Processing Magazine

Dow Chemical to slash 5,000 jobs, close 20 plants

December 8, 2008
The Associated Press reports that Dow Chemical Co. will slash 5,000 full-time jobs close 20 plants and sell several businesses to rein in costs amid the economic recession. The company expects the moves to save about $700 million per year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll. Last month, Dow Chemical had said it would review all options to reduce costs and eliminate or defer capital spending. The company said it will take a fourth-quarter charge of $700 million, or 50 cents to 60 cents per share, to cover $350 million in severance payments and $350 million worth of plant shutdown costs. But the company denied it will suspend dividend payments as a way to conserve cash. Dow has paid a dividend each quarter for nearly 100 years, and has no plans to stop that trend. The company expects "the new Dow" to be comprised of three units: joint ventures; performance products; and health and agriculture, advanced materials and other market-facing businesses. The reorganization comes just days after the company closed on its K-Dow Petrochemicals joint venture with a company controlled by the Kuwait government. The K-Dow venture, which both companies estimate will be worth about $17.4 billion, is slated to open by Jan. 1 and will market plastics and other related products. Dow and Kuwait''s Petrochemical Industries Co. hope the venture will help them capture a larger share of the global chemicals market and boost profitability. Dow also is slated to close on its $15.3 billion buyout of Rohm & Haas Co. early next year, a deal it hopes will help it grow into the high-margin specialty chemicals market. The company expects that deal to results in about $800 million in savings over time. The joint venture and Rohm & Haas deal come as the global credit markets have all but ground to a halt, leading some to question the validity of high-priced deals amid the economic turmoil.