Dow to close 20 plants and shed 2,400 staff

By Hamish Champ, Crain staff (PRW)

Dow Chemical is to shut “approximately” 20 of its worldwide manufacturing sites and shed 2,400 jobs as part of a restructuring programme.

Pointing the finger at sluggish markets, notably Europe, the US materials group said the restructuring programme 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 $500m (£313m) by 2014, Dow said.

The group added that it would cut capital spending and investment plans in non-core areas amounting to a further $500m (£313m).

Andrew Liveris, Dow's chairman and chief executive, 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.”

Dow said it would shut down a high density polyethylene facility in Tessenderlo, Belgium; a sodium borhidrate plant in Delfzijl, the Netherlands, plus a number of Performance Materials manufacturing facilities, including an Automotive Systems Diesel Particulate Filters manufacturing facility in Michigan, and Formulated Systems manufacturing facilities in Ribaforada, Spain; Birch Vale in Derbyshire, UK; Solon in Ohio, 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 $13.6bn (£8.5bn), led - it said - by the downturn in Europe, where revenues were down by 10 percent, driven by “adverse currency conditions”.

Pre-tax and interest earnings were $1.8bn (£1.1bn), with margins flat versus the same period last year.

Dow said its Performance Plastics business generated sales of $3.5bn (£2.2bn), 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 $3.4bn (£2.1bn); 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 organisation is focused on delivering against these three objectives,” he said.

From PRW.com (A Crain publication)

Press releases from Dow Chemical