MIDLAND – Dow Chemical Co. will cut about 5,000 full-time jobs, or 11 percent of its work force, close 20 facilities and sell some non-strategic businesses as the company looks to speed its restructuring and cut costs. No information was provided by Dow on the impact in Michigan.
The nation’s largest chemical producer by revenue also said it will temporarily shut about 180 plants and cut about 6,000 contractor jobs in light of the reduced operations, The Wall Street Journal reported.
Dow’s shares were recently up 4.4 percent at $19.84 as another major manufacturer announces job cuts amid slumping demand.
Just Thursday, competitor DuPont Co. said it will cut 2,500 jobs, or about 4 percent of its work force, dismiss 4,000 contractors and temporarily halt production at 100 sites.
“We are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn,” said Dow Chief Executive Andrew Liveris. He added, “We are moving from a highly centralized and standardized approach, to operating three very different business models with a lean and efficient corporate center.”
The restructured company will comprise three operating models – a joint ventures and asset-light business, a performance-products unit and a health-and-agriculture, advanced materials and other unit. Dow said it would provide specific details on the businesses early next year.
Earlier this year, the company implemented two steep, across-the-board price increases, considered unprecedented at the time, that added to nationwide inflation worries because Dow products are used in a wide range of everyday goods.
The company said in October it would cut capital spending by $100 million and discretionary spending by $100 million to $150 million by year-end to deal with the challenging economy. The company is also in the process of closing its acquisition of specialty-chemicals maker Rohm & Haas Co., a move Dow expects will widen its margins and make its earnings steadier. Dow’s annual profits have been falling steadily after a big jump in 2005.
The job cuts also come as Dow and Kuwait Petroleum Corp. recently agreed to their joint venture that will result in Dow receiving some $500 million less than what was first agreed to when the effort was unveiled a year ago. request from the country’s Supreme Petroleum Council. The venture will make numerous base chemicals that have lower margins and have become less a focus for chemical makers as they pursue higher-margin products.
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