Dow Announces Further Price Increases, Freight Surcharges and Idling of Plants (6/26/08)
The Dow Chemical Co. will raise the price of its products by as much as an additional 25 percent in July in an effort to offset the continuing relentless rise in the cost of energy and hydrocarbon feedstocks.
The company also will implement a freight surcharge of $300 per shipment by truck and $600 per shipment by rail, effective August 1. The surcharge applies to North America customers buying chemicals, hydrocarbons and plastics where Dow absorbs the freight currently (“seller absorbs freight”). Later this year a freight surcharge will be implemented in other geographic regions as appropriate.
Furthermore, the company is moving ahead with plans to temporarily idle or reduce production at a number of manufacturing plants. Dow has reduced its ethylene oxide production worldwide by 25 percent, and idled 30 percent of its North America acrylic acid production. The Company also will idle 40 percent of its European styrene production capacity, and has reduced its European polystyrene production rate by 15 percent. These actions are due to the slowdown in the U.S. and European economies, and the recent surge in hydrocarbon feedstock costs.
In light of a serious decline in North American auto sales, Dow’s Automotive unit is announcing a series of cost reduction measures covering facilities, people and external spending. In addition, the business is in the process of divesting its paint shop sealer business and is implementing plant consolidations resulting in the closure of three production units.
In addition, Dow Building Solutions temporarily
idled 20 percent of its European capacity for producing STYROFOAM™ insulation. Earlier
this month, the Company announced plans to idle three Dow Emulsion Polymers
plants representing 25 percent of North America capacity and 10 percent of
European capacity. These reductions were directly related to declines in the
housing and consumer sectors, as well as rising costs