Dow Chemical Co (DOW.N), the largest U.S. chemical firm, announced Tuesday it plans to cut 5 percent of its workforce and shutter 20 plants as part of a restructuring program amid a slowing global economy.
The facilities to be closed are in the U.S., Belgium, the Netherlands, Spain, the U.K. and Japan, the Midland, Mich.-based company said in a statement released after it inadvertently e-mailed a draft copy to Bloomberg News Monday. An additional $500 million will be saved by cutting capital spending and curtailing some investments, Dow said.
Dow and other chemical companies face slipping global demand. Rival DuPont (DD.N) slashed its earnings forecast and announced 1,500 jobs cuts, Reuters reports.
"The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations," Andrew Liveris, Dow`s chairman and chief executive, said in a statement.
The company said the cuts will result in a loss of around 2,400 positions worldwide.
Among its planned plant closings, Dow will shutter a high-density polyethylene facility in Belgium, a sodium borhidrate plant in the Netherlands, as well as manufacturing facility in Midland, Mich.
It will also take an unspecified charge related to its Dow Kokam LLC assets, reflecting weak demand for lithium-ion batteries.
Dow initially planned to release its restructuring plans along with its third-quarter earnings on Thursday, but the news was inadvertently sent to a Bloomberg reporter, according to a source on Dow's board of directors.
“Chemicals are a very economically sensitive industry,” Jake Dollarhide, CEO of Tulsa, Okla.-based Longbow Asset Management, told Bloomberg. “Economic growth in 2012 has slowed to a trickle, and that has spooked a lot of people.”
Dow said it will pare capital spending and investment in programs that are no longer a priority. It said those cuts should save it an additional $500 million.
The company will take fourth-quarter charges of around 50 cents to 60 cents per share for asset impairments and write-offs, severance and other costs related to the measures.
Dow shares fell 0.7 percent to $28.35 at 5:14 p.m. in New York, after the close of regular trading. DuPont fell 9.1 percent to $45.25 Monday, the biggest decline since December 2008.
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