Arabic Culture a Big Draw for Joint Venture
The Dearborn-Ann Arbor corridor has emerged as a strong contender for the new Southeast Michigan headquarters for K-Dow Petrochemicals — and its 800 jobs.
And the Dearborn area’s large Middle Eastern population is one of the reasons.
K-Dow is a joint venture of Midland-based Dow Chemical Co. (NYSE: DOW) and Petrochemical Industries Co., a subsidiary of Kuwait Petroleum Corp., based in Kuwait City.
The company’s location search guidelines call for a headquarters “anywhere between Ann Arbor (and) around Troy,” said external communications director Chris Huntley.
“We obviously want access and proximity to schools where children of our Kuwaiti employees could be educated in their own tongue,” he said. “But you could have that access without being next door to the schools. Even Ann Arbor is only about half an hour away.”
Metropolitan Detroit is home to nearly 300,000 Arabic and Chaldean residents — the largest concentration of those two ethnic groups anywhere outside the Middle East.
Mike Gambrell, Dow executive vice president of basic plastics and chemicals and manufacturing and engineering, said the company is mainly looking along I-94 and I-96 west of Detroit and hopes to make a decision within the next few months.
“I wouldn’t say the Dearborn area is the only place we’re looking, but given its available resources and community for our Arab Muslim partners in the organization, it was at least one place to start,” he said.
Ahmed Chebbani, founder and executive officer of the American Arab Chamber of Commerce in Dearborn, said last week the organization hopes to coordinate an attraction team with Wayne County Executive Robert Ficano’s staff and the city of Dearborn.
Chebbani said he had heard of the broad range of west side communities under consideration, but thinks Dearborn is a leading contender.
“One of the things we can offer is a wide variety of skilled workers in both white-collar and blue-collar industries. Ann Arbor does not have quite that same mixture or that legacy,” he said. “I think there’s much here we can work with to convince them this is the right location.”
K-Dow would represent a fivefold increase in Southeast Michigan employment for Dow, a company known better here as a vendor than a neighbor. It currently has 200 or so employees at its only local business unit, Dow Automotive in Auburn Hills.
The K-Dow presence would start from new CEO James Fitterling, now group president for Dow Basic Plastics, and an initial leadership team, including some principals coming from Petrochemical Industries, and then eventually add 800 employees to the region, he said.
Dow entered a memorandum of understanding last December to form the joint venture with Petrochemical Industries, which is acquiring a 50 percent stake in Dow’s Basic Plastics business division for about $9.5 billion, under a deal expected to close during the fourth quarter.
“This is an existing business entity within Dow preparing to relocate and take a new form,” Gambrell said. “We will bring much of our personnel, our customer base and expertise and our resources into the venture, and our partners at (Petrochemical Industries) bring much of the equity to the venture.”
Assistant Wayne County Executive Turkia Mullin confirmed her office has held several recent meetings with the Michigan Economic Development Corp. and “other local parties” about attracting the K-Dow headquarters, but she declined to discuss specifics. She also noted that Wayne County communities like Dearborn are a good fit for “sensitivity to the needs” of Middle Eastern residents.
“But whether it’s Wayne or Washtenaw where they locate, it’s still win-win for the region,” she said. “These employees will live here, visit shops and retail and be part of all the activity in the region as a whole.”
Barry Murray, Dearborn director of economic and community development, also confirmed the city is trying to take part in attraction efforts, but “Dow is driving the discussion” at the moment. He also said the city is a prime location because of extensive office space recently vacated by Ford Motor Co.
“Not only is this office space within other buildings, but freestanding buildings as well, that you could come and remake to be your own,” he said. “And that sounds like exactly what they might be looking for.”
Ann Arbor City Administrator Roger Fraser said he was unfamiliar with the K-Dow proposal details but deferred comment on attraction efforts to the private, nonprofit economic development organization Ann Arbor Spark. Spark CEO Michael Finney said he could not confirm or deny any discussions with Dow.
Huntley said much of K-Dow’s initial workforce in the area would be relocated rather than newly hired. But at a full workforce of 800, the $11 billion basic plastics operation would represent a 400 percent increase in Dow’s local presence.
Companywide, Dow Chemical employs about 46,000 people, with 6,000 or so in the Midland area including joint ventures Dow Corning and Hemlock Semiconductor Corp.
The company has been committed to its longtime headquarters city, but about two-thirds of its total 2007 revenue of $53.6 billion came from overseas. The company ranks No. 42 on the 2008 Fortune 500 list, down from No. 40 the year before, a decline partly attributable to the cyclical downtown in the automotive component of its business.
In Midland, Dow owns the site of the Great Lakes Loons minor league baseball stadium and leases it to the Michigan Baseball Foundation. It was also a principal backer of the $36 million stadium development, which wrapped up in April 2007, plus a $25 million renovation-modernization of the city’s historic Ashman Court Hotel, a Marriott location now renamed “The H” for company founder Herbert H. Dow.
As a basic plastics operation, K-Dow will produce polyethylene, polypropylene and polycarbonate compounds as a materials supplier for other plastic products companies across several business segments, including automotive.
By Chad Halcom
Crain’s Detroit Business