Dow to axe 5% of workforce under $1bn cost-saving programme

Midland, Michigan – Dow Inc. aims to achieve $1 billion (€0.92 billion) in cost savings in 2023, partly through job cuts and shutting down assets, the US group announced 26 Jan.

The decision was revealed alongside fourth quarter results showing a 17% year-on-year decline in net sales, to $11.9 billion, and earnings impacted by higher production costs.

The cost-saving programme includes $500-million in “structural improvements” and a workforce reduction of 2,000 people, estimated to be around 5% of Dow global workforce.

Furthermore, the group envisages the closure of “select assets” under an evaluation of its global asset base, particularly in Europe.

The restructure will ensure “long-term competitiveness and enhance cost efficiency,” said Dow, which also aims to increase productivity via end-to-end process improvements.

Another $500 million in savings will be achieved through operating expense reductions, focused on near-term cash flow, according to the statement.

Among other steps, these savings are to be delivered by decreasing turnaround spending, reducing purchased raw materials, logistics and utilities costs.

The actions, said Dow chairman and CEO Jim Fitterling, will prioritise business operations toward the group’s “most competitive, cost-advantaged and growth-oriented markets.”

The measures, he went on to say, will be carried out while also navigating “macro uncertainties and challenging energy markets, particularly in Europe.

Dow will record a charge of between $550 million and $725 million in the first quarter of 2023 for costs associated with the overall restructure.

The charge will primarily include severance and related benefit costs; costs associated with exit and disposal activities; and asset write-downs and write-offs.

Longer-term, Dow said it remained on track to grow its underlying earnings by greater than $3 billion by 2030 while reducing its carbon emissions by 30% versus its 2005 baseline.