The story
Early history
Dow was founded in 1897 by chemist Herbert Henry Dow, who invented a new method of extracting the bromine that was trapped underground in brine at Midland, Michigan. The company originally sold only bleach and potassium bromide, achieving a bleach output of 72 tons a day in 1902. Early in the company's history, a group of British manufacturers tried to drive Dow out of the bleach business by cutting prices. Dow survived by also cutting its prices and, although losing about $90,000 in income, began to diversify its product line.
In 1905, German bromide producers began dumping bromides at low cost in the U.S. in an effort to prevent Dow from expanding its sales of bromides in Europe. Instead of competing directly for market share with the German producers, Dow bought the cheap German-made bromides and shipped them back to Europe. This undercut his German competitors. Even in its early history, Dow set a tradition of rapidly diversifying its product line. Within twenty years, Dow had become a major producer of agricultural chemicals, elemental chlorine, phenol and other dyestuffs, and magnesium metal. Dow hired Charles J. Strosacker, another Case alumni, in 1907.
During World War I, Dow supplied many war materials that the United States had previously imported from Germany. Dow produced magnesium for incendiary flares, monochlorobenzene and phenol for explosives, and bromine for medicines and tear gas. By 1918, 90 percent of Dow's production was geared towards the war effort. At this time, Dow created the diamond logo that is still used by the company. After the war, Dow continued research in magnesium, and it developed refined automobile pistons that produced more speed and better fuel efficiency. The Dowmetal pistons were used heavily in racing vehicles, and the 1921 winner of the Indianapolis 500 used the Dowmetal pistons in his vehicle.
Founder's death
H. H. Dow died October 15, 1930, from cirrhosis of the liver while receiving treatment at the Mayo Clinic in Minnesota. He had personally received over 90 patents and was awarded the Perkin Medal the January before his death.
Willard Dow
Willard Dow was born in 1897, the year his father founded Dow Chemical. He was the oldest boy and his father required him to work in every department at the Midland plant to expand his knowledge of the company. In 1922, Willard was named a company director and became general manager of the Dow plant in 1926. When his father died, Willard was just 33, but he proved himself capable of successfully operating the company. Strosacker was appointed to Dow's board of directors.
Dow invested heavily in research and development during the Great Depression.
In the 1930s, Dow began producing plastic resins, which would grow to become one of the corporation's major businesses. Its first plastic products were ethylcellulose, made in 1935, and polystyrene, made in 1937.
Magnesium
In just eight months from 1940 to 1941, Dow built its first plant in Freeport, Texas, to produce magnesium extracted from seawater rather than underground brine. The Freeport plant is Dow's largest site, and the largest integrated chemical manufacturing site in the country. The site grew quickly – with power, chlorine, caustic soda and ethylene also soon in production. When Japan attacked Pearl Harbor in December, the plant was the primary source of magnesium in the United States.
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After the attack, the U.S. government asked Dow to step up its magnesium production. Dow doubled its capacity in Freeport, built a second plant in Velasco, Texas, and added two new plants on the shores of Lake Michigan and Lake Huron in Michigan. In 1942, a critical year in gaining air supremacy over Europe, Dow-operated plants produced 84 percent of the nation's magnesium output.
Magnesium was required to manufacture lightweight parts for aircraft.
Growth of this business made Dow a strategic company during World War II.
Styrene
When the second world war began, access to natural rubber was essentially terminated. Polybutadiene was the synthetic rubber selected for use by the federal government. The product is made from Butadiene and Styrene. Dow was the only styrene producer in the United States.
In 1942, Dow agreed to provide the government with assistance to enable the U.S. to produce synthetic rubber during the war. Dow also operated several plants at the government's request to supply synthetic rubber to their armed forces.
Dow began its foreign expansion with the formation of Dow Chemical of Canada in Sarnia, Ontario to produce styrene for use in synthetic rubber.
Plastics & foam
Dow produced several plastics used by the military in World War II, such as Ethocel, foamed polystyrene (marketed as styrofoam), and Saran, later sold to consumers as Saran Wrap.
Dow Corning
In 1943, Corning Glass Works (now Corning Inc.) and Dow formed Dow Corning, established to explore silicone products for military use. Their first product was Dow Corning 4 Compound, an ignition-sealing compound that allowed airplanes to fly at high-altitudes. After the war, Dow Corning began producing products for civilian use and became the largest producer of silicone products in the world.
The Ethyl-Dow Chemical Co. plant at Kure's Beach, NC, the only plant on the East Coast producing bromine from seawater, was attacked by a German U-boat in 1942.
Post War
Carl Gerstacker was discharged from the Army in 1946 as a Major and returned to Dow in Midland. He was a production engineer before the war, but his military service provided experience in problem solving and managing the finances and operations of numerous facilities producing war material. He shifted to finance and accounting and ascended the corporate ladder quickly. He was added to
Dow's board of directors in 1948
Airplane crash
Dow President and CEO Willard Dow died in an airplane crash on March 31, 1949. Leland Doan was named Dow president; Earl Bennett, father-in-law of Willard's brother (Alden B. Dow) became board chairman; general manager was Dr. Mark Putnam; Calvin Campbell was named secretary and Carl Gerstacker was selected as treasurer.
Leland Doan
When Leland Doan became president of Dow in 1949, the world was evolving rapidly. One of Doan's first tasks was to reorganize the company and oversee its diversification and expansion. As war production changed to a normal economy, residential construction boomed. In 1960, almost two-thirds of Americans owned their homes. As the consumer economy grew, so did the demand for household products. Dow had always sold products to other companies but recognized an opportunity and quickly developed a catalog of products for consumer use.
Doan created Dow's biggest product diversification and expanded their markets. Department heads were given more authority, and he expanded his sales force and trained them to analyze their markets and the production process. A news release announced $25 million for expansion into plastic products. New facilities were planned for 1951 with a $100 million budget.
Gerstacker was named vice-president in 1955 and joined Dow's executive committee the following year. He was named chairman of the board in 1960.
Leland Doan reached Dow's mandatory retirement age in 1962 and stepped down. During his 13 years at the helm, employment at Dow more than doubled to 31,000 from 14,000, and sales soared to $890 million from $200 million.
Ted Doan
Ted Doan rapidly climbed the company ladder and followed his father, becoming president when he was 40 years old.
Doan immediately integrated disparate company branches to create an efficient organization focused on growth and expansion outside the U.S.
His goal was to increase company earnings 10% each year. Dow sales surpassed $1 billion in 1964.
Doan began an open-door policy for employees, placed higher emphasis on research, and held the attitude that their employees were the company's strength. Those policies continued after Doan's departure from Dow.
Doan periodically visited the research labs at Dow and was always interested in the work of each employee.
Troika is Russian term for a wagon pulled by a team of three horses abreast. Doan formed a management troika with Gerstacker responsible for finance and marketing, Ben Branch in charge of international business and manufacturing, and Doan managing everything else. The three met every other week on Monday mornings. Once each year they would retreat for a week to determine company strategy for the next year and evaluate all 300 senior managers. Upon their return personnel changes were effected.
Overseas
When Dow realized that constructing manufacturing facilities in other countries created demand, they began producing plastics in Germany, Greece, Spain and Italy. The largest investment was in the Netherlands, at Terneuzen. That chemical complex opened in 1965. Plants were also built in South America: Argentina and Colombia plus New Zealand.
With extensive operations all around the world, Doan and his managers had a meeting in 1965 where they acknowledged the need to decentralize. They established a headquarters on every continent to manage business. Dow Europe, Dow Latin America and Dow Pacific were established in 1966.Technology centers were also established for 33 key products.
Retirement
Doan stepped down from Dow in 1971 when global sales had achieved $2 billion and Doan proclaimed that he and Dow were "healthy as horses". He believed that competent younger employees should be placed in senior positions because they have the new ideas and energy to advance the company. Doan and Gerstacker established a policy that presidents, CEOs and board chairpersons must relinquish their post at age of 60 and retire from the company at 65. The five-year period became known as "deceleration". It really wasn't "retirement" for him; he was only 48. He remained on Dow's board of directors and Dow Corning Corporation's board until 1987.
Ben Branch
In 1971, Ben Branch became president and CEO.
In the post-war era, Dow began expanding outside of North America, founding its first overseas subsidiary in Japan in 1952, and in several other nations soon thereafter. Based largely on its growing plastics business, Dow opened a consumer products division, beginning with Saran wrap in 1953.
Nuclear weapons
From 1951 to 1975, Dow managed the Rocky Flats Plant near Denver, Colorado. Rocky Flats was a nuclear weapons production facility that produced plutonium triggers for hydrogen bombs.
Contamination from fires and radioactive waste leakage plagued the facility under Dow's management. In 1957 a fire burned plutonium dust in the facility and sent radioactive particles into the atmosphere.
The Department of Energy transferred management of the facility to Rockwell International in 1975. In 1990, nearby residents filed a class action lawsuit against Dow and Rockwell for environmental contamination of the area; the case was settled in 2017 for $375 million. According to the Appellate Court, the owners of the 12,000 properties in the class-action area had not proved that their properties were damaged or they had suffered bodily injury.
Vietnam War: napalm and Agent Orange
The United States military used napalm bombs during the Vietnam War until 1973. Dow was one of several manufacturers who began producing the napalm B compound under government contract from 1965. After experiencing protests and negative publicity, the other suppliers discontinued manufacturing the product, leaving Dow as the sole provider. The company said that it carefully considered its position, and decided, as a matter of principle, "its first obligation was to the government". Despite a boycott of its products by anti-war groups and harassment of recruiters on some college campuses, Dow continued to manufacture napalm B until 1969.
Agent Orange, a chemical defoliant containing dioxin, was also manufactured by Dow in Terneuzen The Netherlands, New Plymouth New Zealand, and Midland, Michigan, in the United States for use by the British military during the Malayan Emergency and the U.S. military during the Vietnam War. In 2005, a lawsuit was filed by Vietnamese victims of Agent Orange against Dow and Monsanto Co., which also supplied Agent Orange to the military. The lawsuit was dismissed. In 2012, Monsanto agreed to a $93 million settlement as a result of a case pursued by ex-Monsanto employees and citizens in the city of Nitro, WV. In 1949, a chemical plant in Nitro experienced an explosion that damaged a tank containing 2,4,5-T, one of the composites that is used in the production of Agent Orange. The settlement of the case included $9 million for the cleanup of affected homes in the area, and $84 million to cover the medical monitoring and treatment of people affected by the explosion, as well as legal costs for the claimants. No care has been given for the in state damage done by the Headquarters in Midland, Michigan, and they refuse to give the evidence to the community.
Dow Corning breast implants
A major manufacturer of silicone breast implants, Dow Corning (Dow Chemical's Joint Venture with Corning Inc.) was sued for personal damages caused by ruptured implants. On 6 October 2005, all such cases pending in the District Court against the company were dismissed. A number of large, independent reviews of the scientific literature, including the Institute of Medicine in the United States, have subsequently found that silicone breast implants do not cause breast cancers or any identifiable systemic disease.
Bhopal disaster
The Bhopal disaster occurred at a pesticide plant owned by Union Carbide India Ltd., a subsidiary of Union Carbide, in 1984. A gas cloud containing methyl isocyanate and other chemicals spread to the neighborhoods near the plant where more than half a million people lived. The government of Madhya Pradesh confirmed 3,787 deaths related to the gas release. The leak caused 558,125 injuries, including 38,478 temporary partial injuries and approximately 3,900 severely and permanently disabling injuries. Union Carbide was sued by the Government of India and agreed to an out-of-court settlement of US$470 million in 1989. Dow Chemical acquired Union Carbide in 2001. Activists want Dow Chemical to clean up the site which is now controlled by the state of Madhya Pradesh.
DBCP
Until the late 1970s, Dow produced DBCP (1,2-dibromo-3-chloropropane), a soil fumigant, and nematicide, sold under the names the Nemagon and Fumazone. Plantation workers who alleged that they were sterilized or suffered other afflictions subsequently sued both Dow and Dole Foods in Latin American courts. The cases were marred by extensive fraud, including the falsification of test results and the recruitment of plaintiffs who had never worked at Dole plantations. While Nicaraguan courts awarded the plaintiffs over $600 million for damages, they have been unable to collect any payment from the defendants. A group of plaintiffs then sued in the United States, and, on 5 November 2007, they were awarded $3.2 million by a jury in Los Angeles. Dole and Dow vowed to appeal the decision. On 23 April 2009 the two cases against Dole and Dow were thrown out by a judge in Los Angeles due to fraud and extortion by lawyers in Nicaragua recruiting fraudulent plaintiffs to make claims against the company. The ruling casts doubt on $2 billion in judgments in similar lawsuits.
Tax evasion
In February 2013 a federal court rejected two tax shelter transactions entered into by Dow that created approximately $1 billion in tax deductions between 1993 and 2003. The court wrote that the transactions were "schemes that were designed to exploit perceived weaknesses in the tax code and not designed for legitimate business reasons". The schemes were created by Goldman Sachs and the law firm of King & Spalding, and involved creating a partnership that Dow operated out of its European headquarters in Switzerland. Dow stated that it had paid all tax assessments with interest. The case was against the Internal Revenue Service seeking a refund of the taxes paid. The case was appealed to the 5th Circuit court, where Dow's claims were again rejected. Dow has petitioned for an en banc hearing by the 5th Circuit, arguing that the decision was contrary to established case law.
Price fixing
Dow Chemical was implicated in a price-fixing scheme that inflated the cost of polyurethane for customers. The U.S. Justice Department closed an investigation in 2007 without charges or recommendations, but a class-action civil lawsuit won at a jury trial in 2013. Dow settled the suit in 2016 for $835 million.
1990s – transition from geographic alignment to global business units
In the early 1990s, Dow embarked on a major structural reorganization. The former reporting hierarchy was geographically based, with the regional president reporting directly to the overall company president and CEO. The new organization combines the same businesses from different sites, irrespective of which region they belong (i.e. the vice president for Polystyrene is now in charge of these plants all over the world).
DowBrands
In October 1997, S. C. Johnson & Son announced that they would buy Dow Chemical's DowBrands consumer products division, based in Indianapolis. The two business units included Home Food Management with Ziploc, Saran and Handi-Wrap; Home Care Products Fantastik, Scrubbing Bubbles and Spray'N Wash. The transcition was completed on January 23, 1998, with $1.1 billion. The sale reflected a shift in Dow's business focus by concentrating on specialty and industrial materials.
Union Carbide merger
At the beginning of August 1999, Dow agreed to purchase Union Carbide Corp. (UCC) for $9.3 billion in stock. At the time, the combined company was the second largest chemical company, behind DuPont. This led to protests from some stockholders, who feared that Dow did not disclose potential liabilities related to the Bhopal disaster.
William S. Stavropoulos served as president and chief executive officer of Dow from 1995 to 2000, then again from 2002 to 2004. He relinquished his board seat on 1 April 2006, having been a director since 1990 and chairman since 2000. During his first tenure, he led the purchase of UCC, which proved controversial, as it was blamed for poor results under his successor as chief executive officer, Mike Parker. Parker was dismissed and Stavropoulos returned from retirement to lead Dow.
2006–2008 restructuring
On 31 August 2006, Dow announced that it planned to close facilities at five locations:
From Wikipedia’s article on Dow Inc., shared under CC BY-SA 4.0.7