Dow Chemical to open new research facility in U. Providence

Posted: July 29, 2013

So rural and sleepy over the years that you couldn't find a zip code for it, the 19-square-mile Upper Providence Township to this day is served by four separate post offices - Oaks, Collegeville, Royersford, and Phoenixville.

The postal-route system may not have modernized out there in what was the Montgomery County sticks, but the economy certainly has.

On Wednesday, Dow Chemical Co. chief executive Andrew Liveris and Gov. Corbett are scheduled to hold a news conference in Upper Providence announcing the official opening of Dow's new 800-employee Philadelphia-area research center there.

The new center is the latest evolution for Dow Chemical after purchasing Philadelphia's Rohm & Haas in 2009 for about $15 billion.

Dow, one of the nation's largest chemical companies, is seeking to transform itself into a higher-margin specialty chemical company from a low-margin bulk-commodity chemical giant - with the former Rohm & Haas, which commercialized acrylic paints and Plexiglas, forming the core of this transformation.

Dow is leasing 800,000 square feet of a Pfizer Inc. pharma complex for the new research facility. Pfizer retained about one million square feet for its own businesses.

Dow will relocate 800 employees from Rohm & Haas' "heritage" labs in Spring House, a facility of nine buildings 15 miles away in Lower Gwynedd.

Over time, according to officials, Dow could boost Philadelphia-area research staff to more than 1,000. The capacity in the new labs is 1,300 employees.

Dow has signed a 50-year lease on the Pfizer space and the center is expected to be fully operational by the end of next year.

Dow's plans for the Philadelphia area will be clearer after a presentation by Liveris on Wednesday - his first public appearance in the region. The company has designated Philadelphia as the headquarters of its Advanced Materials business, with the administrative offices on the top floors of the landmark Rohm & Haas building on Independence Mall.

To shorten the geographic and cultural distance between corporate headquarters in rural Michigan and Philadelphia, Dow Chemical runs a daily corporate jet shuttle between the two cities. The jet seats 40 and on Wednesdays brings executives or managers from Midland to Philadelphia and returns them to Michigan on the same day.

Howard Ungerleider, a Midland-based executive, has relocated to Philadelphia to run the Advanced Materials businesses that accounted for 20 percent of Dow Chemical's revenue in 2012, or $11.4 billion out of a total Dow sales of $56.8 billion.

Securities and Exchange Commission regulatory filings show that Advanced Materials' businesses hold 43 percent of Dow's patents in the United States, or 1,590, and 41 percent of Dow's foreign patents, or 6,440.

Advanced Materials reports its sales and earnings through two Dow Chemical segments: electronics and functional materials, and coatings and infrastructure solutions.

Electronics segment revenue fell to $4.5 billion in 2012 from $4.6 billion in 2011. Coatings and infrastructure solutions revenue fell to $6.9 billion from $7.2 billion over the same two years. Part of the decline in revenue was attributed to lower material costs - resulting in lower prices. The company also noted continued "weak end-market conditions."

Spring House's fate is uncertain. A pioneering suburban research lab, it opened in 1963. Over the last decade, Spring House has attracted media attention because of a number of brain cancers among former or current scientists and employees.

In 2010, University of Minnesota researchers found that the rate of brain cancer at the site was twice as high as in the population at large, though they were unable to pinpoint a chemical culprit. The researchers counted up to 14 cases among 5,283 current or former employees.

"We heard they might demolish the buildings and have the site cleared," Larry Comunale, Lower Gwynedd township manager, said last week. Dow officials, he said, indicated that it would cost $100 million to modernize the complex.

"We know it's being marketed," Comunale said. "We're hopeful it stays for what it is zoned - a single-business office tenant."

As for the Upper Providence-area economy, it appears to have recovered from the financial crisis and Dow will give it a boost. The area is north of booming King of Prussia, and other major employers include Iron Mountain, SEI, Quest Diagnostics, and GlaxoSmithKline.

There's a new retail shopping plaza, the Providence Town Center, with a Wegmans and more than 30 other stores, restaurants, and service outlets.

"Most of these buildings are less than 30 years old and we have seen multiple turnover of large tenants," said C. Lee Milligan, assistant township manager in Upper Providence. The Pfizer research lab, he said, was "vacant a couple years and we did not shop it at all."

Contact Bob Fernandez at 215-854-5897 or or follow on Twitter @bobfernandez1.

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