Dow Chemicals to shed 11 per cent of global workforce

09 December 2008

Dow Chemical Co. said Monday it would slash about 5,000 full-time jobs, or about 11 per cent of its global staff, and eliminate an additional 6,000 positions in its contractor workforce as it moves to address "current economic realities."

In addition, Michigan-based Dow said it would idle 180 plants and shutter 20 facilities in "high-cost locations," cutting about 30 per cent of its total production.

"Reflecting poor current market conditions, Dow will temporarily idle approximately 180 plants and significantly reduce its contractor workforce worldwide by approximately 6,000 as predicated by reduced operations," the company said ina statement.

Consequently, shares of the No.1 chemicals maker in the US rose in most in more than a month in New York trading after news of this cost-cutting hit the bourses. Dow soared $1.46, or 7.7 per cent, to $20.46 at 11:40 a.m. in New York Stock Exchange composite trading.

"The entire industry supply chain [that Dow serves], all the way to what the consumer buys - outside of food and healthcare - is in a recessionary model," said chairman and CEO Andrew Liveris on a conference call with analysts.

Due to the restructuring, Dow said it would post a pretax charge in the current quarter of $700 million, including $350 million for severance packaged and a $350 million related to the closing of facilities. That should impact quarterly earnings by 50 cents to 60 cents a share. Dow will also be hit with a related $80 million charge in 2009, but the move should eventually result in $700 million in annual cost savings by 2010, the company said.