What Might Be Tagged At Dow’s Yardsale?

As you have may have heard, Dow Chemical plans to sell more businesses. Back in December, the company said it would get rid of its epoxy resins and chlorine-related business, which would make the bulk of $3.0 to $4.0 billion worth of divestitures. Mind you, these numbers here are a little funky. They refer to the pre-tax proceeds to Dow from transactions that aren’t necessarily even being negotiated yet. However, the company tends to get strong valuations when it sells businesses, so I would expect that the proceeds from deals would be within the range and even towards the top of it. Last week, at an investor event in Saudi Arabia, the company announced it would put an additional $1.5 to $2.0 billion in businesses up for sale. CEO Andrew N. Liveris wouldn’t say what the businesses are, but he would certainly characterize them. They would be nice businesses, likely coming out of its Performance and Functional Materials units, and perhaps reasonably profitable. But they would be more meaningful to potential buyers than they currently are to Dow. They would be, Liveris promised,  “Lots of small, little businesses that you never even track, that you never follow, and that you never even knew we had.” He was addressing analysts, thus casting a wide net. They are only acquainted with the solid form of ethylene known as polyethylene and Dow AgroSciences. The Chemical Notebook takes Liveris’ remarks as a challenge. What are the most obscure Dow businesses? Two that jumped out at me are are Dow Plastics Plastics Additives And Dow Oil & Gas. Dow put the plastics additives unit up for sale last year and then withdrew it from the market. Oil and Gas is tiny, about $270 million in annual sales. It is a market facing unit that sells chemicals for oil and gas exploration and extraction. This is a very marketable business, with companies such as Solvay and Ecolab plunging further in this area. My only reservation about Dow selling this business is that the chemistry on offer in oil and gas overlaps with other Dow businesses. Additionally, I combed through Dow’s Product Safety Assessment Finder, which by the way, is a great source of information for many chemicals. I asked question “what are the real oddball businesses?” Here are few (Don’t take this as a list of possible sales, though. Some, as you will see, are likely keepers.): Silicones and Feel Modifiers: These sound dirty. They’re not. They are used in leather finishing. They also sound like something Dow Corning would sell. With a tradename like ROSILK, I’ll guess these came from Rohm and Haas. ADSORBIA...

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Shale And The Safety Challenge Ahead
Jun21

Shale And The Safety Challenge Ahead

Incidents at chemical plants in Louisiana one week ago left three people dead. Two were killed in an explosion and fire at a Williams Cos. ethylene cracker in Geismar. One died when a nitrogen manifold ruptured at a CF Industries complex in Donaldsonville. A write up by Jeff Johnson and me appears here. The genesis of the story is an interesting one. Last Monday, I called Jeff about blasts. I made the observation that both plants were undergoing work. The Williams plant is being expanded by 50% this year to take greater advantage of shale gas. An ammonia unit at the CF facilities was undergoing a scheduled turnaround. The process of shutting down, working on, and restarting units is a major danger for chemical operators in a similar way that takeoff and landing are the most treacherous moments of flight. Jeff is very aware of this. He owns the Chemical Safety & Hazard Investigation Board beat. He also mentioned to me that the CSB is overtaxed. Its staff of 40 has 15 investigations to cover right now. It hasn’t launched an investigation into CF yet for want of manpower. Shale will lead to a flood of construction the likes of which the U.S. chemical industry has never seen. According to the American Chemistry Council, the amount of capital spending for already announced products is $71.7 billion, and climbing. There will be a big chunk of the chemical industry in the danger zone for accidents. Back in March, I attended a talk at the IHS World Petrochemical Conference in Houston by Richard Meserole, vice president of energy and chemicals construction at the engineering firm Fluor. He had staggering numbers. In just a 50 mile radius from Houston, 45 projects worth $100 million or more will require 20,000 new craft workers. All these skilled laborers such as welders, iron workers, and pipefitters couldn’t even fit into the Toyota Center for a Rockets game. Many of these workers will come from outside the region. Many will be recently trained. And though every construction site—even for a back yard deck—present hazards, are all these workers prepared for the particular nuances of an environment with volatile and highly reactive chemicals? Let us hope that the chemical industry and those regulating it are up to the challenge....

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