MIDLAND, MICH. (Oct. 24, 9:45 a.m. ET) — Dow Chemical Co. plans to close approximately 20 of its worldwide manufacturing sites and shed 2,400 jobs as part of a restructuring program.
Pointing the finger at sluggish markets, particularly Europe, the Midland-based company said the restructuring program was “designed to accelerate cost reduction actions and advance the next stage of the company's transformation in the midst of persistently slow macroeconomic growth.”
The job losses amount to 5 percent of its total workforce and the site closures would see annual operating cost savings of around $500 million by 2014, Dow said.
The group added that it would cut capital spending and investment plans in non-core areas amounting to a further $500 million.
Andrew Liveris, Dow's chairman and CEO, said: “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.”
Plastics operations set to be closed include a high density polyethylene facility in Tessenderlo, Belgium, and an epoxy resins facility in Kina Ura, Japan.
The group made the restructuring announcement as it revealed a 10 percent fall in third quarter turnover to $13.6 billion, led – it said – by the downturn in Europe, where revenues were down by 10 percent, driven by “adverse currency conditions”.
Pre-tax earnings were $1.8 billion, flat vs. the same period last year.
Dow said its Performance Plastics business generated sales of $3.5 billion, down 15 percent, though volumes were up 5 percent. These gains were offset by a 10 percent decline in price, it added.
The group's Performance Materials operation saw sales down 8 percent at $3.4 billion; volumes rose 4 percent, while prices fell 11 percent on an adjusted basis.
Dow said prices were down 9 percent, with double-digit decreases “in most businesses”, with Europe and China taking the lead on 12 percent and 11 percent respectively.
Liveris said market conditions required an “agile and efficient response” from the company.
“The task before us is straightforward. We must deliver value to our shareholders by a continuing focus on improving return on capital, increasing cash flow and growing earnings.
“And with our new, streamlined operating model and management structure, our entire organization is focused on delivering against these three objectives,” he said.