging times for the chemical industry," Stavropoulos said. "I like to think these are exciting times for Dow."     Turnaround strategy     In place is an aggressive strategy that in the near term will increase profit margins, improve cash flow and reduce debt, Stavropoulos said. "We’re making progress and progress is rapid."     But before the company can break out of its earnings slump and achieve those goals, costs need to be cut.     The task, in the short term, will continue to affect Dow customers and employees.     Expenses have been reduced across the company, a goal that is "on track," Stavropoulos said.     Price increases are in place at 15 Dow businesses to compensate for energy costs that doubled in the last year. About 13 underutilized and non-competitive sites with combined 2002 revenues of $2.5 billion have been identified and will be shutdown or sold.     The businesses include the Tungsten Carbide site in Midland, which will be closed in April. Employees will be moved to other jobs within the company, Dow spokeswoman Holly LaRose-Roenicke said.     Other shutdowns will take place in Texas, West Virginia, New Jersey, Louisiana, Canada, Italy, Venezuela and Puerto Rico. Sales and shutdowns will eliminate 3,000 to 4,000 jobs. The reduction in employment in the short-term will spur future growth for the long-term, Stavropoulos said.     "A company constantly has to change to stay ahead," he said.     Obstacles to overcome     Part of the Dow struggle in recent months has been with high and volatile energy costs, slow global growth rates and uncertainty about the economy.     Stavropoulos addressed the controversial Union Carbide merger that to some has appeared a mistake. He assured people that despite the residual legal disputes brought into Dow by the merger, including asbestos lawsuits and lingering aftereffects of a 1980s industrial disaster in Bhopal, India, that teaming with Union Carbide was a wise move.     "We were aware of the situation," he said. "It’s something that we have to deal with."     It takes at least five years to realize the benefits of most acquisitions, and the Union Carbide deal is no different, Stavropoulos said. He expects the merger will save money later, particularly energy expenses.     "You’re going to see big-time earnings potential," he said.     Keeping Midland     globally competitive     To address how changes and strategies impact Midland, Gary Veurink, vice president and site manager, took the stage.     While Michigan Operations still struggles to attract new business, the gap between the site’s prime controllable costs and the cost of comparable locations is shrinking.     "Over time we will in fact attract new business," Veurink said.     In 2000, the cost for a new business to locate in Midland was 4 percent higher than at other existing Dow sites. Today, Midland costs are 1.5 percent higher.     "We’ve been trying to get this site into the game," Veurink said.     Layoffs and voluntary departures have reduced costs, along with outsourcing.      Local 12075 United Steelworkers of America President Kent Holsing said union workers understand the importance of keeping Michigan Operations competitive with other markets.     "We understand it and we do support any initiative to bring new investment and add more jobs," he said, adding the union has not agreed with all of Dow’s cost-cutting measures.     "I guess that’s the cost of business," Holsing said.     Midland is in the running for new investment, Veurink said.     Dioxin in Midland     Veurink also discussed dioxin issues, noting that health statistics show the community is healthy and that the health of the Tittabawassee River continues to improve.     The Midland Dow site now emits nearly no dioxin into air and water, he said. The most recent tests show .063 of a gram per year of emissions, meaning that accumulation of a gram, or the amount of sugar in a restaurant-style packet, would take more than a decade.     The dioxin existing in Midland, a problem the company is working to resolve, is from historical manufacturing, Veurink said.     A health study still is in the works, he added.