Tuesday, November 11, 2003 - Dow Community Advisory Panel Minutes

The Dow Community Advisory Panel met on November 11, 2003 at 6:00 p.m. at the Dow Conference Center in Plaquemine, Louisiana.

After the facilitator welcomed those present and introductions were made, the minutes of the September 8, 2003 and October 13, 2003 meetings were approved by the panel.

Dow's Economic Impact
Mr. Shipp explained that the Dow Plaquemine site is the largest of 6 Dow sites in Louisiana, employing 3,000 Dow and contract employees. It is the larges taxpayer in both Iberville and West Baton Rouge Parishes. Ms. Carville stated that the Plaquemine site has $3.5 billion in assets and produces 14.5 pounds of product annually. The site is located on a 1,600-acre site and is a non-union salaried operation. The Plaquemine site started operations in 1958 and is a large industrial park with 23 production plants for Dow, joint ventures, other companies, and suppliers. Over 50 products are produced at the Plaquemine site, including chlorine, antifreeze, plastics, synthetic rubbers, surfactants for cosmetics, soaps, and pharmaceuticals, and cleaning solvents.

The Plaquemine site economic impact for 2002 included $177.8 million in payroll (employee and contractor), $290 million in purchasing in Louisiana ($68.6 on the West Side), $222 million in capital investment, $1.3 million in community contributions and $39.6 million in state and local taxes -- a total of $732,100,000 plus $175 million capital investment for the Engage® plant and $325 million from AEP for the co-generation plant.

There are approximately 1,700 Dow employees on site, and 1,300 contract employees. Dow recently hired 25 operations personnel. It actively supports workforce development through the ABC school on the West Bank at Plaquemine High School, Baton Rouge Community College Process Technology through scholarships and internships, and having technical degree interns on site.

Answers to Questions Included the Following:

1. The $290 million spent on purchasing excludes raw material purchases.
2. Expenditures with West Side suppliers account for 18%-20% of Dow's total spending.
3. Dow utilizes consolidated purchasing for this site and for other sites as well. Some Louisiana suppliers supply other Dow facilities outside Louisiana. In response to a request by a panel member, Ms. Carville stated that she will provide data on purchasing at other Dow locations from businesses in Louisiana.
4. Dow considers itself to be within the Greater Baton Rouge area. It attempts to purchase on the West Side (Assumption, Iberville and West Baton Rouge Parishes), but purchases in Baton Rouge as well.
5. A panel member stated that he would like to encourage businesses to have satellite offices in Plaquemine. Ms. Babin stated that some area businesses have already moved to the Plaquemine area.

Ms. Laurie Aucoin, Tax Manager for the Southeast Region, explained that she handles state and local property and sales use taxes for Dow in nine states. The Plaquemine site's sales and use taxes for 2002 in Iberville Parish amounted to $6.6 million, and property taxes amounted to $6.2 million, for a total of $12.8 million paid to Iberville Parish. The sales and use taxes paid to West Baton Rouge Parish amounted to $1.9 million and property taxes amounted to $3 million, for a total of $4.9 million taxes paid to West Baton Rouge Parish. There will be an increase in property taxes in Assumption, Iberville and West Baton Rouge Parishes next year, as more equipment under the 10-year tax exemption will be added to the tax rolls. Total sales and use taxes paid to the state of Louisiana for 2002 amounted to $14.1 million and other taxes (franchise taxes) amounted to $4.4 million.

Answers to Questions Included the Following:

1. Franchise taxes are a small percentage of the overall taxes that Dow's Plaquemine site pays.
2. Louisiana's tax exemptions allow business to be more competitive.
3. Louisiana is in the lowest 10 for state business taxes according to one of the CAP members. Texas has a 7-year property tax exemption. Other states have creative financing to support new business.

Dow's Economic Impact on West Baton Rouge Parish
Mr. Durbin stated that 37% percent of the $3 million in property taxes that Dow pays to West Baton Rouge Parish is dedicated to local schools; 22% to law enforcement; 10% to drainage; and smaller percentages fund the levee district, the community center, the assessor, the Council on Aging, the parish government's general fund, the museum, the health unit, and juvenile detention. Of the $1.9 million in sales and use taxes that Dow pays to West Baton Rouge Parish, 44% is dedicated to schools, 25% to parish government, 20% to municipal governments, and 11% to correctional facilities.

Dow's Economic Impact on Iberville Parish
Mr. Randall Dunn stated that for 2002, the percentage of total property tax related to Dow Chemical in Iberville Parish amounted to 30.45%, with an assessed value of $62 million. Dow's property taxes remain relatively constant and are a major source of revenue for Iberville Parish governmental bodies. Property taxes going to the parish government pay for general governmental expenditures (animal control, office space, tourism, etc); parish wide drainage maintenance and capital improvement (spraying of canals, etc.); and maintenance and capital improvement of all parish buildings. If tax receipts exceed expenditures, the remainder goes into the general fund to be used on an as-needed basis. Dow contributed a large percentage toward these programs in 2002. For tax year 2002, Dow's contribution of the total sales and use tax to Iberville Parish amounted to 21% of the total collected in the parish. Sales and use taxes for the parish are used to cover general governmental expenditures, maintenance and capital improvement of roads, pickup and disposal of residential garbage, recycling and boom trucks, and capital improvement of any type of parish asset, including buildings, roads, drainage, etc. The rest of the property and sales taxes collected are distributed to the school system, fire districts, and law enforcement.

Answers to Questions Included the Following:

1. Iberville Parish's total millage is 87; West Baton Rouge's is 82 (both relatively low).
2. Dow takes advantage of exemption programs in the state and watches everything very closely. It is important that Dow know the tax laws. The company cannot take advantage of the exemptions if the laws are not understood.
3. Dow submitted 2 enterprise zones for Dupont/Dow plants and chose to receive a refund of only state taxes.
4. The state allows obselescence exemptions (wear and tear) on pipelines, machinery and equipment.
5. Companies must compete in other countries as well as other states in today's economy.
6. Of total taxes paid in Iberville Parish, 70% are paid by 25 industrial taxpayers.

Responsible Care Performance Measurements
Mr. Graham presented Responsible Care Performance Measurements for the period October 14-November 11, 2003 (attachment). A Dow employee was hit in the mouth with a hook on a lanyard while he was pulling a bushing off, chipping a tooth. Additionally, a contractor chipped a tooth and another received a facial cut during the reporting period. There were 2 outside complaints (contractor traffic and health questions by visitors to Nazarenes Cemetery). There were no spills and/or incidents affecting the community, no agency audits, and no serious transportation incidents. Year-to-date there have been 12 site OSHA injuries.

There have been 41 environmental agency reportables during 2003. During the reporting period, there was a leak during a plant outage and an ethylene leak.

Answers to Questions Included the Following:

1. The Nazarene Cemetery is owned by the Nazarene Baptist Church and is still active. Visitors are allowed to visit the cemetery during daylight hours.
2. Less than 2 pounds of ethylene was released in the reported leak.

"Dow in the News"
Ms. Babin provided CAP members with a copy of "Dow in the News - Louisiana October 2003" (see attachment). She explained that Dow's website, dowlouisiana.com, has been revamped and CAP meeting minutes are posted on the website. Upcoming events include the toy drive, Dow night at LPB, Art of the Season, and the Holiday Open House. Tickets are available for CAP members to attend the Art of the Season (activities for children). The open house will be held at 6:30 p.m. on December 11, 2003 and will be co-hosted by CAP members. Ms. Babin stated that attempts are being made to locate a branch of the YMCA on the west side. Landowners are willing to provide land for the facility, and funding and grants are currently being reviewed. An announcement is expected at the beginning of 2004. Ms. Carville stated that the YMCA facility will probably be located in the Addis/Brusly area.

General Questions and Discussion by CAP Members
A panel member stated that Dow needs to "toot its horn" more in its ads in the local newspaper because people in the community really don't know what Dow does.

Another panel member stated that 44,000 vehicles travel along LA 1 daily, an increase of 16,000 since 1993. He suggested that new turn lanes be designed along the corridor. LA 1 is scheduled for resurfacing after sugar cane season, and several new turn lanes have been proposed to be added.

New CAP Member Selection Process
The February, 2002 CAP guidelines provide that CAP members may serve 2-year terms, with an option to serve an additional third year. Five current CAP members have been serving on the panel since 1998. Based on the CAP guidelines, these members must be replaced and may continue to serve as ex officio CAP members. The facilitator provided panel members with new member nomination forms and asked that each panel member nominate 2 persons to serve on the panel -- one with similar views, and one with views that are not similar. He stated that currently there are 12 members from Iberville Parish and 4 from West Baton Rouge Parish. Panel members may nominate individuals from these areas and from North Iberville Parish as well. Nomination forms will be forwarded by mail to panel members who were unable to attend the meeting. They should be completed and returned to the facilitator as soon as possible.

Comments by Mr. Shipp
Mr. Shipp explained that Dow has a new President, Mr. Andrew Liveris, an Australian who worked at the Plaquemine site at one time, and currently runs Dow's Performance Chemicals business. Some reorganization is anticipated and Mr. Shipp will provide more information when it becomes available. The budget for 2004 is currently being completed. Since the October CAP meeting, 28 engineers from around the USA have been on site for interviews. Between 18 and 20 will be made job offers and Dow will know who accepts the offers within the next 2-3 weeks.

Next Meeting
The next Dow CAP meeting will be held on January 13, 2004 at 6:00 p.m. at the Dow Center. The Dow Holiday Open House is scheduled for December 11, 2003 at 6:30 p.m.