Dow Chemical announces massive price increase

Dandelion Salad

By Alex Lantier
30 May 2008

Dow Chemical announced it would charge up to 20 percent more for its products on May 28, citing spiraling price increases for oil and other petrochemical inputs. This decision by Dow—a behemoth with $54 billion in 2007 sales spread throughout numerous consumer industries—is expected to substantially increase inflation, which is already increasing rapidly in the US and throughout the world, cutting into workers’ purchasing power.

Dow’s action will affect a huge array of basic materials and consumer items, including: plastics used in automobile components and shopping bags; propylene glycols used in antifreeze, coolants, solvents, cosmetics and pharmaceuticals; and acrylic acid-based products used in detergents, wastewater-treatment and disposable diapers.

The Wall Street Journal commented: “Over the past months, Dow and other chemical companies have been raising product prices to pass on higher raw-material costs to their customers, but the increases have been usually confined to one product or one region. The company’s decision to increase prices for all its products world-wide is nearly unprecedented.”

Dow’s price increase comes on the heels of announcements of planned price increases of 4-8 percent on a variety of consumer goods produced by companies such as Procter & Gamble and Kimberly-Clark, which are among Dow’s main clients. It appears that Dow is trying to position itself to claim a significant portion of the new revenue that will be generated by retailers and consumer goods makers as they jack up their prices.


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