Dow Chemical announced that it will not close its San Lorenzo plant

After the intervention of the national government, finally the CEO of Dow for Latin America, Javier Constante, announced this Wednesday that the company withdrew the announcement of the closure of its factory in Puerto San Martín de Santa Fe. The news was known after a meeting that the businessman held in the Ministry of Productive Development with the minister of that portfolio, Matías Kulfas, and the governor of the Province of Santa Fe, Omar Perotti. At the meeting, they also agreed to formalize the opening of a dialogue table “with the aim of discussing competitive conditions that allow the continuity of the plant’s operation,” according to the government in a statement.

The decision is key because the Santa Fe plant is the only one in the country that manufactures polyurethane, a fundamental input for various industries such as automotive and white goods. In addition, Dow did not plan to sell these facilities to another company but simply close them to start importing from other countries where they also produce this input, such as Brazil, Colombia or the United States.

The business move was going to leave about 120 workers on the street. That is why the union celebrated the change of position of the multinational on Wednesday. “For us it is a triumph. We try to make everyone understand the importance of this company for the national productive development. Honestly, the announcement took us by surprise. We already closed the possibility of Dow staying. We were working on another strategy. We wanted them to sell it to a third party ”, he assured PageI12 Mauricio Brizuela, General Secretary of the Petrochemical Employees Workers Union (SOEPU).

Kulfas also showed himself for Dow’s backtracking and when interviewed by the newspaper El Litorial he gave some clue as to what the official statement was referring to with reference to the competitiveness conditions that will be discussed at the dialogue table. “The company raised two major issues: the cost of logistics and working on aspects to analyze or calibrate tax issues, export duties. We have worked together with the Ministry of Economy, with some sectors, to reduce export duties for the incremental. These types of measures, plus some of a provincial nature, are things that we are going to put on the table, “he said. Then he clarified that Dow is not conditioning its permanence on what arises from that negotiation: “This work table that was generated in these months will now continue to work, but not to prevent the closure, which is already there, but to continue working together, With investments from Dow and things that we can put in from the Nation and Province, we help this plant to be able to export again. “

From Dow they confirmed PageI12 What was reported by the government through the Productive Development communiqué, but before the consultation on how the dialogue table will continue and the competitiveness conditions that will be discussed there, they assured that for now they do not have more information to give.

The origin of the conflict

Dow Argentina had announced on August 9 that it planned to close its Puerto San Martín plant in May 2022. The company denied that the decision was linked to the local economic situation and justified it by assuring that it was part of a “restructuring at the local level. global”. In fact, he gave as examples other similar closures that the multinational had announced in China, Australia and the United States.

The union made it clear from the beginning that although the plant had been operating below its means, it was still a profitable business. That is why they asked that if Dow did not want to continue at least sell it to a third party. “The pandemic raged everywhere, but in the last months of last year the situation began to reverse and when the closure was announced it was producing at 60 or 70 percent. That is why it took us by surprise because it was not a plant that was not profitable, but they initially suggested that it was more profitable to produce in Brazil and import ”, recalled Brizuela from SOEPU.

Cristina’s request

A month after Dow’s announcement, Vice President Cristina Fernández de Kirchner referred to the possible closure of the San Lorenzo plant in the campaign closing act that the Frente de Todos organized in Tecnópolis. There he asked President Alberto Fernández on stage to do everything possible to prevent Dow from leaving. “Alberto, we do not have to allow Dow Chemical, in San Lorenzo, Santa Fe province, to close this important factory that produces plastic and molten supplies for the entire industry. It is a very important firm. It is true that they have decided to relocate, a global decision but hey… And then they want to have to sell us phenols for polymers from Brazil to import. No, this is taking autonomy from our industrial process and draining the currencies that we need to continue producing ”, he assured.

The official strategy

After those words from the vice president, official pressure intensified to try to keep the plant running. The next step was taken by the National Commission for the Defense of Competition (CNDC), which ordered the company “not to innovate, alter or modify the productive assets it owns in its plant in Puerto General San Martín, in San Lorenzo, except that the action carried out is based on the maintenance, repair or improvement of these, until the matter under investigation is resolved in accordance with the provisions of the Law on Defense of Competition “.

What prompted the antitrust office to intervene was the revelation that the company was not willing to sell the plant. “The corporate communication would express that the productive assets would be rendered useless, given that they will not be transferred or relocated, but will destroy them or make them obsolete, which implies an affectation of the general economic interest”, assured the CNDC, dependent on the Ministry of Productive Development.

This fact was interpreted as a possible abuse of a dominant position. “Taking into account the market position that the investigated firm occupies, it would seem that the action taken is only aimed at maintaining its position as the main supplier in the market at the cost of the loss of recovery of the investments made,” the agency said. order not to innovate, a move that was part of a pincer strategy to force the company to backtrack with its closure announcement.

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