Dow Chemical Co. Chief Executive Officer Andrew Liveris said the world's biggest producer of chlorine is suffering a drop in European demand that goes beyond normal slowdowns during the summer vacation period.
Dow will get a clearer idea of the extent of the slowdown by mid-September when demand normally rebounds after the August holiday period, Liveris told journalists at a briefing in London today. For now, the Midland-based company's factories are running at about 81 percent capacity, taking into account scheduled maintenance shutdowns.
"It's not just a normal weak European vacation season," Liveris said. "There's a lot of stuff out there that's not only not running hard but is running at cash margins, not ours."
The ability to export to eastern Europe and the nearest Middle Eastern nations has helped bolster Dow Chemical's sites in the region. Liveris said he's assessing the situation on a daily basis and will be paying "close attention" to the European footprint as assets remain more evenly balanced between commodity and specialty chemicals than elsewhere, where higher- margin products account for a higher percentage of sales.
Dow Chemical's strategy is centered on moving toward specialty chemicals from a low-cost raw material position, and having the complete chain to convert a gas like propane into polyurethane-based insulation foams. Liveris said he's not as big of a believer in industrial biotechnology as some of his peers because of the long-conversion rates on enzymes and catalysis.
Labor reforms across Europe will be a decisive factor as Dow Chemical assesses its plants there, according to the CEO. The 18 sites in Germany "tend to be very competitive but there are lots of factories in Europe that are not competitive on labor costs," he said.