Uncertainty in Midland ahead of Dow-DuPont merger

Ian Thibodeau
The Detroit News
Dow and DuPont announced in late July that shareholders approved the merger that would break the companies into three separate companies.

Midland —Up to three-quarters of the weekday lunch crowd at the restaurant Maria Batsios owns with her husband, Bill, are Dow Chemical Co. employees.

She’s not sure how that might change if the multibillion-dollar merger between Midland-based Dow and Delaware-based DuPont Co. is approved by antitrust authorities.

“We exist because of Dow,” said Batsios, who for 14 years has operated Cafe American Restaurant & Coffee Bar in a strip mall less than a mile from Dow’s world headquarters. “If Dow lays people off, of course it’s not good for us. All we can do is stay on top of business.”

Dow started in Midland in 1897, after Herbert Henry Dow discovered a new way to extract the element bromine — used in medicines and photographic materials — from brine in wells around Midland. Dow now has 53,000 employees globally.

Dow and DuPont, two worldwide giants of the chemical manufacturing industry, announced in late July that shareholders approved the merger. The plan would break the merged $130 billion company into three independent companies within two years of closing. One of the break-out companies — the material-science company — would be headquartered in Midland.

“... It is too preliminary to comment on broader impact at this time, but we expect to grow the material science business ... by combining low-cost integration and innovation with expanded customer offerings in key growth sectors,” Dow Chemical spokeswoman Rachelle Schikorra told The Detroit News in an email.

Schikorra did not say whether the Dow-DuPont merger would result in job losses in Midland or the Great Lakes Bay Region.

But local business owners and city officials are cautiously optimistic.

“Dow has deep roots of family here,” said Becky Church, vice president of operations with Midland Tomorrow, a part of the Midland Area Chamber of Commerce focused on making the city attractive to business.

But union officials do worry.

Kent Holsing, president of United Steelworkers Local 12075, which represents 780 Dow Chemical Co. laborers in Michigan, fails to see how any cuts to benefits or jobs couldn’t be bad for the city. He noted the impact of Dow Chemical’s unrelated June acquisition of Dow Corning Co. that resulted in 700 job cuts in Midland.

Cuts are almost inevitable in mergers, Holsing said, and he believes too many in Midland are putting positive spins on what’s at stake.

“We’re not going to get those 700 (Dow Corning) jobs back,” he said. “I don’t think community leaders and politicians in this area want to say anything negative about what’s been going on. ... It’s a fact of life, that’s how business works, but they seem to brush (job loss) off to the side to paint the bigger picture.”

The city and the company are almost irreversibly tied together. Midland was built on Dow. Dow invests in the city, and city officials work to make sure the manicured stretch of downtown is full of shops and restaurants, the schools are competitive and attractions like the Midland Center for the Arts exist in the small mid-Michigan town.

Midland Mayor Maureen Donker said it’s too early to tell what will happen if the merger is approved.

Everyone in town will know someone who’s affected by the Corning cuts or anything that comes out of the merger, but Donker is confident the changes will be good for the city in the long run, she said.

“There’s anxiety,” Donker said, “but there’s also a sense of hope” that if DowDuPont makes the right moves, the new company will continue to invest in Midland, even if there is another round of layoffs.

Dow Chemical Co. started in Midland in 1897, after Herbert Henry Dow discovered a new way to extract bromine, which is used for medicines and photo materials.

Community impact

Michael Sharrow, Midland Public Schools superintendent, said the community is trying to remain positive. The Dow Corning cuts were a blow, but Dow Chemical launched an online job portal a month after the cuts were announced. Sharrow’s never heard of a big company doing that.

“They’ve kind of convinced us this is probably a positive thing” and will help the company grow in a few years, he said. “They keep saying that they’re going to stay here.”

Dow has worked with Michigan Department of Talent and Economic Development to help laid-off Dow Corning workers find new jobs, and Dow Chairman and CEO Andrew Liveris called the cuts “difficult but necessary actions” in a June statement.

Sharrow said he knows the company owes the city nothing.

“We have to stay on our toes to make sure we’re an attractive place to stay,” he said. “When Dow is trying to hire the world’s best scientists and they have school-age children, Dow can (point to) a quality public school system. ... A billion-dollar company could certainly leave whenever they want. The headquarter building doesn’t mean a whole lot.”

There’s a symbiosis between the schools and the families brought to the region by Dow, Sharrow said. Midland schools thrive because Dow brings education-minded parents to the region, and those parents are attracted to the region because of the successful schools.

Dow and Dow-affiliated foundations donate millions of dollars to the school system, Sharrow said, and Dow has indicated the donations won’t change.

Sharrow expects to lose about 150 students by next fall due to Dow Corning cuts. Sharrow hopes for the best for DowDuPont, but said the school system has been conservative in its hiring and spending lately. He expects a temporary dip in jobs following the merger.

If the company leaves or significantly shrinks its presence, Sharrow said, “We’d be devastated. It starts with them and it ends with them.”

Foundation grants

CEO and President of Midland Center for the Arts Terri Trotter says some of the center’s funds come from Dow.

Similar belt-tightening is happening at the Midland Center for the Arts. President and CEO Terri Trotter said a chunk of the center’s funding comes from Dow foundation grants.

After the acquisition and merger, she said, “I think funding sources are going to look different. ... We don’t know exactly what that looks like, but we believe that over the long term, Dow is very invested in this community.”

Trotter, like Sharrow, said the art center makes Midland attractive to the scientists and engineers that Dow courts.

People in Midland are realistic about working through the restructuring, Trotter said.

But union local chief Holsing cautions that questions remain unanswered.

“What really drove (this)?” Holsing asked. “It’s these high-end shareholders that are really pushing these corporations, we think, to make these kind of decisions without regard for the human element.”

Holsing said workers and the community need to be considered when decisions are made.

“We’ve never dealt with this kind of an animal before,” Holsing said. “Dow has always acquired, we’ve never merged with anyone, so that’s different. And we’ve never dealt with the fact that we were split into three separate publicly traded entities. ... There are just certain things we’re going to be faced with anew.”

Kent Holsing, United Steelworkers Local 12075 president, says cuts are inevitable in mergers.



Twitter: @Ian_Thibodeau