Dow to shut 20 plants, idle 180 more
By David Hannon -- Purchasing, 1/15/2009 2:00:00 AM
In an effort to reduce its production capacity in an era of declining demand, Dow Chemical is closing 20 facilities and temporarily idling another 180 plants around the world. As a result Dow will also cut 5,000 full-time jobs, or about 11% of its global staff, as well as about 6,000 contractor positions.
Under a newly developed alignment, Dow will comprise three operating models: a joint ventures and asset-light business, a performance-products unit and a health/agriculture/advanced materials unit. Dow said it would provide specific details on the businesses early this year.
"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," says Dow CEO Andrew Liveris in a statement. "We are moving from a highly centralized and standardized approach, to operating three very different business models with a lean and efficient corporate center."
According to a recent news report, Dow CFO Geoffery Merszei told a Citigroup chemicals conference in December that the industry is experiencing significant pricing pressure due to slumping global economies and sliding oil prices. "A lot of these price increases (enacted earlier in the year) we have to give back," he said. "There is a lot of pressure on pricing, and pricing is dropping."
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