07 May 2012

Dow Chemical Expands into Africa

Dow Chemical Co., the largest U.S. chemicals producer, said it expects sales in Africa to at least double within three years as demand for its products including water-purification systems and building materials grows.

The company, based in Midland, Michigan, inaugurated an office in Nairobi yesterday that will serve the East African region, the Chief Executive Officer said yesterday in an interview in the Kenyan capital. Dow, which has an annual capital investment budget of $2.5 billion, will initially spend an average of $30 million per year in Africa on areas including manufacturing facilities to grow its sales.

Dow has been reviewing opportunities in Africa and really reinforcing our commitment to the continent. This is a multibillion dollar opportunity for Dow. We are less than a billion dollars revenue today and most of that is centered in southern Africa and northern Africa.

Economic growth in Africa may average 5 percent over the next two decades as the continent boosts its manufacturing capacity, diversifies trade by reducing its reliance on agriculture and invests in infrastructure including power supply, the United Nations Economic Commission for Africa said in a report in March. Growth averaged more than 5 percent between 2000 and 2010, helped by improved economic management and rising prices for its commodities, it said.

Dow has manufacturing facilities in 37 countries and sales offices in 160 nations. It spends $1.7 billion on research and development annually, with two thirds of sales generated outside the U.S.

Growing Manufacturing

Strategies are in place to continue growing outside the U.S., by utilizing manufacturing facilities, value add and over time, research and development.

Dow, founded in 1897 as a bleach maker, is the world’s biggest producer of ethylene, chlorine, epoxy resins and linear low-density polyethylene plastic. It’s the world’s second- biggest chemical maker by revenue behind Germany’s BASF SE.

The strategy to grow sales in eastern Africa will begin with importing products into the regional market, warehousing and working with global supply chains, Liveris said. Over time, the company may introduce manufacturing and eventually research and development facilities in the region, he said.

In partnership with Saudi Arabian Oil Co., a state-owned energy supplier, Dow is currently building the Sadara Chemical complex in Saudi Arabia at a cost of $20 billion. The plant is expected to begin production in 2015 with 40 percent of output being exported to Asia and as much as 35 percent to the Middle East and Africa.

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