Rohm & Haas to cut 5.5% of workforce
Company cites chemical demand slump, acquisition by Dow
By Maria Varmazis -- Purchasing, 1/21/2009 1:45:00 PM
Following labor cuts of about 900 employees in June 2008, Rohm & Haas this week announced it will cut an additional 900 employees, freeze employee salaries and shut down “underutilized” plants in an effort to reduce costs and save approximately $90 million. The Philadelphia-based chemical company says the cost-cutting measures are needed given its pending acquisition by Dow Chemical as well as the market downturn and slumping chemical demand. The company has not yet disclosed specifically which plants it aims to idle or shut down.
“We will continue to aggressively protect our company from the challenges of deteriorating market conditions and a weakening economy," says CEO Raj L. Gupta, in a statement. The actions “are intended to adjust our operations to current business conditions, which reflect softening markets worldwide," says Pierre Brondeau, president of Rohm & Haas, in a statement. "We will continue to control costs in order to compete effectively, while preserving our capacity to accelerate performance when markets recover.”
Dow Chemical was supposed to buy Rohm & Haas for $15.3 billion, but was put on hold after a Kuwaiti company backed out of a $17.4 billion joint venture just days before it was to close. Dow had counted on using some of that money to fund the acquisition of Rohm & Haas. Analysts tell the International Herald Tribune that the cuts by Rohm & Haas are just the latest signs of trouble in the chemical sector, and are not tied to the deal with Dow. “I don't think this is company specific," says Dmitry Silversteyn of Longbow Research. “This is a response to a tough environment.”
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