DOW
Permanent workforce to be cut by 11% / Plans to close 20 plants and idle 180 / “Non-strategic” businesses will be divested
In what it calls “the next step in our transformational strategy,” management of Dow Chemical (Midland, Michigan / USA; www.dow.com) is taking a hatchet to the company. This week the US chemical major announced that, in reaction to the worldwide economic downturn and in part reflecting initiatives planned earlier, it will shutter 20 production plants in high-cost areas, idle another 180 facilities and divest several non-strategic businesses.
The plants to be idled represent around 30% of Dow’s worldwide production and are “mostly split evenly between North America and Europe.” Although the mothballed facilities have not been officially identified, plastics production (PE, PP and PC) at Freeport, Texas / USA may be among them, US press reports suggest. For the past three months, said CEO Andrew Liveris, the company has been working on “code red.” He noted that “the entire industrial supply chain outside food and health is in a recessionary mode.”
When the hatchet job is finished in 2010, Dow hopes to have achieved USD 700m in annual operating costs on top of the USD 800m in synergies realised in the acquisition of Rohm and Haas – see Plasteurope.com of 15.07.2008. The plan calls for elimination of 5,000 full-time jobs (11% of the permanent workforce) as well as terminating the contracts of some 6,000 temporary workers.
Dow said the “vast majority” of the operations targeted for action belong to the “Business Portfolio Optimization Group” – Plasteurope.com of 28.02.2008 – which includes much of its plastics portfolio. The latest plan means that “we'll pursue these closures and divestitures at an even more aggressive pace than we have in the past,” said Liveris. He pointed out that about 2,000 of the jobs being eliminated “are expected to go with these divested businesses.”
With effect from the first quarter of 2009, Dow is creating three business operating models. In addition to its much-touted “Asset Light” model (see comprehensive coverage in Plasteurope.com), these will include Performance Products (including polyurethanes and epoxies) and a model with the unwieldy name of Heath & Agriculture, Advanced Materials and other Market Facing businesses. This will be made of up of businesses with “higher margins” and strong brands, Liveris said.
The plants to be idled represent around 30% of Dow’s worldwide production and are “mostly split evenly between North America and Europe.” Although the mothballed facilities have not been officially identified, plastics production (PE, PP and PC) at Freeport, Texas / USA may be among them, US press reports suggest. For the past three months, said CEO Andrew Liveris, the company has been working on “code red.” He noted that “the entire industrial supply chain outside food and health is in a recessionary mode.”
When the hatchet job is finished in 2010, Dow hopes to have achieved USD 700m in annual operating costs on top of the USD 800m in synergies realised in the acquisition of Rohm and Haas – see Plasteurope.com of 15.07.2008. The plan calls for elimination of 5,000 full-time jobs (11% of the permanent workforce) as well as terminating the contracts of some 6,000 temporary workers.
Dow said the “vast majority” of the operations targeted for action belong to the “Business Portfolio Optimization Group” – Plasteurope.com of 28.02.2008 – which includes much of its plastics portfolio. The latest plan means that “we'll pursue these closures and divestitures at an even more aggressive pace than we have in the past,” said Liveris. He pointed out that about 2,000 of the jobs being eliminated “are expected to go with these divested businesses.”
With effect from the first quarter of 2009, Dow is creating three business operating models. In addition to its much-touted “Asset Light” model (see comprehensive coverage in Plasteurope.com), these will include Performance Products (including polyurethanes and epoxies) and a model with the unwieldy name of Heath & Agriculture, Advanced Materials and other Market Facing businesses. This will be made of up of businesses with “higher margins” and strong brands, Liveris said.
11.12.2008 Plasteurope.com [212410]
Published on 11.12.2008
German version of this article...