Fw: Dow Corning to split operations to cut costs

[Guest guest]

----- Original Message -----

From: " ilena rose " <ilena@...>

<Recipient List Suppressed:;>

Sent: Wednesday, March 06, 2002 4:49 PM

Subject: Dow Corning to split operations to cut costs

~~~ Thanks Onnie ~~~

http://news.ft.com/ft/gx.cgi/ftc?pagename=View & c=Article & cid=FT3JN8XOFYC

Dow Corning to split operations to cut costs

By Firn in London

Published: March 5 2002 12:08

Dow Corning, the US speciality chemicals company, is to split its

operations into two in an effort to cut costs and protect margins. The

silicone company, which has been under Chapter 11 bankruptcy protection

since 1995, has set up a new unit, called Xiameter to run its commodity

silicones business. Higher margin products and services will remain under

the Dow Corning brand.

The split will free Dow Corning to focus resources on healthcare and

electronics, two areas it has earmarked for expansion. Burns, Dow

Corning executive vice president, said the move was a response to the

maturity of the $7bn-a-year silicone market. " Products are becoming

commodities so we have set up the new business for customers buying on

price, " Ms Burns said. Xiameter is using e-business technology to automate

ordering, production and delivery in an effort to cut personnel costs for

low-margin products. The company has invested $100m in a global SAP system

and £220m ($312m) to upgrade its manufacturing facility in Wales. Dow

Corning is the world's biggest producer of silicone in sales terms, with

turnover of $2.5bn. Lanham, Xiameter's commercial director, said

Dow Corning was the lowest cost producer, but like many companies in the

speciality chemical sector was struggling to maintain margins as its

products become mature.

The creation of a new business unit, with a distinctive brand, would help

allow it to exploit the growing market for commodity silicones, without

damaging margins across the company, Ms Burns said. However, both

businesses will share manufacturing facilities and produce silicone to the

same specification. The company, which is a joint venture between Dow

Chemical and Corning, made a loss of $22.7m in 2001, against a profit of

$104.6m the previous year. In January it announced plans to cut 700 jobs,

about 8 per cent of its workforce to cut costs. Ms Burns said the trading

environment was still tough. " We are taking a very cautious approach to

2002. We anticipate and hope that the second half will be better, " she

said.

Silicone is used in a broad range of industries including automotive,

textiles, personal care, construction, electronics and paper. Dow Corning

sought Chapter 11 protection in 1995 following a $2bn settlement with women

who claimed they had been harmed by silicone breast implants. Ms Burns said

as there was no certainty as to when to the company would emerge form

Chapter 11 protection. " We've given up predicting. Every time we predict we

will emerge it takes longer, " she said.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View & c=Article & cid=FT3JN8XOFYC