Wired for growth

Dow Wire & Cable, a business unit of Dow Chemical Company, manufactures critical components for wires and cables
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The Middle East as a developing region is boosting global growth in electricity consumption, which is good news for cable makers. This was the message from Dow Wire & Cable global marketing director Jon Penrice at Middle East Electricity 2010.

Penrice said that, although the global recession has resulted in a dip in electricity consumption, particularly in the West, “We foresee consistent growth in the developing economies of China, India, Latin America, Africa and the Middle East. These are all markets that will grow at plus 5% on average. So that is going to put tremendous pressure on infrastructure. The infrastructure is not there to be able to accommodate that kind of electricity growth today. That 5% consistent growth is going to require 5%, 10%, 15% growth in infrastructure.”

Dow Wire & Cable has entered into a collaborative partnership with local cable manufacturer Ducab.

“Our philosophy is very much that you cannot have a quality cable without quality compounds. The trick in terms of delivering long-term reliability is two companies working very closely together. We are fortunate to have a partner like Ducab, with whom we have been working for 12 years now. The development of that partnership and technical collaboration has been truly exceptional. That is what really lies at the heart of quality.”

Dow Wire & Cable is a business unit of Dow Chemical Company that focuses exclusively on the wire and cable industries. “We do not make wires and cables, but the components that are critical to those cables. We engage across the entire value chain, as we believe in understanding the entire needs all the way through from the industrial end user, and trying to bring that back into our R&D. As a group we spend US$1.5 billion on R&D, so we have a tremendous capability in this regard.”

Penrice pointed to four mega trends that Dow Wire & Cable has identified that will drive future opportunities across all its business interests, which run the gamut from heavy and medium voltage to consumer electronics, automotive and building and construction. These are health and nutrition, energy, transportation and infrastructure and consumerism.

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“Some 6.5 billion people have the same aspirations in terms of the cars they drive and the type of air-con they want for their homes, which we believe will drive electricity consumption in a significant and sustained way. There is a huge need for infrastructure development, as very much highlighted in the Middle East. Infrastructure needs will be a long-term mega trend that will drive growth,” said Penrice.

“The issue is not just about growth in emerging markets. In developed markets, the power infrastructure -- especially in the US and many parts of Europe -- is old and needs renewal. The power infrastructure of New York, for example, is 100 years old and is crumbling. So there are investment opportunities not just in developing markets, but in mature markets as well.

“Then there are the new challenges posed by climate change and renewable energy. I think energy efficiency has always been something this industry has not really focused on, in that the 9% average loss between the generation and consumption of electricity has always been one of those things that nobody talks about. As soon as you start putting a price on that 9% in terms of how much you are going to have to pay for carbon emissions, that 9% becomes real money, at which point there is going to be a tremendous focus on reducing it. There is not one magic solution, but we believe that energy efficiency is going to be a major driver.

Another trend is the global investment in renewable energy. “For the cable industry, solar power is an even bigger opportunity. The average yield of renewable energy is 20% due to weather variables, but you still need the same cable infrastructure. Renewable energy also tends to focus on remote locations, which means concomitant growth in the transmission and distribution sectors,” said Penrice.