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May 28 (Bloomberg) -- Dow Chemical Co., the largest U.S. chemical maker, will raise prices the most in the company's 111- year history because of surging costs for energy and raw materials used to make Styrofoam, pesticides and plastics.
The ``unparalleled'' increases of as much as 20 percent on all of Dow's 3,200 products are needed after a 42 percent jump in first-quarter spending on raw materials and energy, Chief Executive Officer Andrew Liveris said today. The increases take effect June 1, the company said in a statement.
Dow plans to pass on some of an expected $7.4 billion increase in energy and materials costs this year that Liveris said is due partly to the U.S. government's failure to develop policies to solve a ``true energy crisis.'' Higher food, fuel and metals prices are contributing to inflation and helped boost U.S. consumer prices 3.9 percent in the year ended in April.
``This is our largest across-the-board increase,'' Liveris said today in an interview at the company's headquarters in Midland, Michigan. ``We have a tsunami landing on us here,'' he said, adding that Dow has been boosting prices for four years.
Dow Chemical Co. announced its second comprehensive price hike in less than a month to offset the "relentless rise" in costs for energy and related raw materials.
The Midland-based chemical company announced Tuesday it will raise prices by as much as 25% next month. That follows price increases of up to 20% that took effect June 1…
Dow said it's also adding a freight surcharge for North American customers of $300 per shipment by truck and $600 per shipment by rail effective Aug. 1. The company said it will add the surcharges in other regions later this year.
Dow also announced it's moving ahead with plans to temporarily idle or cut production at a number of manufacturing plants. Cost cuts at Dow's automotive unit includes its work force and plants in light of a North American sales decline.
Chairman and Chief Executive Andrew Liveris said in a statement that the steps are "extremely unwelcome but entirely unavoidable" as global energy costs surge.
"The price increases we announced May 28 helped, but they were not enough to fully cover the additional costs we are now facing," he said.
"Even since our last announcement, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing. We must restore margins in our businesses, both through price increases and the reduction of operating costs at certain production facilities."
Consumer prices shot up in June at the second fastest pace in 26 years with two-thirds of the surge blamed on soaring energy prices.
The Labor Department reported that consumer prices jumped 1.1 percent last month, much worse than had been expected. Energy prices rocketed upward by 6.6 percent, reflecting big gains for gasoline, home heating oil and natural gas.
The big rise in prices cut deeply into consumers' earning power with average weekly wages, after adjusting for inflation, dropping by 0.9 percent in June, the biggest monthly decline since 1984.
The 1.1 percent June price increase was the second largest monthly advance in the past 26 years, surpassed only by a 1.3 percent gain in September 2005 from a jolt to energy costs after Hurricane Katrina.