Q-1: Mr. Vignart, Dow Chemical is a very well known name with activities all over the world, when did Dow Chemical start to operate in Argentina as Dow Química S.A.?
A-1: Dow started its operations in Argentina in the fifties. We began with a selling office in Buenos Aires were we imported different products from the outsides of Buenos Aires. In the sixties Dow invested in San Lorenzo that is placed in the North of Rosario beside the Paraná River. This industrial plant became a specialist in the production of different products like latex and poliol. Since then, we had a very active presence in manufacturing, selling, importing and exporting products. But the company really changed its dimensions in 1995. It took advantage of the deregulation and the privatization of the energy sector in Argentina. Dow Química Argentina SA participated in the bid for Petroquímica Bahía Blanca (PBB) and INDUPA that were in the hands of the government by the end of 1995. We were successful so we asked also the local polyethylene company called POLISUR. Dow had the control of three polyethylene plants in Bahía Blanca in association with YPF ( today Repsol YPF).
Dow, YPF and Petrobras moreover developed a plan to provide natural gas to the petrochemical complex expansion in Bahia Blanca. This project was called Mega and required an investment of 700 million dollars.
Today, after the PBBPolisur expansion, we have a worlds scale petrochemical complex. Repsol-YPF is our partner in all the investments. Dow has the majority of the company management.
Q-2: As for today, Repsol-YPF holds 38%, Petrobras 34% and Dow Química 28% of the Mega Company. Do you expect this figures to changes in the near future?
A-2: No, we do not. We expect this structure to continue as it is nowadays. I do not know what will happen in the future but the situation will be modified if Repsol YPF and Petrobras decide to change their position in this plan.
Q-3: What is the main production segment of Dow Química Argentina?
A-3: We have a large portfolio of products. Some of them are part of the local production. All the polyethylene products are made in Bahía Blanca. We also have specialty chemical and agrochemical products in San Lorenzo. So if you ask me about the segments that we reach, we are present in all the industrial products of the chemical industry. Talking about plastics, we produce all the consuming products like food packaging and bowls. Related to the car industry, we are suppliers of all the polyethylene matrixes.
Q-4: Can you provide us with more details concerning the regional structure in Latin America?
A-4: Dow made lots of investments in South America mainly in Brazil and Argentina. Our businesses in Argentina were made taking into account the existence of the Mercosur as an important market. Dow is very strong in the distribution and selling processes in all the countries of Latin America. The company also made important investments in Colombia. Dow knows how to operate in Latin America.
Dow is divided into three regions in Latin America. One is in the North and includes Mexico, Colombia, Venezuela and the Caribbean. Another one is Brazil. The last one is the South region with Argentina ,Chile, Uruguay and Paraguay. Dow does not have a Latin America headquarters but there are important branches in Mexico, Sao Paulo and Buenos Aires.
Q-5: Companies like DuPont had to adapt their commercial strategy to the bad performance of the Argentinean economy. As a result they increased the export rate. Did something similar happen at Dow?
A-5: We are exporting more plastic products than what we have planned before. Since the beginning, we have planned to export lots of products. As you said, in the last three years the local consumption decreased. Nevertheless, our presence in some markets is still very strong.
Q-6: Environmental policy is one of the main issues for Chemical companies. What is your experience with Argentinean authorities in this matter?
A-6: We had, as Chemical Industry, some environmental problems in Bahía Blanca. As you probably know, there were a couple of incidents with two companies in that city. Since then, there have been some solutions to the problem because the government started to think about a controlling authority for the environmental issues.
| Q-7: Can you tell us more about your investments in Bahía Blanca?
A-7: There are three steps in the investment process: first it was a regional investment when we participated in the bid. Then, we sold part of the company. Finally, we invested in an expanding plan and in two new plants. If you look at all the investments, the number climbs to 1,200 million dollars. Sometimes, when you give a number you have also to take in account the value of the taxes. The number goes up to a 21% more if you add the taxes. It is a huge difference. The Project Mega is not included in this final number.
Q-8: How did the merger between The Dow Chemical Company and Union Carbide affect the operations of Dow Química Argentina?
A-8: The only operation in this sense was a plant that we sold to Union Carbide in San Lorenzo two years ago and now we had recovered it. Union Carbide has also in Argentina a terminal and a sales office in the port of Buenos Aires. So we are now in the process of joining the two companies.
Q-9: What is the position of Dow compared to your competitors in Argentina?
A-9: Dow is the biggest petrochemical company in Argentina. We are the leaders of the market. We also have an important presence in the local manufacturing processes. DuPont and Perez Companc are probably significant competitors for us. In the future we will be more efficient in our operations. Dow also needs to consolidate its market share because the company has grown very fast.
Q-10: Mr. Vignart, do you foresee for this year a substantial improvement of Argentina’s economy, as expected by most Argentinean political and business leaders?
A-10: We expect the government to solve this political situation that exists in the country. I think that all the economic problems can be fixed. Most of the activities and companies that were in the hands of the government had been privatized. Today Argentina has a very strong energy sector and a powerful financial system. We have a liberal economic system. There are fewer restrictions for trading operations in Argentina than in the United States or in any of the European countries. The economy needs some adjustments and control of the government expenses. Many industrial activities are suffering from disadvantages because of the financial crisis. Argentina is a country with lots of resources and most important a population that is very well educated.
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