End of an Era: Dow to Exit Magnesium Business

20 November 1998

End of an Era: Dow to Exit Magnesium Business

    MIDLAND, Mich.--(AutomotiveWire)--Nov. 20, 1998--After more than 80 years producing magnesium, The Dow Chemical Company announced today that it is planning to exit its magnesium business and shut down production at its sole magnesium metal plant in Freeport, Texas. The shut down process will begin immediately at the Gulf Coast plant, which had a nameplate capacity of 65,000 metric tonnes.
    The decision to shut down the facility was reached at the end of a careful evaluation process that examined whether Dow should remain in the magnesium business. This evaluation process considered, among other things, the global marketplace and Dow's strategic direction. In the end, the substantial damage that the magnesium plant sustained due to lightning strikes and flooding spawned by recent severe storms weighed heavily in the decision, the company said. Dow declared force majeure to its customers September 30.
    "The resulting damage from these storms has continued to cause complex production problems for the magnesium plant," said Frank Petitti, global business director for magnesium. "Dow has been unable to rectify this situation, and we have concluded that the existing plant will not be able to achieve satisfactory production and quality levels."
    Since January 1941, the Freeport plant has been extracting magnesium, the lightest of all structural elements, from seawater through an electrolytic process. Today, magnesium alloys are die cast into a variety of automotive components including valve covers, steering wheels and instrument panels.
    Herbert H. Dow first extracted the metal from brine in Midland, Michigan, in 1916, and quickly saw the importance of magnesium as a structural metal. Dow built the first magnesium plant in Midland a few years later and continued to pioneer its development. Dow's Freeport magnesium plant played a key role during World War II when the lightweight metal became a critical alloy for airplanes. U.S. military aircraft production escalated, and as much as 2,000 pounds of magnesium was needed per plane.
    In a letter to customers dated November 20, 1998, Petitti said Dow would be in contact with customers to discuss the company's decision not to reinvest in this business.
    "Dow has produced magnesium in Freeport, Texas, for over 57 years and has established many old and valued customer and community relationships. We thank them for their past business and support, and more importantly, for their patience during this difficult time," Petitti said.