Dow Inc. is delaying an $11.5-billion industrial project in Fort Saskatchewan, Alta., amid stock market uncertainty and company plans to scale back spending.
The global chemical producing giant announced Thursday it’s delaying the Path2Zero project, which aims to expand and retrofit Dow’s facility in the city of 30,000 that borders northeast Edmonton.
Thursday’s move reduces its capital spending plans for the year by US$1 billion to US$2.5 billion from US$3.5 billion.
The announcement came during a first-quarter earnings report in which the Midland, Mich.-based Dow said it expects extended pressure on earnings as uncertainty from U.S. President Donald Trump’s erratic trade policies adds to macroeconomic volatility.
Dow approved an investment in the Path2Zero project two years ago as the chemical maker aims to become carbon neutral by 2050. The federal government in 2023 said the project will add 8,000 jobs during construction and between 400 and 500 full-time jobs when complete.
The project includes building a new ethylene cracker and increasing polyethylene capacity by two million metric tonnes per annum.
“The Alberta government said in November 2023, when the project was first announced, that the Dow Project is eligible for $1.8 billion in grants through its Alberta Petrochemicals Incentive Program. Ottawa said it will provide up to $400 million toward the implementation of the clean technologies.
Along with other chemicals firms, Dow has been struggling with higher feedstock and energy costs as well as weak demand and prices for its products, especially in markets such as Europe.
“Our industry is in one of the most protracted downcycles in decades,” CEO Jim Fitterling said Thursday in a post-earnings call.
“Now, with the uncertainty around where tariffs are going to land, with the impact that’s having on demand, that’s driving our lower for longer (earnings) outlook.”
Chetan Dave, a professor of economics at the University of Alberta, said Thursday he isn’t surprised by Dow’s decision to halt the project given the “direct damage” by U.S. President Donald Trump’s tariffs. He said the indirect damage caused by the tariffs such as Dow’s decision to delay the Path2Zero project is “just as important if not more important.”
“The indirect damage is because of policy uncertainty,” Dave told CTV News Edmonton.
“This (U.S.) administration rolls out some tariffs and markets react horribly, so they pull back a little bit. Markets react a little bit better, which makes the administration feel that they’re on the right track, so they roll out more horrible policy, and the markets go right back to sort of punishing them, if you will.
“All of this creates a lot of policy uncertainty, and when you have a lot of policy uncertainty, what happens is that consumers, and more importantly businesses, start pulling back on long-term plans because they don’t know what’s coming around the corner.”
Dave said the local impact of the Dow decision will mean the loss of jobs, which he calls more than “just a paycheque.”
“Based on having a job that’s fairly certain in the sense that you’re expecting continued employment, you as, let’s say, a parent makes plans for your children, to invest in the local community, buy a house, go to school council meetings, etc., because you’ve got that job backing you up,” Dave said.
“What’s going to happen locally in Alberta is that a lot of these communities are going to suffer big time. On top of that, the tax take of the government to provide municipal services is going to go down because people are not paying the income taxes from their employment.
“It’s just an all-around bad deal, whether you’re looking at it globally or whether you’re looking at it locally.”
Dow said it expects to see delays in both purchase and investment decisions from consumers as well as corporations until negotiations on tariffs are finalized, even though an estimated 95 per cent of its North America trade volumes were compliant with the United States-Mexico-Canada Agreement.
It said on Thursday that it was also taking other actions to reduce costs and increase competitiveness, including widening the review of its European assets and delaying the construction of its Alberta project.
Dow also grappled with lower prices and higher input costs in the reported quarter.
With files from CTV News Edmonton’s Miriam Valdes-Carletti and Mrinalika Roy of Reuters
