Tag: dow

We all had to know it was coming, right? Perhaps both OPEC and the US oil companies caught wind of this and that was the genesis of their saber rattling lately?

With U.S. biodiesel production at an all-time high and a record number of new biodiesel plants under construction, the industry is facing an impending crisis over waste glycerin, the major byproduct of biodiesel production. New findings from Rice University suggest a possible answer in the form of a bacterium that ferments glycerin and produces ethanol, another popular biofuel.

“We identified the metabolic processes and conditions that allow a known strain of E. coli to convert glycerin into ethanol,” said Ramon Gonzalez, the William Akers Assistant Professor in Chemical and Biomolecular Engineering. “It’s also very efficient. We estimate the operational costs to be about 40 percent less that those of producing ethanol from corn.”

Gonzalez said the biodiesel industry’s rapid growth has created a glycerin glut. The glut has forced glycerin producers like Dow Chemical (DOW) and Procter & Gamble (PG) to shutter plants, and Gonzalez said some biodiesel producers are already unable to sell glycerin and instead must pay to dispose of it.

“One pound of glycerin is produced for every 10 pounds of biodiesel,” Gonzalez said. “The biodiesel business has tight margins, and until recently, glycerin was a valuable commodity, one that producers counted on selling to ensure profitability.”

Researchers across the globe are racing to find ways to turn waste glycerin into profit. While some are looking at traditional chemical processing — finding a way to catalyze reactions that break glycerin into other chemicals — others, including Gonzalez, are focused on biological conversion.

In biological conversion, researchers engineer a microorganism that can eat a specific chemical feedstock and excrete something useful. Many drugs are made this way, and the chemical processing industry is increasingly finding bioprocessing to be a “greener,” and sometimes cheaper, alternative to chemical processing.

In a review article in the June issue of Current Opinion in Biotechnology, Gonzalez points out that very few microorganisms are capable of digesting glycerin in an oxygen-free environment. This oxygen-free process — known as anaerobic fermentation — is the most economical and widely used process for biological conversion.

“We are confident that our findings will enable the use of E. coli to anaerobically produce ethanol and other products from glycerin with higher yields and lower cost than can be obtained using common sugar-based feedstocks like glucose and xylose,” Gonzalez said.

Find article here:

Annual consumption of glycerin in the United States has ranged between 400 million and 450 million pounds for the past three years (2003-2006). Domestic production figures show that approximately 400 million pounds per year was produced heading into the turn of the century.

The U.S. biodiesel industry is expected to produce an estimated 1.4 billion pounds of glycerin valued at $289 million between 2006 and 2015, according to an economic study by John Urbanchuk, director of LECG Inc. According to projections gleaned from NBB estimates, the industry could produce as much as 200 million pounds this year alone. Crude glycerin that once fetched between 20 and 25 cents per pound is now edging closer to 5 cents and lower. This is down from the high of $1.08 in 1996. The glut and pricing pressure have led Dow to close it’s 150 million pound per year facility in Freeport, Texas.

Ethanol giants like Archer Daniel’s (ADM) had previously put glycerin facility plans on hold at the turn of the century as prices collapsed. ADM will produce an estimated 250 mmgpy of biodiesel in the US by the end of 2007 which equates to 25 mmgpy of glycerin. At ethanol production costs of 40% less than corn, anyone want to bet the glycerin facilities plans that are on hold will be jump started?

More information when I get it as I have requests out.

Here are the calls from late yesterday and early this am

Upgrades:

NOVA Chemicals (NCX)= Buy

Enbridge Energy (EEP)= Outperform

Pacific Sunwear (PSUN)= Buy

Bank of America (BAC)= Buy

US Airways (LCC)= Neutral

CIGNA (CI)= Neutral

Downgrades:

Conventry Health (CVH)= Peer perform

US Steel (X)= Reduce

Hercules Offshore (HERO)= Hold

Lehman Brothers upgraded the chemicals giant last week and laid out three scenarios, a big purchase, significant sale or huge share repurchase, that could lift earnings next year. Do not buy DOW (DOW) shares because of this.

The analyst, Sergey Vasnetsov raised his recommendation on Dow Chemical’s shares to overweight from equal weight and lifted his price target to $55, or $15 higher than his previous projection.

He said the company’s large cash position and statements from executives over the past few months have made three outcomes possible that could add to earnings next
year. They include a big acquisition, such as the purchase of a company with sales topping $10 billion; a stock buyback worth up to $10 billion; and a $3 billion divesture of some of Dow’s commodity, or bulk, chemicals businesses.

Given the company’s strong free cash flow, Dow Chemical “could be quite an active
chemical company in M&A,” said Vasnetsov.

If not for those reasons, why buy Dow? Let’s put aside the stellar balance sheet, cash hoard and envious cash flow and look just at the business. Recently in an interview CEO Andrew Liveris said “The good news, though, is that volume is good, and I would tell you with the exception of housing, end-use markets are strong in North America, surprisingly strong, and the rest of the world is somewhere between dynamite and good,” said Liveris.

For proof of his statement? Look at recent pricing actions by the company.

Dow announced price increases for acrylic acid and esters, also known as acrylic monomers or acrylates, effective July 1, 2007, or as otherwise allowed by individual contract terms.

Dow will increase prices for glacial acrylic acid, butyl acrylate, ethyl acrylate, methyl acrylate and 2-ethylhexyl acrylate, as follows:

Butyl Acrylate/2-Ethylhexyl Acrylate

* In North America by US$0.05 per pound.
* In Asia Pacific by US$120.00 per metric ton.
* In Middle East/Africa by US$120.00 per metric ton.
* In Latin America by US$120.00 per metric ton.
* In Europe by 90 Euros per metric ton.

Ethyl Acrylate/Methyl Acrylate/Glacial Acrylic Acid

In North America by US$0.03 per pound. In Asia Pacific by US$70.00 per metric ton. In Middle East/Africa by US$70.00 per metric ton. In Latin America by US$70.00 per metric ton. In Europe by 50 Euros per metric ton.

“The need for these increases is driven by an industry-wide butanol and 2-ethylhexyl supply/demand imbalance,” explained Mark Bassett, global business director for the Acrylic Monomers business of The Dow Chemical Company. “This has reached such a critical point that production is not able to meet demand. This increase also attempts to recover increases in the cost of raw materials such as propylene and natural gas.”

They also announced recently they will raise list and off-list prices on a number of their Oxygenated Solvents products in North America effective June 1, 2007, or as contracts allow. This increase is primarily driven by the tight supply of butanol combined with the continued increased costs of propylene and natural gas.

“A tightening market for raw materials namely propylene and butanol are the primary drivers for this price increase,” says Martin Sutcliffe, global business director, Glycol Ethers. “The global butanol market has been steadily tightening this year, with supply now unable to keep up with demand.”

“Dow recognizes that we need to make exceptional efforts to meet the demand,” says Pat Gottschalk, global business director, Solvents & Intermediates. “However, when the industry is dealing with the need to maximize supply, we must raise our prices to continue to compete for raw materials and other resources.”

If you follow this link, you will see Dow’s 2007 pricing announcements. You will also notice that announcement after announcement has the words “price increase” in it. Demand and pricing are firming and that is never a bad thing.

Liveris said 2007 will be a good year for Dow, but it will definitely not outperform its 2006 earnings. He said earnings should be below $4.00 per share. The reason? Low cost production facilities are being built and Dow is still tied to the US energy market. That US dependence is being fixed but will take time and each year we will see a dramatic improvement.

In the meantime, Liveras does have Dow in a position to purchase more earnings and expand capacity without adding huge debt demonstrated by the recent announcement in five petrochemical projects in Thailand worth $2 billion… a win-win.

In what looks to be straight out of Dow (DOW)Chemical CEO Andrew Liveris’s playbook, John Rice, VP of the Archer Daniels Midland Company (ADM)said “Investment in research, infrastructure, and transportation, and partnerships between ethanol producer countries are the measures required in order to ensure the future of renewable fuels.” He said this at the panel Global Paradigms: The experience of ethanol in the United States and in Brazil, on June 4th at the Ethanol Summit 2007, São Paulo, Brazil.

The president of the São Paulo Sugar Cane Agroindustry Union (Unica), Eduardo Pereira de Carvalho, also believes a partnership between ethanol producer countries to be the best strategy for the success of renewable fuels. “Maize ethanol produced in the United States does not compete with our ethanol. My ‘enemy’ is gasoline,” Carvalho joked.

He continued, “What we need to do is make the forecast investment of US$ 17 billion in the production sector come true, qualify ethanol as an energy product in order to overcome barriers to agricultural products, and sign long term agreements,” he said.

ADM is currently the world’s largest producer of biodiesel and of corn ethanol and has stated it is looking for investment for ethanol in Brazil and will begin producing biodiesel there this month. This is exactly what Dow did recently in Saudi Arabia with it’s petrochemical announcement last month. If you are a producer a product, produce it where the input costs are the cheapest. Since the Brazilian ethanol program is quazi state run, also like Dow’s situation again, ADM will be going into business with the gov’t.

Brazil wants US investment in it’s ethanol program, ADM wants to produce cheap ethanol, this is going to happen….

“I want to have a water business that is $2 billion or $3 billion within two or three years (currently $400 million). I want a coatings business or a buildings solutions business that is equally as big in two or three years,” Said Dow Chemical (DOW) CEO Andrew Liveris in an interview with Reuters Television.. He continued, “These are the areas where we are going to go hunting.”

Liveras was being interviewed in relation to rumors that Dow was trying to acquire German rival BASF (BF). This comes on the heals of recent revelations that Dow made overtures to acquire DuPont (DD) last fall.

Liveras has spent the last three years cleaning up Dow’s balance sheet and now the company is in fantastic shape. With debt at it’s lowest level this century, $2.5 billion in the bank, producing almost $4 billion from operations annually and a $3 billion share buyback ongoing, Dow is now in position to acquire businesses. Is it BASF? Who knows. What is of interest here is what Liveras did not say, when asked he replied “We’ll never comment on a rumor like that, but I will say that between Dow and BASF you are looking at two of the world’s leading chemical companies and reality has to set in on do-ability, The barriers to doing deals like that are not just financial.” What didn’t he say? NO. When asked about the possibility of a Dow buyout in the past, Liveras has been crystal clear that it would not happen, this response is a bit muddy. What is clear? Liveras has made no bones about his desire to grow through acquisitions and partnerships like the one recently announced with Saudi Arabia and based on to date results, his deal making is far from finished.

If he wants a coating business, how about Sherwin Williams (SHW)? A buildings solutions? How about Owens Corning (OC)? Both could be had for a song at their current valuations, have international operations and are leaders in their business.

Now, as an investor who holds most picks several years, if not decades, normally I despise the thought of one of my picks being bought out. It means that I was right, it was undervalued and the purchase price will bring me a nice quick return at the expense of a bunch of future ones. That is the reason these folks buy them, they recognize this. But, when I own both sides of the equation (the buyer and the seller), go ahead kids, merge away. I get a nice quick return on my pick, and continue to benefit from it’s results with my ownership of the buyer and DOW gets a sweet return on it’s money sitting in the bank. Win-Win

One thing is for certain, by the time this decade is over, the Dow Chemical Company I know today will be far different and my kids college funds will be much larger.

Talk about drama. The SEC initiated an investigation into whether or not a senior executive and a board member at Dow Chemical (DOW), both of whom have been fired by the company, secretly attempted to put the company in play, the New York Times reported today. The investigation might also probe Dow’s attempt last autumn to buy DuPont (DD)in a deal worth over $40 billion. At the time, neither company disclosed that Dow had approached DuPont. DuPont turned Dow down, but its stock rose 15% between September and December. The SEC is also examining the unusual trading that resulted from their actions in both companies stocks. Another question that will need to be answered is who at JP Morgan let the “cat out of the bag” to folks who then piled into shares of DuPont or, was it only Krienbeg and Reinhard since it appears JP Morgan was working both deals simultaneously?

Dow says the speculation, and the accompanying stock price spikes, were fueled by the actions of Romeo Kreinberg and J. Pedro Reinhard, who held “multiple meetings” about a takeover. JPMorgan Chase, who was working on the unauthorized takeover proposal of Dow, admits it met with both men. Both executives deny the accusations and have countersued Dow for defamation. Another question that will need to be answered is who at JP Morgan let the “cat out of the bag” to folks who then piled into shares of DuPont or, was it only Krienbeg and Reinhard?

The SEC probe and the lawsuits will hinge on testimony from JPMorgan CEO James Dimon, who told Liveris that Kreinberg and Reinhard had held talks with JP Morgan about a Dow takeover. It would be hard to imaging nobody at JP doing anything wrong after looking at the activity of both companies stocks, so Dimon will essentially have to throw some of his folks to the wolves.

The really big news here is the attempted Dow and DuPont merger. This story is going to have a ton of twists and turns to it in the coming months and ought to keep us occupied in an other wise slow summer. Dow has long coveted Dupont’s seed business an the offer was an attempt to get it. Since that seems to have failed could a Monsanto (MON) joint venture be coming? It would be a way for Dow to get heavily into the seed business and provide Monsanto cheaper building blocks for its products and cash to reinvest in it’s business as it has stated it wants to.

Stay tuned to this one

NEW YORK, May 23 Analysts at Credit Suisse downgrade The Dow Chemical Co (DOW) from “outperform” to “neutral.” The target price is set to $50. In a research report, the analyst Mark Connelly wrote that he likes Dow’s strategy, but sees only moderate upside after speculators recently drove up shares on buyout rumors. He has a $50 price target on the stock, up from $49. He also downgraded the overall major chemicals industry to “Underweight” from “Overweight” on expectations of slowing demand growth. This does not make sense. If you used his numbers, over the next 12 months DOW will return an almost 15% gain to shareholders when you add the 11% share price increasehe expects and the almost 4% dividend DOW will pay to shareholders. How is that bad?

What is it going to “under perform””? The market? Does he think the The Ratings For Sectors

Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months.
Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.
Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12months

Now the Individual Company Ratings

Outperform: The stock’s total return is expected to exceed the industry average* by at least 10-15% (or more, depending on perceived risk) over the next 12 months.
Neutral: The stock’s total return is expected to be in line with the industry average* (range of ±10%) over the next 12 months.
Underperform**: The stock’s total return is expected to underperform the industry average* by 10-15% or more over the next 12 months.

So what do we have? The Chemical sector being downgraded to “under perform” means that is will lag the S&P in 2007. Dow’s neutral rating means that is will match that performance plus or minus 10%. Some math is now necessary. Let’s say S%P advances 10% in 2007. This guy is right and the chemical sector “under performs” and only advances 8%. That means that Dow’s neutral rating means that shares will be between $44 and $53 from their current $45. The more the sector lags the market, the more the downside risk. If the chemical sector only advances 1% in 2007, his expectation is shares will trade between $41 to $50.

Here is the best part: “In an effort to achieve a more balanced distribution of stock ratings, the Firm has requested that analysts maintain at least 15% of their rated coverage universe as Underperform. This guideline is subject to change depending on several factors, including general market conditions.”

Translation? “We have to put a certain number of firm in a category whether they warrant it or not. A depending what the market does, if we are going to look foolish we reserve the right to arbitrarily change that.”

Is anyone getting where i am going with this? He has no idea where shares are going to trade..

Please ignore them…

In early March I wrote “I expect Dow (DOW) to make a major announcement by the end of April and, no, it will not be a sale of the company.” OK, so I was off by 10 days. When Dow and the Saudi Arabian Oil Co. announced their joint venture this past weekend, it marked a major coup for both the company and it’s chief Andrew Liveras.

Currently in the chemical world the most talked and fretted about variable in input (energy) prices. Sales for Dow are increasing quarterly and annually and the only thing holding there stock back is the fact that energy prices are increasing along with them pressuring margins and profits. Last year on CNBC Liveras gave an interview that foretold the events of the past few months and what stands to happen in the future. He said in the interview that US energy policy was going to drive his company and others out of the US to places where they were able to get input for the products they make cheaper. Before anyone gets all riled up and decides to make a political pronouncement on this, I need put out the fire. Liveras was explicit in his blame for both parties here. Neither has done anything meaningful in regards to implementing a national energy policy that would sustain us. Both parties in the last 20 years have controlled Congress and the White House and neither has done anything about it. The argument could be made that Bush has done the most with his push for alternative energy but even here he is only dipping his toes in the water.

The US, Liveras said has access to ample oil and natural gas reserves but will not allow them to be drilled. This causes an artificial reliance on imports and increases their prices. Whether you agree or not on the drilling policy is irrelevant, the facts are what they are when it comes to pricing and it’s effect on business. Liveras has pulled off a master stroke for his shareholders. In a “if you cannot get cheap milk in the store, go to the farmer to get it” move, he is building the largest petrochemical complex in the history of Dow in with the worlds largest oil producer in Saudi Arabia. He has now guaranteed shareholders the cheapest input prices in the industry for the products it will produce. How cheap? Most analysts estimate the natural gas Dow will be using at the facility to be 1/8 to 1/10 the cost of gas it uses in the US. It will be a staggering savings for DOW at a mammoth facility.

How big will this be? Currently DOW has 100 plants around the world that took 100 years to built. The Saudi complex by itself will house 30 additional plants.

The next announcement will be in China with it’s China Shenhua Energy Co to turn it’s massive western coal supplies into energy. China is desperate to develop its western provinces to take some of the strain off the infrastructure on it’s eastern seaboard. China recognizes that it’s oil dependency is growing annually and its looking for ways to offset it before it significantly strains the country’s growth.

We now have DOW building the largest petrochemical plant in a country with lowest input price costs and near completing a deal in the world most populated country to help supply it with desperately needed alternatives to oil. When you add in the doubling of the capacity at their Kuwait project, Dow is becoming the largest and lowest cost producer of it’s products to the fastest growing area of the world. Sounds like recipe for success.

These will be joint ventures are in keeping with Liveras’s stated strategy and will mitigate the costs by Dow. The fact that they are essentially going into business with the government’s of those countries assures the success of the projects for Dow and it’s shareholders.

On another note. Isn’t it nice to be a shareholder of a company that has a CEO who, when he states the goals and a direction of our company, actually delivers on them immediately? Dow is a long term play and by long term I am talking about decades, not months or years. The long term value of Dow is multiples of any price people were talking about in the recent buyout speculation frenzy in February and March. Liveras resisted taking the easy buck and shareholders will be the eventual winners. I own shares and are enrolled in the companies DRIP plan (read more about DRIP plans here) so every one of the juicy dividends Dow pays just deliver me more free shares of the company.

• Federal and state governments recommended, and often specified its use – in the 1920s, the 1930s and all the way to the 1970s.

• No U.S. public health official or government – federal, state or local –advocated restricting the use of lead in house paint until 1949, when public health investigations in Baltimore first identified the risks to children from chipping and peeling lead paint in poorly maintained homes. The federal government did not ban the use of lead-based house paint until the 1970s.

Lead Paint Was Recommended By US State & Fed Government- The Same Gov’t Now Suing Them For It’s Production:

The U.S. Departments of Commerce, Interior and Agriculture, along with other federal and state agencies, recommended lead paint for its durability from the early 1900s through the late 1970s. Fifty of the public housing projects built by President Roosevelt’s Public Works Administration in the mid-1930s specified use of interior lead-based paint to obtain the durability government paint experts found was best provided by such paint. “Public Housing,” “Unit Plans,” and “U.S. Housing Projects,” The Architectural Forum, 345-424 (May 1938). In 1939, the U.S. Forest Service said that lead paint is “the best choice for house owners who wish to allow very long intervals, longer than the durability of any other white or tinted paint, to elapse between jobs.” U.S. Forest Service, “Shopping For Paint,”Consumer’s Guide, Vol. 5, No. 16, at 6 (Feb. 13, 1939). In 1944, the War Production Board resisted the decrease of the amount of lead in paint.

“As a result of these formulation changes, the actual basic carbonate of white lead content of paints is already at an irreducible minimum. And any further reductions in the lead content could only be made at the expense of durability.”

In a 1945, Percy Walker, the chief of the Chemistry Division, and Eugene Hickson of the National Bureau of Standards, presented recommendations as to the use of painting materials to meet federal specifications. The manual stated:

“White lead, a component of almost all white and light-colored paints, is one of the most important white paint pigments.”

In 1933, the American Public Health Association wrote a publication responding to reports of childhood lead poisoning. The association recommended not using lead-based paint on baby toys, beds and carriages. However, it also said it otherwise had wide fields of usefulness like house paint:

“Although lead paint has many wide fields of usefulness, babies’ toys, beds and carriages are not the places to put it.”

The great majority of interior lead-based paint was applied before 1930. By 1940, very little lead pigment was being used for interior residences

Sherwin-Williams (SHW ) stopped producing lead pigmented paint in 1947, a full 30 years before it was banned!!

Beginning in the 1920s, industry sponsored no-strings attached research into risks from lead paint and worked with the American Academy of Pediatrics, the American Standards Association and other public health groups to develop a voluntary national standard to take most of the lead out of interior paint in 1955, long before the federal government required it. In fact, one of the State’s expert witnesses in Rhode Island – Dr. David Rosner – testified that the industry never hid scientific studies about the risks of lead paint from the public, the government or public health officials.

Only 12% of Children Are Even Tested for Lead:

How can we have a “public nuisance” that is so irrelevant that Dr’s and parents only have 120 in 1000 children tested for it and of those 120 children, only 1 of them even test positive for elevated levels? That is “elevated”, not dangerous. Of the 23.3 million children under 72 months in the US in 2005, only 2.9 million of them were even tested for lead in their blood. Of those, only 1.5% tested positive for lead in their blood. The question then needs to be asked: Where did the lead come from? Since there is no way to prove the source unless the possible contacts and sickness are immediately correlated, lead paint defendants need to show other source of possible lead paint exposure. If it is not the improperly maintained paint that is making people sick, then the paint can not be construed a “public nuisance” can it? Other proven sources of lead poisoning in children

From the CDC website:

The potential for children to be exposed to lead from candy imported from Mexico has prompted the U.S. Food and Drug Administration (FDA) to issue warnings on the availability of lead-contaminated candy and to develop tighter guidelines for manufacturers, importers, and distributors of imported candy. Lead has been found in some consumer candies imported from Mexico. Certain candy ingredients such as chili powder and tamarind may be a source of lead exposure. Lead sometimes gets into the candy when processes such as drying, storing, and grinding the ingredients are done improperly. Also, lead has been found in the wrappers of some imported candies. The ink of these plastic or paper wrappers may contain lead that leaches into the candy.

Lead has been found in some traditional (folk) medicines used by East Indian, Indian, Middle Eastern, West Asian, and Hispanic cultures. Traditional medicines can contain herbs, minerals, metals, or animal products. Lead and other heavy metals are put into certain folk medicines on purpose because these metals are thought to be useful in treating some ailments. Sometimes lead accidentally gets into the folk medicine during grinding, coloring, or other methods of preparation. People selling a remedy may not know whether it contains lead. You cannot tell by looking at or tasting a medicine whether it contains lead. Consuming even small amounts of lead can be harmful. There is no safe blood lead level. Lead poisoning from folk remedies can cause illness and even death. Lead has been found in powders and tablets given for arthritis, infertility, upset stomach, menstrual cramps, colic and other illnesses. Greta and Azarcon (also known as alarcon, coral, luiga, maria luisa, or rueda) are Hispanic traditional remedies taken for an upset stomach (empacho), constipation, diarrhea, vomiting, and used on teething babies. Greta and Azarcon are both fine orange powders that have a lead content as high as 90%. Ghasard, an Indian folk remedy, has also been found to contain lead. It is a brown powder used as a tonic. Ba-baw-san is a Chinese herbal remedy that contains lead. It is used to treat colic pain or to pacify young children.

If swallowed or put in the mouth, lead jewelry is hazardous to children. In 2003, a 4-year-old child swallowed a piece of jewelry bought from a vending machine. The child became ill because the jewelry was made of lead. The potential for children to be exposed to lead from this source caused the U.S. Consumer Product Safety Commission (CPSC) to issue on July 8, 2004, a recall of 150 million pieces of metal toy jewelry sold widely in vending machines. In 2006, there was a death of a child from acute lead poisoning after ingestion of a heart-shaped metallic charm containing lead. The charm had been attached to a metal bracelet provided as a free gift with the purchase of shoes manufactured by Reebok International Ltd. On March 23, 2006, a voluntary recall of 300,000 heart-shaped charm bracelets was announced by CPSC and Reebok

Other Proven Lead Hazards That Have Nothing To Do With Paint:

• Drinking water. Your home might have plumbing with lead or lead solder. Call your local health department or water supplier to find out about testing your water. You cannot see, smell, or taste lead, and boiling your water will not get rid of lead. If you think your plumbing might have lead in it:
  • Use only cold water for drinking and cooking.
  • Run water for 15 to 30 seconds before drinking it, especially if you have not used your water for a few hours.
• The job. If you work with lead, you could bring it home on your hands or clothes. Shower and change clothes before coming home. Launder your work clothes separately from the rest of your family’s clothes.
• Old painted toys and furniture.
• Food and liquids stored in lead crystal or lead-glazed pottery or porcelain.
• Lead smelters or other industries that release lead into the air.
• Hobbies that use lead, such as making pottery or stained glass, or refinishing furniture
• In 1979, cars released 94.6 million kilograms (kg; 1 kg equals 2.2 pounds) of lead into the air in the United States. In 1989, when the use of lead was limited but not banned, cars released only 2.2 million kg to the air.” “lead was banned for use in gasoline for transportation beginning January 1, 1996.
• The potential for exposure to lead in canned food from lead-soldered containers is greatly reduced because the content of lead in canned foods has decreased 87% from 1980 to 1988.
• Lead may also be released from soldered joints in kettles used to boil water for beverages. “The domestic use pattern for lead in 1990 was as follows: lead-acid storage batteries, used for motor vehicles, motive power, and emergency back-up power, accounted for 80% of total lead consumption; ammunition, bearing metals, brass and bronze, cable covering, extruded products, sheet lead, and solder represented 12.4%; the remaining 7.6% was used for ceramics, type metal, ballast or weights, tubes or containers, oxides, and gasoline additives (USDOC 1992).”

I’m a service provider in environmental health and safety. I go out to collect the samples, and train other inspectors to detect the danger. In what follows I will describe about nature of the threat from lead.

From my perspective in science and measurement, there are many sources of lead in the environment. So although we focus on lead paint in housing, let’s not lose sight of the big picture. When I think of lead exposure, I think of a lot of sources, with houses being possibly one of them. But also there are major exposures to lead in industrial areas. If any of you drive along Interstate 95, you will pass by or under bridges, water towers, various steel structures with lead paint on them. In fact, when we go out and do air monitoring and soil testing, our worst readings are not in housing at all. It’s when we go out on a bridge painting or repair project that see sky-high exposure. Also, I spent six years in ship-building and overhaul, and in that industry—due to the small confined spaces and compartments six-decks down—there are major exposures to lead.

At A Bridge Construction Site:

I pointed out that each bridge would have a dumpster full of the contaminated abrasive, and what the benefit was to the public health of removing it. The EPA staffer said, “You got a darned good point.” But when I asked him if he could change the regulation, he said, “I can’t do that. Lead-removal is the state’s job.” And yet, the state says that they will do it if the federal people make them do it. This has really been a challenge, to get different state transportation departments granted EPA waivers.

The lead paint defendants need to educate the public about these still present dangers in everyday life regarding lead. Many of those who appear to care most about these children are pursuing dead ends, playing the blame game (See RI AG Patrick Lynch). Yet we know how to solve the problem at a cost that, if not trivial, is certainly less expensive than the road through the court system, with all its hidden toll-booths.If we don’t solve the problem by statute, we will live through a litigation nightmare, and the children will not be winners. But if we do pass the right laws, and enforce them, we will have much as a country to be proud of. Perhaps eliminating childhood lead poison might not rank right up there with eliminating smallpox, as we thought we had done twenty years ago. But what a feat it would be to eliminate this poison from the lives of those children who are already at greatest disadvantage.

Portions of this post from:

http://www.leadlawsuits.com/index.php?s=home

http://www.cdc.gov/nceh/lead/surv/stats.htm

http://www.manhattan-institute.org/html/lead_paint.htm

• Repurchased 9.3 million shares at a cost of over $400 million to complete 2005 program
• 2006 share repurchase program triggered ($2 billion program)
• Outstanding shares are being reduced and the new $2 billion program should be completed by middle of next year (approx. 45 million shares)
• The “death of polyethylene” has been greatly exaggerated with demand only slowing in N. America
• Liveris “2007 will change the earnings profile of the company from a commodity company”
• Liveris “A big bang deal is not necessary to achieve this”
• Debt is not being used for “assets light” expansion
• High feedstock cost assets in N. America that were initially built to export, are being shut and moved to oversees to inexpensive feedstock geographic areas (Libya, Saudi Arabia, India, Russia, Asia) reducing costs.
• Liveris on acquisitions when asked about GE Global “Nothing is off the table as long as it provides the correct integration” and “they are possible”
• Increasing dividends vs increasing buyback: Desire to keep yield above 3.5% and add consistency to shareholder renumeration
• Industry consolidation will continue

PDF. of presentation:

Earnings Highlights:

• Sales grew 3 percent to $12.43 billion from $12.02 billion last year
• EPS of $1.00 a share met estimates
• Earnings were $1.00 per share, down from $1.24 in the same period last year. The fall was principally due to a decline in licensing revenues from extremely high levels a year ago.
• Double-digit sales growth in Europe, Asia Pacific and Latin America more than offset continued weakness in North America, particularly in the housing and automotive sectors.
• Volume was up 1 percent in the quarter, with solid gains across most businesses.
• Asia Pacific, Latin America and Europe all reported strong demand growth — with volume increases of 13 percent, 8 percent and 7 percent, respectively — more than offsetting an 8 percent decline in North America.
• Prices edged 2 percent higher, with healthy gains across most of the company’s performance businesses and in basic plastics, dampened by lower prices in basic chemicals.
• Equity earnings for the quarter were $274 million, an increase of more than 60 percent compared with the first quarter of 2006, reflecting the value of the Company’s asset light strategy.
• Increased the quarterly dividend 12% to 42 cents a share –

CEO Andrew Liveris:

“We have spoken a great deal recently about the power of Dow’s integration and diversification – and these results amplify those words. Our geographic balance meant that robust sales in Europe, Asia Pacific and Latin America more than offset continued weakness in North America; strong growth in many of our Performance businesses and in Basic Plastics countered a downturn in Basic Chemicals; our joint ventures contributed another quarter of excellent earnings; and we continued to strengthen our position in several key industries through our market-facing business model.”

Regarding Feedstock Pricing:

“While there was a temporary pause in feedstock and energy cost increases at the start of the year, we saw a sharp change in direction mid-way through the quarter and expect second-quarter costs to be higher than the same period last year,” said Andrew N. Liveris, Dow’s chairman and chief executive. “That said, strong demand and good pricing momentum has continued through April — reinforcing our view that 2007 will be another solid year for the company.”

Buyout rumors:

Liveris on CNBC: “We are not for sale and have had no conversations with anyone regarding a sale”

Summary:

Another solid quarter for DOW. 5 years ago, the N. American decline would have decimated earnings. Now, it is becoming just a blip on the screen. Share buybacks are continuing, the dividend is increasing and it seems like each week another asset light highly profitable joint venture is being announced. There isn’t anything not to like about DOW now. Liveris is doing a masterful job at reinventing DOW and us shareholders are benefiting and will continue to for a long time… Kudos

I will be on the earnings call today at 10am and will update any significant statements.

Full Earnings Report Here:

DOW Chemical CEO Andrew Liveris appeared on CNBC on Tuesday to attempt to “put to bed once and for all” the rumors of an LBO. Appearing on David Faber’s segment he reiterated the companies stance that they have had “no talks with any private equity group regarding an LBO”. If they had, he said “we would be the first to tell people”. He went on to state that the true value of DOW is in it integration of both upstream and downstream operations and that integration is “total.” This level of integration is shared by only two chemical companies in the world, DOW and BASF. An LBO, he said that would break up the pieces of DOW and sell them off would destroy that value for shareholders. In this instance, an LBO would lead to “value destruction, not creation”. Other notables from the conversation:

Liveris:
“We are currently involved in over 60 deals flows, one of which we announced this morning with Chevron Phillips Chemical”

From The Press Release:

• Dow Chemical Co. (NYSE:DOW – News) and Chevron Phillips Chemical Co. (NYSE:CVX – News; NYSE:COP – News) said on Tuesday they planned to form a joint venture of their plastics and plastic feedstock operations in the Americas.
• The 50-50 joint venture, which would link the companies’ polystyrene and styrene monomer assets, is expected to close in the second half of the year and yield significant synergies in manufacturing, commercial and feedstocks.
• No financial details were released from the planned link-up under the nonbinding memorandum of understanding signed by the companies.
• The new partnership is expected to combine Dow’s styrene monomer plant in Camacari, Brazil, and six polystyrene plants in the United States, Colombia and Brazil, with Chevron Phillips’ Louisiana styrene monomer plant and Ohio polystyrene plant.

In this joint venture, the refining capabilities of Chevron Phillips upstream operations (which Dow does not do), compliment perfectly the downstream plastics operations of DOW (which Chevron Phillips does not do). In essence, Dow is receiving guaranteed feedstock at more than competitive prices in exchange some of the profits from the sale of the final product. A win- win for both companies. This is a vital change in the business strategy of Dow.

When asked about using the growing cash balance at DOW and its now “de-levered” balance sheet for acquisitions, Liveris gave tremendous insight as to what DOW may be looking at. He said:

“We have put the company back in charge of its own future which includes, acquisitions. Now, acquisitions of what companies or what businesses? You’ve read the strategy I am sure and you just implied it when you referred to GE plastics, we are looking for downstream businesses that provide earnings growth and earnings momentum that compliment our own businesses…..”

“…. I won’t comment on any specific deal (after being asked about his interest in GE Plastics) but with over 60 deals in the works, we are looking at everything. It is the deals we haven’t done that are the most instructive. This is a company that financial discipline and making sure that the deals we do do, fit our strategy and we are not just going to come around and buy whatever is available. Now, having said that, look at the profiles, look at the downstream businesses, we are not interested in more commodities, we are interested in technology rich downstream businesses.”

In the past I have pleaded on this blog with CEO Liveris not to give in to the temptation of the easy LBO money. It would seem, based on this mornings interview that those fears should be put to rest. It is also apparent that Liveris is in this thing for the long term. When I reviewed his annual letter to shareholders last week I said a sale of the company was not in the works for 2007. So far so good on that one. Liveras did say that 2007 was going to be a “significant year”. As I have said before, nothing he has done up until this point has lead me to doubt anything he says, no reason to start now…

I will have more on this next week. Here is the summary from the DOW website.

MIDLAND, Mich., March 23 /PRNewswire-FirstCall/ — In his annual letter to shareholders, Andrew Liveris, chairman and chief executive officer of The Dow Chemical Company, summed up 2006 as “a very good year.” And he underscored the Company’s commitment to a transformational growth strategy, focused on reshaping its integrated business portfolio in order to enhance its earnings profile.

In his letter, headlined ‘Strong today. Stronger tomorrow’, Liveris said: “Although our 2006 performance represents an important milestone for our Company, we believe 2007 will be even more significant.”

In 2006, Dow reported record sales of $49 billion, the second highest earnings in the company’s history, a 12% increase in the dividend, the repurchase of more than 18 million shares and the approval of an additional $2 billion in share buy-backs.

Commenting on Dow’s future, Liveris said: “We have the right strategy. We are implementing it with discipline and speed, and our initial results are showing great promise. Going forward, shareholders can expect more innovation, more market-facing businesses, more asset-light joint ventures, continued financial strength and flexibility, and a higher ratio of Performance businesses.”

Liveris also wrote of how Dow delivered against the strategy it laid out a year ago, “Early in 2006, we put some public stakes in the ground regarding our future plans. We said then that we would remain a diversified, integrated, global company, and we think our 2006 results bear out the wisdom of that statement. We said that we would take action to strengthen our franchise Basics businesses and grow through joint ventures, not only building new plants with JV partners, but in some cases, placing our existing assets into JVs-similar to what we did in 2004 with ethylene glycol and the formation of MEGlobal. We call this our “asset light” strategy, and we have made substantial progress in this area.”

Looking toward 2007, Liveris highlighted the Company’s key initiatives related to technological innovation, environmental sustainability and joint venture partnerships.

“With the Basics portfolio, as with our Performance portfolio, we will continue to take aggressive action throughout 2007, including new business models that will make our Basics portfolio more ‘asset light’ and more competitive for the long term,” said Liveris.

“Dow has a long history of innovation … we are funding more than 600 projects that either strengthen our position in key franchises or break into entirely new areas of technology,” said Liveris. “We will continue to invest in the technologies, businesses, regions and markets that are the most promising; prune non-strategic businesses and non-competitive assets; and keep ongoing costs under control.”

Liveris also discussed the Company’s launch of its 2015 Sustainability Goals that commit Dow to addressing humanity’s most pressing environmental problems including: access to clean water, shelter and health care, climate change, and reducing greenhouse gases.

“I made a public commitment at the United Nations’ headquarters in New York City that our Company would apply the full power of its technology- including three major breakthroughs during the 10 years of the program-as well as dedicate our philanthropy and volunteerism to help solve these and other challenges.”

Liveris’s letter was issued today as part of Dow’s 2006 10-K and Stockholder Summary, which has been mailed to all Dow stockholders along with the 2006 Corporate Report and Dow’s 2007 Proxy Statement. Copies of all three documents are available on Dow’s website at http://www.dowannualreport.com/.

Dow has been the subject a quite a few rumors lately:

First, a British newspaper printed a rumor in February that a group lead by KKR and Carlyle were going to make a $60 a share offer for the company. I went on record at the time with my plea to CEO Andrew Liveris to not sell the company. The rumor subsided (did not “go away”) and then market was hit with the events of the past two weeks that commanded everybody’s attention.

Then, Tuesday on CNBC’s “Mad Money” show Jim Cramer (who I beat to the punch on Google ) commented on the rumors admitting he has been waiting since February for DOW and AA to dip after takeover rumors which were printed a British newspaper. While he discouraged speculation on potential buyouts if the fundamentals are not strong, “the fundies for both DOW and AA are pretty good.” According to the rumors, Dow could be purchased by private equity firms at $60 a share, a substantial premium from its present rate of $42.94. He noted the company has a 3.5% dividend yield, has been raising prices and cutting costs. “Buy Dow and Alcoa because when there’s smoke, there’s fire.” Now, while I am not a fan of Jim’s bi-polar investment style, I do place value on his market commentary and the insights he gives on the “why” things happen. I also assume that he has plenty of “friends in high places” on Wall St. and given his obvious egomanism, he would not lend credence to a rumor unless the was a good chance there was actually something there. That is not to say that the interested parties are KKR and Carlyle specifically but that Dow is highly undervalued and people are taking a real close look.

Now there are rumors that Dow an India’s Reliance Industries are considering a joint venture or a merger. India’s top petrochemicals maker, Reliance Industries Ltd , is set to form a joint venture with Dow Chemical Co. for plastics and chemical businesses, the Economic Times said on Thursday.”Talks are at an advanced stage and the two sides are expected to make a formal announcement by the weekend,” the newspaper said, quoting unnamed sources. Top Reliance officials led by Chairman Mukesh Ambani are scheduled to meet Dow Chief Executive Officer Andrew Liveris and a memorandum of understanding may be signed. A Reliance spokesman denied a deal was in the offing, the newspaper said, while a Dow spokesman said it was not the company’s policy to comment on rumors about itself or its activities. The newspaper said Dow was unable to unlock the full value of its huge commodity chemicals and plastics business because of rising cost of feedstock and raw materials in the West. Dow’s basic chemicals and plastics business would be spun off into a separate company, with Reliance paying about $12 billion for its stake and Dow picking up the remainder, the paper said in an unsourced report. The Economic Times had reported on Thursday a deal could be be finalized soon and that the two companies were expected to make a formal announcement by the weekend. The Times of India said Reliance would hold the right to buy Dow’s proposed 41 percent holding in the joint venture if a third party offered to buy the American firm’s stake. Reliance was likely to fund the joint venture by selling some of its stock either to Dow directly or to investors and then investing the cash in the joint venture, the Times of India said.

In my plea the Liveris I expressed my belief that Dow was worth far more on its own long term to me than the quick $60 payoff a buyout would bring. If this joint venture comes to fruition, he would at least seem to believe the same and is taking steps to unlock Dow’s long term value. Since taking over in 2004 Liveris has done a brilliant job fixing Dow’s financial ship and is now embarking on growth and expansion. The easy thing for him to do would be to cash out at the $60 and walk away. The right thing for us shareholders is for him to keep doing what he is doing..

The business is financially sound and growing. It’s stock price is well below its real value and people are starting to notice. It was only a matter of time.