Dow Announces Restructuring Program
The Dow Chemical Co. recently announced a restructuring program designed to accelerate cost reduction actions. These actions will reportedly result in a net reduction of approximately 2,400 positions, or 5% of the global workforce. The restructuring also includes the shutdown of approximately 20 manufacturing facilities.
Once fully implemented, these actions are expected to result in approximately $500 million of annual operating cost savings by the end of 2014. In addition, Dow plans to further reduce capital spending and investments for targeted growth programs that are no longer a priority in this environment. These measures are expected to deliver an additional $500 million cash impact. Taken together with the $1.5 billion of measures Dow has already initiated, this will bring the company’s stated cumulative intervention goal to $2.5 billion.
“The reality is we are operating in a slow-growth environment in the near term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations—particularly in Europe—and mitigate the impact of current market dynamics,” said Andrew N. Liveris, chairman and CEO. “Earlier this year, we announced targeted actions—levers we planned to pull to reduce costs and protect our earnings growth path. The interventions we are announcing today represent the next phase in our path to driving efficiency and prioritizing our growth programs. Importantly, we will continue funding projects where differentiation is rewarded even in this environment and where margin expansion opportunities are clear—for example, in Dow AgroSciences, Dow Electronic Materials, and our Sadara and U.S. Gulf Coast investments. Taken on the whole, Dow’s strategy remains intact, and our long-term growth fundamentals are strong.”
Dow will reportedly shut down a high-density polyethylene facility in Tessenderlo, Belgium; a sodium borhidrate plant in Delfzijl, the Netherlands; and a number of Performance Materials manufacturing facilities. The company will also record an impairment charge related to the write-down of Dow Kokam LLC’s assets, reflecting weak global demand for lithium-ion batteries, consolidate certain assets in its Oxygenated Solvents business, and shut down a number of other small manufacturing facilities. These actions are expected to take place over the next two years.
For additional information, visit www.dow.com.