Economic hard times are prompting DuPont Co. to eliminate 6,500 jobs worldwide and Dow Chemical Co. to cut ``thousands'' of contract workers in Texas.
Wilmington, Del.-based DuPont, a major producer of nylon and other engineering resins, said Dec. 4 it will shed 2,500 full-time employees and 4,000 contractors. Most of the full-time cuts will come from businesses that support the motor vehicle and construction markets in the U.S. and Western Europe, officials said.
Of the full-time cuts, 1,300 will come from Western Europe, 550 from the U.S. and the remaining 650 from Canada, Asia and South America, DuPont spokeswoman Lori Captain said in a telephone interview. Ten DuPont locations will be shut down or scaled back, Captain added, although she declined to name the sites until employees had been notified.
The full-time cuts represent about 4 percent of DuPont's global workforce of 60,000. The contractor cuts are about 30 percent of DuPont's global total, not counting construction contractors.
The DuPont moves are expected to increase the firm's pretax earnings by $730 million and reduce working capital by $1 billion. The contractor cuts will be made by the end of the year, with additional cuts in that area possible in 2009. Further details of the cuts — including their impact on DuPont's plastic-related businesses — were not provided.
``We have taken immediate and aggressive actions to maximize cash flow by reducing cost, working capital and capital expenditures in response to current market challenges,'' DuPont Chair- man and Chief Executive Officer Charles Holliday Jr. said in a news release.
In the first nine months of 2008, DuPont's sales increased 10 percent vs. the year-ago period to $25.8 billion, while profit rose 8 percent to $2.6 billion. But rough times lie ahead for the firm, according to stock analyst Kevin McCarthy with Banc of America Securities in New York.
``Broad-based inventory destocking, coupled with rapid demand deterioration globally, will likely lead to 15-20 percent volume declines in 4Q,'' McCarthy wrote in a Dec. 5 note to investors. ``Adverse trends have accelerated, with volume declines in November outpacing those in October.''
For Midland, Mich.-based Dow, ``thousands'' of the 4,000 contract workers that the firm employs in Freeport, Texas, will be let go, according to a Dec. 4 report in the Galveston County Daily News. Dow also has 4,500 full-time employees in Freeport, some of whom will be asked to take vacations as production at the site drops to 35 percent, according to the report.
Dow officials could not be reached for comment. The Galveston paper's report said the production cut in Freeport — a major production center for polyethylene, polypropylene and other plastics — will last from Dec. 15 until at least Jan. 5.
Freeport is Dow's largest integrated site, with 75 production plants covering 5,000 acres. More than 40 percent of all Dow products sold in the U.S. are made in Freeport.
The cuts come as Dow is completing two major financial deals. Its K-Dow joint venture with Petrochemical Industries Co. of Kuwait — which includes Dow's PE, PP and polycarbonate businesses — is to open its doors Jan. 1, but the venture's value has fallen by more than $1 billion since it was announced earlier this year. Dow also is buying specialty chemicals and plastics additives maker Rohm and Haas Co. for almost $19 billion. Dow's July bid for Rohm and Haas was more than 70 percent higher than Rohm and Haas' stock price at the time.
Dow's nine-month sales for 2008 rose 19 percent vs. the year-ago period to $46.6 billion, but the firm's profit tumbled 13 percent to $2.1 billion.
Plummeting global demand has sent the stock prices of both DuPont and Dow plunging in recent months, with each dropping almost 50 percent since mid-September.