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Dow chemical to cut 3% of workforce following chlorine deal
[HOUSTON] Dow Chemical Co plans to cut about 3 per cent of its global workforce and close some facilities following the US$5 billion deal it struck last month to separate its chlorine business.
Dow will eliminate 1,500 to 1,750 jobs as a result of the chlorine deal, the Midland, Michigan-based company said Monday in a statement. In addition, less than 1 per cent of company assets by value will be consolidated or shut. Second-quarter earnings will be reduced by US$330 million to US$380 million for writedowns, severance and other costs related to the measures.
The company, which had 53,000 employees at the end of last year, has come under pressure from an activist shareholder to cut costs and streamline its business. Dow, the largest US chemical maker by revenue, said the actions will be completed over two years and are expected to save about US$300 million in annual operating costs.
In November, Dow agreed to give Third Point two board seats after the hedge fund criticised the company's performance and called for a spinoff of Dow's petrochemical business to improve profitability.
The company has announced plans to sell almost all of its chlorine business to Olin Corp, with Dow shareholders gaining a majority stake in what will become the world's largest producer of the chemical used to sanitize water and produce vinyl. Dow is focusing on value-added products such a plastics used in autos and genetically modified corn seed.
Dow fell 0.1 per cent to US$51.65 in New York. The shares have gained 13 per cent this year.