Despite the cancellation of the US$17bn K-Dow joint venture in December 2008 with PIC of Kuwait, The Dow Chemical Company has continued to build on its strong regional presence, mainly in Kuwait and Saudi Arabia.
Given the importance of the region in the company’s portfolio, Dow has appointed Markus Wildi as its new president for operations in the region, which he holds in addition to his position as vice president of corporate development for the company’s operations in Kuwait. “I have recently been tasked with additional responsibilities for the group’s business in the region,” explains Wildi.
“In my new role as president for Dow in the Middle East, I oversee the company’s operations in the region including the successful development and implementation of the company’s strategy. The Middle East has always been an integral region for us so part of my mandate will be to develop new business opportunities across multiple industry sectors relevant to our business,” he explains.
His duel-role is considered one of the top jobs globally for the chemical super-giant, and Wildi reports directly to Andrew Liveris, chairman and CEO of The Dow Chemical Company.
The collapse of the proposed K-Dow project in 2009 has not altered the vision of Dow toward the Kuwaiti market, and Wildi describes his mission in Kuwait as a special, crucial challenge for the company. “My main responsibilities are to build upon our local presence, enhance brand image and position, identify and evaluate new business potential in Kuwait while providing oversight of the company’s existing joint ventures in the country,” says Wildi.
Dow has a longstanding relationship with the Middle East beginning with the establishment of manufacturing and commercial facilities in the UAE and Egypt more than 30 years ago.
“Worldwide, we have over 60 years of experience in managing successful partnerships and joint ventures. Today we have 62 successful joint ventures around the world, which are integral to our global reach,” he reveals.
The company’s major regional investments are today in Kuwait and in the Kingdom of Saudi Arabia. “We have partnered with Petrochemical Industries Company K.S.C. (PIC) of Kuwait on six joint ventures and are in the JV formation process of world-scale manufacturing complex in Saudi Arabia’s Eastern Province,” he explains.
For nearly 15 years, Dow and PIC have shared one successful milestone after another, partnering on six industry-leading joint ventures. “Our JVs with PIC combine Dow’s strong existing asset base, technology position and global market reach and presence.
Our strategy of working with local partners to set up state-of-the-art petrochemical complexes in Kuwait demonstrates our commitment to transforming the regional petrochemical landscape while supporting regional employment objectives and economic diversification agendas.” In Saudi Arabia, Dow has a significant stake in the Saudi Acrylic Monomer Company (SAMCo), a JV with Tasnee and Sahara Olefins Company, which will produce 250,000 t/y of acrylic acid. Dow’s share was originally held by Rohm and Haas, which Dow acquired in April 2009.
Also in Saudi Arabia, Dow recently signed a business alliance with regional industrial conglomerate E.A. Juffali & Brothers to construct a polyol blends plant in Jeddah. This manufacturing expansion combines the company’s polyurethane systems and epoxy systems capabilities.
A global credit crunch coupled with ever increasing volatility in energy prices made life difficult for chemical producers around the world. In the midst of the world’s greatest financial crisis, Dow maintained its commitment to its transformation strategy.
“We have been preferentially investing in performance and specialty businesses. These businesses depend on customer intimacy and technology-differentiated solutions,” he says.
“They are less cyclical, more value-add businesses, with higher profit margins that are also more consistent earners over the cycle. Our acquisition of Rohm and Haas was a milestone in our execution of that strategy,” he adds.
Dow continues to strengthen the competitiveness of its franchise basic petrochemicals portfolio. “These assets produce commodity products that are sold into a competitive landscape, where scale and cost are critical to success,” explains Wildi.
“Dow has taken a strategic approach that we call “asset-light”. This strategy entails sharing capital costs and project risks with strong partners. In other words, pairing ourselves with resource owners who can position our franchise basics businesses for growth and competitive advantage, by providing access to feedstocks and new geographic channels to market while we provide technology and thought leadership in return, such as our partnerships in Kuwait and Saudi Arabia.”
Committing to this business strategy in the Middle East allows Dow to continue to invest in its successful partnerships and also to identify new opportunities to create world-class joint ventures across the region.
In executing this business strategy, Dow is encountering some regional challenges. “One of the pressing challenge areas in the region is identifying local talent that has the right mix of education and experience to grow and excel in the petrochemical industry,” he reveals.
To overcome challenges in the area of talent procurement, Dow entered into a strategic partnership with King Abdullah University of Science and Technology (KAUST) to establish a multi-year, multi-million dollar joint research and development (R&D) framework.
“Our plan with KAUST is to expand Dow’s innovation footprint into the Middle East, and our collaborations with universities in the Middle East and Africa R&D centre is to enrich the R&D experience and develop the region’s R&D expertise,” Wildi says.
While access to feedstock is a key motive behind Dow’s investments in the region, growth opportunities are another factor.
“The Middle East downstream market is very exciting but in the end it comes down to people. What we’re seeing here in the Middle East is a young population – among the youngest in the world – that is also among the world’s fastest-growing. Ultimately, these populations all expect more from life,” explains Wildi.
“We have an opportunity to participate in the socio-demographic growth in a number of dynamic ways, and through a number of industries,” he explains. Wildi also sees that the Middle East downstream market presents an opportunity to partner with a range of prominent companies and initiatives in order to act on what we’ve been learning about the region for quite some time.
“It is a place that deserves a concentrated and long-term investment – in hard assets and goods and services – but above all, in its people,” he adds. Wildi is not deterred by the large-scale expansions which have been rolled out in the Middle East by many national oil company subsidiaries, and says the region holds enormous promise for new developments. “There is plenty of room for investment in the Middle East. With the feedstock availability it absolutely remains an attractive place to expand,” Wildi concludes.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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