By Hamish Champ, Crain staff (PRW)
Dow Chemical is to shut â€œapproximatelyâ€ 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 â€œdesigned to accelerate cost reduction actions and advance the next stage of the company's transformation in the midst of persistently slow macroeconomic growthâ€.
The job losses amount to 5 percent of its total workforce and the site closures would see annual operating cost savings of around $500m (Â£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 (Â£313m).
Andrew Liveris, Dow's chairman and chief executive, said: â€œThe 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.â€
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 (Â£8.5bn), led - it said - by the downturn in Europe, where revenues were down by 10 percent, driven by â€œadverse currency conditionsâ€.
Pre-tax and interest earnings were $1.8bn (Â£1.1bn), with margins flat versus the same period last year.
Dow said its Performance Plastics business generated sales of $3.5bn (Â£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 (Â£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 â€œin most businessesâ€, with Europe and China taking the lead on 12 percent and 11 percent respectively.
Liveris said market conditions required an â€œagile and efficient responseâ€ from the company.
â€œThe 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.
â€œAnd with our new, streamlined operating model and management structure, our entire organisation is focused on delivering against these three objectives,â€ he said.
From PRW.com (A Crain publication)
Press releases from Dow Chemical