Dow Chemical 2011 Annual Report Download - page 104

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The Feedstocks and Energy segment also includes the results of Compañía Mega S.A., MEGlobal and a portion of the
results of EQUATE Petrochemical Company K.S.C., The Kuwait Olefins Company K.S.C. and the SCG-Dow Group,
all joint ventures of the Company.
Divestitures:
• On June 17, 2010, Dow sold Styron to an affiliate of Bain Capital Partners. Businesses and products sold within
the Feedstocks and Energy segment included certain styrene monomer assets, which were reported in the
Feedstocks and Energy segment through the date of the divestiture (see Note E to the Consolidated Financial
Statements).
• The Feedstocks and Energy segment also included a portion of the results of the OPTIMAL Group of Companies
through the September 30, 2009 divestiture of this group of joint ventures (see Note E to the Consolidated
Financial Statements).
Corporate includes the results of Ventures (which includes new business incubation platforms focused on identifying and
pursuing new commercial opportunities); Venture Capital; non-business aligned technology licensing and catalyst
activities; the Company's insurance operations and environmental operations; enterprise level mega project activities; and
certain corporate overhead costs and cost recovery variances not allocated to the operating segments. In 2009, Corporate
also included the results of the Salt business, which the Company acquired with the April 1, 2009 acquisition of Rohm and
Haas and sold to K+S Aktiengesellschaft on October 1, 2009.
Industry Segments and Geographic Area Results
See Note Y to the Consolidated Financial Statements for information by operating segment and geographic area.
Competition
Historically, the chemical industry has operated in a competitive environment, and that environment is expected to continue.
The Company experiences substantial competition in each of its operating segments and in each of the geographic areas in
which it operates. In addition to other chemical companies, the chemical divisions of major national and international oil
companies, advanced material suppliers, and producers of crop protection chemicals and agricultural biotechnology provide
substantial competition in the United States and abroad. Dow competes worldwide on the basis of quality, technology, price and
customer service, and for 2011, continued to be the largest U.S. producer of chemicals and plastics, in terms of sales.
Raw Materials
The Company operates in an integrated manufacturing environment. Basic raw materials are processed through many stages to
produce a number of products that are sold as finished goods at various points in those processes.
The two major raw material streams that feed the integrated production of the Company’s finished goods are chlorine-
based and hydrocarbon-based raw materials.
Salt, limestone and natural brine are the base raw materials used in the production of chlor-alkali products and derivatives.
The Company owns salt deposits in Louisiana and Texas; Alberta, Canada; Brazil; and Germany.
The Company purchases hydrocarbon raw materials including liquefied petroleum gases, naphtha, natural gas and
condensate. These raw materials are used in the production of both saleable products and energy. The Company also purchases
electric power, benzene, ethylene and propylene to supplement internal production. Expenditures for hydrocarbon feedstocks
and energy accounted for 42 percent of the Company’s production costs and operating expenses for the year ended
December 31, 2011. The Company purchases these raw materials on both short- and long-term contracts.
Other significant raw materials include acetone, aniline, phenol, styrene, methanol, ammonia, formaldehyde, acetic acid
and polystyrene. The Company purchases these raw materials on both short- and long-term contracts.
The Company had adequate supplies of raw materials during 2011, and expects to continue to have adequate supplies of
raw materials in 2012.