Midland, Michigan – Dow Chemical Co. is cutting 2,500 jobs globally – equal to 4 percent if its workforce – within the next two years as part of the integration of Dow Corning Corp. into the company.
In a statement on 28 June, Dow, which is now the full owner of Dow Corning, said that it would shut down silicones manufacturing facilities in Greensboro, North Carolina, and Yamakita, Japan.
The Midland-headquartered company will also close “certain administrative, corporate and other manufacturing facilities to further enhance competitiveness and streamline costs associated with the transaction.”
“These collective actions will result in a reduction of approximately 2,500 positions globally, or approximately 4 percent of Dow’s workforce,” the company stated.
According to Dow, the move is in a bid to “achieve synergy capture and accelerate shareholder value creation from the restructuring of its ownership of the Dow Corning.”
In the process, Dow will take a charge of approximately $410 million (€370 million) to $460 million in the second quarter of 2016 for asset impairments, severance and other costs related to these measures.
“These actions position Dow to achieve its cost synergy target run rate of 70 percent within 12 months of closing the Dow Corning transaction, and 100 percent within 24 months,” said the company.
“With these difficult but necessary actions, we are bringing together the best of each company’s talent and technology, accelerating Dow’s strategy to go narrower and deeper into attractive, targeted market sectors,” said Andrew Liveris, Dow’s chairman and chief executive.
Dow says it is positioned to capture $500 million in combined run rate annual synergies as a result of the restructured ownership of Dow Corning – consisting of $400 million in cost synergies, an increase from the previously stated $300 million target, and $100 million in growth synergies.
The company expects to achieve $1 billion of additional annual earnings at full run-rate.