Plastics materials plants in Belgium and Japan are among the 20 plants that Dow Chemical Co. will close worldwide, as part of a restructuring program that will eliminate 2,400 jobs.
Plastics operations set to be closed include a high density polyethylene facility in Tessenderlo, Belgium, and an epoxy resins facility in Kina Ura, Japan.
Pointing the finger at sluggish markets, particularly Europe, the Midland, Mich.-based company said the restructuring program is “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 the company's total workforce and the site closings are designed to cut annual operating costs by around $500 million by 2014, Dow said.
Dow added that it will cut capital spending and investment plans in non-core areas amounting to a additional $500 million.
“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,” Andrew Liveris, Dow's chairman and CEO, said in an Oct. 23 news release.
Industry analyst Roger Young said the plastics plants being closed in Belgium and Japan are older plants. The Belgian plant also “wasn't using key Dow technology,” he added.
Longer term, Young said Dow “could be under some real pressure in Europe” since it uses feedstocks for ethylene-based products from naphtha, which is derived from crude oil. Plants in North America increasingly are using lower-priced ethane feedstocks from abundant natural gas supplies.
“As long as shale gas is around, Europe could be hurting,” he said.
The group made the restructuring announcement as it revealed a 10 percent fall in third-quarter sales to $13.6 billion — led, it said, by the downturn in Europe, where revenues were down by 10 percent. Dow's third-quarter profit fell almost 35 percent to $591 million.
