Dow Chemical Co said it would cut 1,500 to 1,750 jobs, or as much as 3 percent of its global workforce in the next two years, as part of a broader plan to reduce costs by $1 billion over three years. The company would not provide any details related to possible impact on the Dow AgroSciences business.
The official statement provided by Dow Chemical says, “Dow’s May 4 announcement is a series of actions to further streamline the organization and optimize its footprint as a result of the company’s pending separation of a significant portion of its chlorine value chain. These actions will further accelerate Dow’s value growth and productivity targets. Workforce reductions will impact approximately 3 percent of Dow’s global workforce during the next two years. Reductions of positions will vary and impact to specific Dow locations and businesses is not available.”
Dow has made the decision to sell a chunk of its century-old chlorine business to Olin Corp for $5 billion. The chemical maker has been shedding its low-margin commodity businesses to focus on high-growth business such as packaging, electronics and agriculture, according to a Reuters report on the company’s actions. This analysis suggests that agriculture is a business segment with a strong future within the company.
Dow said it would also consolidate or close some manufacturing facilities, representing less than one percent of its net property value.
The company said it would record charges of about $330-$380 million in the second quarter ending June for asset impairments, severance and other costs.
The cost-cuts announced are expected to be completed over the next two years, Dow said, adding they would help Dow save $300 million in operating costs a year.
Dow AgroSciences on April 23 announced its sales of $1.9 billion was down 12 percent versus the year-ago period. Crop protection sales decreased 11 percent from negative currency impact coupled with volume declines in Europe, Middle East, Africa, India and the Americas, with weather conditions resulting in a later start to the European season compared with the year-ago period.
Seed sales decreased 14 percent in the quarter, as acreage switched from corn to soybeans in North America and Latin America. Lower commodity prices are leading to lower forecast planted acreage of corn across the Americas, the company noted.