Dec 8 2008
The Dow Chemical Company (NYSE:DOW) today announced a series of aggressive actions to accelerate its transformational strategy in light of current economic realities.
Dow’s transformation to a lean Corporate Center, a shared Business Services group and three business operating models, effective January of 2009, will accelerate the Company’s ability to shed high-cost assets and centralized functional structures. As part of the actions announced today, Dow will eliminate approximately 5,000 full-time jobs, close 20 facilities in high-cost locations and divest several non-strategic businesses. The job reductions represent a reduction of roughly 11 percent of Dow’s global workforce. Once fully implemented, these actions are expected to result in $700 million in annual operating cost savings by 2010 and are additional to the previously announced cost synergies of $800 million in the same timeframe for the anticipated Rohm and Haas acquisition.
In addition, 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.
“Transformation, by definition, requires a commitment to working differently. We are moving from a highly centralized and standardized approach, to operating three very different business models with a lean and efficient Corporate Center. Today’s restructuring is designed to support the Dow of Tomorrow,” said Dow Chairman and CEO Andrew N. Liveris. “However, we are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn.”
The new Dow will comprise three different business operating models: Joint Ventures/Asset Light; Performance Products; and Health & Agriculture, Advanced Materials and other Market Facing Businesses. Specific details on these business structures will be outlined early next year.