Dow Chemical to cut around 3 per cent of global workforce
05 May 2015
Dow Chemical plans to cut around 3 per cent of its global workforce as it prepares to part with a significant portion of its chlorine operations in a deal announced earlier this year with Olin Corp (See: Dow Chemical to sell part of chlorine business to Olin Corp for $5 bn).
According to the company, the cuts would reduce its workforce by 1,500 to 1,750 positions. Dow Chemical had a workforce 53,000 strong worldwide at the end of last year.
In March, the Midland, Michigan company said it would receive about $2 billion in cash and cash equivalents and an estimated $2.2 billion in Olin common stock as part of the chlorine business deal.
The company would take charges totaling about $330 million to $380 million in the second quarter for asset impairments, severance and other costs related to the cuts announced Monday.
The company, last week, also announced that it was selling its AgroFresh specialty chemical business to the buyout company Boulevard Acquisition Corp for $860 million.
Dow further announced last fall a three-year, $1-billion ''productivity drive'' to cut costs and push earnings higher.
Dow also said, it would make adjustments, including "minor" consolidation and shut downs, at select manufacturing facilities. The facilities were not identified by Dow, which represent less than 1 per cent of its net property value.
According to company spokeswoman Rachelle Schikorra, it was too early to say if the job cuts and facility adjustments would impact Dow's Philadelphia-area sites.
"At this time, the facilities that are included in the minor asset footprint adjustment are still under evaluation," she said. As for the layoffs, "we don't have any specifics as to what that is going to look like by geography."
Dow had been under pressure from the hedge fund Third Point LLC for splitting its specialty chemical and petrochemical businesses.
"Our productivity efforts continue to center on cost-out actions and doing more with the resources we have in place, all to enable higher earnings,'' chief financial officer Howard Ungerleider said in a statement.
"Today's announcement illustrates our ongoing commitment to the consistent implementation of our strategy moving forward and proactively addresses any stranded costs from the divestment of Dow Chlorine Products.''
