Formosa Plastics says investment in US not equal to exit from Taiwan


TAIPEI — New investment in the United States by Taiwan’s largest plastics manufacturer, Formosa Plastics Group (FPG), is simply recapitalization of its U.S. subsidiary and is no indication that the company is pulling out of Taiwan, FPG officials said yesterday. Formosa Plastics Corp., USA, an FPG subsidiary, announced that it has invested a further US$2 billion in production expansion at its Texas plant after FPG Chairman William Wong visited it earlier this month, local media reported.

The project is expected to provide 250 fulltime jobs in the area, while as many as 1,800 construction workers will be employed at the peak of the project, according to the report.

FPG confirmed that Wong met with Texas Governor Rick Perry during his visit and that the investment was mentioned in that meeting. However, this was the U.S. branch’s own investment and FPG is not exiting Taiwan, FPG sources said.

New ethylene and propylene plants will be built in Texas, where energy costs are low thanks to abundant shale oil resources, the sources said.

For example, in Taiwan the raw material for making ethylene — naphtha — costs US$1,000 per metric ton, while it costs only US$340 per metric ton for ethane in Texas, which can also be used to produce ethylene. This gives the plant there a production advantage.

The investment was announced earlier this month and the plant expansion project will run through 2016, according to the sources.

FPG wants to invest more in Taiwan, but the local environment has posed many obstacles over the years, while a large ethylene plant it operates in China is still seeking a breakthrough, the sources added.

However, the upstream material of the petrochemical industry is global, and manufacturers must expand their production anywhere they can lower costs, the sources pointed out.