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The Dow Chemical Company (DOW - Analyst Report) announced that it plans to build a number of specialty material production plants on the U.S. Gulf coast to leverage feedstock advantage available from increasing supplies of shale gas in North America.
Dow expects to ramp up the Performance Plastics capacity along the U.S. Gulf coast and plans to construct new facilities along the Gulf Coast. The facilities are currently in the front end engineering and design (FEED) phase and are expected to be completed in 2014.
These facilities will likely include a number of technologies that will manufacture materials for Dow’s fastest growing market segments including packaging, hygiene and medical, electrical and telecommunications, transportation, sports and leisure and consumer durables.
Planned units include facilities for the production of ethylene-propylene-diene monomer (EPDM), elastomers, polyethylene (PE) and low density polyethylene (LDPE). The facilities by Dow will employ up to 3,000 workers at construction peak.
Dow estimates that these units along with other planned projects earlier announced as part of the company’s comprehensive U.S. Gulf Coast investment plan, will employ about 5,000 workers during peak construction and will create over 35,000 jobs in the broader U.S. economy over the next 5 to 7 years.
These are strategic moves by Dow to create additional competitive advantage for its Performance businesses by increasing access to cost-advantaged natural gas-based feedstocks. These investments are focused at businesses that have generated higher return on capital.
Dow currently retains a short-term Zacks Rank #3 (Hold).
Other companies in the chemical industry having favorable Zacks Rank are Akzo Nobel NV (AKZOY), Axiall Corporation (AXLL - Snapshot Report) and Eastman Chemical Company (EMN - Analyst Report). All of them hold a Zacks Rank #2 (Buy).
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