Dow Chemical announces further moves to bolster competitiveness
17 Dec '07
4 min read
In its ongoing drive to improve the efficiency and cost effectiveness of its global operations, The Dow Chemical Company has announced plans to shut down a number of assets and make organizational changes within targeted support functions.
As a consequence of these activities, approximately 1,000 jobs will be eliminated from across several functions, geographies and businesses.
The Company expects to incur a charge in the range of $500 million to $600 million, which includes such costs as severance and asset write-downs. This will be reflected in Dow's results for the fourth quarter of 2007. Once these actions are fully implemented, the Company expects to realize savings in the order of $180 million a year.
“Today's announcement reflects our commitment to prune businesses that are not delivering appropriate value and tackle tasks more efficiently across the entire organization freeing up capital and resources that will be re-directed toward value-creating growth opportunities,” said Andrew N. Liveris, Dow's chairman and chief executive officer.
“Our focus on financial discipline and low cost to serve remains as sharp as ever, and we will continue to seek ways to refine our organizational structure, asset base and business portfolio to ensure Dow's competitiveness on the world stage.”
The most significant financial impacts of announcement are described below. Dow will record an impairment charge related to its manufacturing site in Lauterbourg, France, as a result of overcapacity within the industry, a disadvantaged cost position, and increasing pressure from generic suppliers.
As required, the Company has launched an information/consultation process with the local employee representatives on the closure project.
Dow will exit the automotive sealers business in North America, Asia Pacific and Latin America within the next nine to 18 months, and will explore strategic options in Europe.
The decision, which reflects concerns about the unit's ability to meet the financial expectations of this business, will allow the Company to focus its resources on delivering differentiated and higher value technologies to the automotive industry.
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