Dow Chemical, which is the largest chemical maker by sales in the United States, plans to slash around 2,400 jobs and close 20 manufacturing plants to decrease its annual costs by $500 million as the global economic growth slows down. The factories that will be closed are located in the United States, Belgium, Netherlands, Spain, UK, and Japan.
Dow announced that that it would save $500 million by limiting some investments and cutting capital spending. The job cuts are around 5 percent of the company’s workforce across the globe. Its rival DuPont also recently announced that it was slashing 1,500 jobs due to the drop in demand for solar cells and paint pigment.
Dow Chemical made the cuts even if it reported third quarter earnings that were over analysts’ predictions. According to Chief Executive Officer Andrew Liveris, the company is operating in the worst conditions since 2009.
The job cuts announced by Dow and DuPont were due to the struggling global economy as it tries to recover from the recession. DuPont is the largest chemical company in the United States according to market valuation.
Dow Chemical dropped 0.7 percent to $28.35. DuPont slid 9.1 percent to $45.25, which was its largest decline since December 2008. The annual costs savings from the job cuts would be realized by the end of 2014 according to Dow. Its fourth quarter earnings would be decreased by 50 cents to 60 cents per share for expenses related to write-offs, asset impairments, severance and other costs.
Dow’s third quarter net income dropped to $582 million or 42 cents per share from $900 million or 69 cents the previous year. Plastics production benefited from low-cost natural gas. Its revenue went down to $13.6 billion from $15.1 billion.
The job cuts wouldn’t affect the Dow’s plan to put up new plants in Saudi Arabia and the US Gulf Coast. It would also not affect its electronics and agriculture units.