June 24, 2008-Less than a month after it announced an across-the-board increase of up to 20%, Dow Chemical says it will raise prices yet again, this time up to 25% more in July. According to chairman and CEO Andrew Liveris, the steps are “extremely unwelcome but entirely unavoidable” in order for Dow to counter the ongoing “relentless rise in the cost of energy and hydrocarbon feedstocks. Since last month, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing.” Dow sources say that the company's bill for both energy and feedstocks has grown 400% since 2002, from $8 billion to over $32 billion (estimated) this year. In addition, costs for the first half of 2008 are up more than 40% over the same period in 2007.
In another move, Dow plans to temporarily idle or reduce production at a number of manufacturing plants in response to the slowdown in U.S. and European economies along with the ongoing escalation in feedstock costs.
Company sources also report that declining North American auto sales are the reason that Dow Automotive will soon begin cost reduction procedures involving facilities, people and external spending.