Dow Chemical on Monday announced that it will close manufacturing facilities in Europe, North America and Latin America to counter what it calls "continued weakness" in Europe's economy. The Midland, Mich.-based chemicals giant expects to reduce its global employee headcount by approximately 900 in conjunction with the cost reductions, which it predicts will save $250 million annually.
"These actions, while difficult, are in full alignment with our commitment to continually manage our portfolio to adapt to changing and volatile economic conditions, as we are seeing particularly in Western Europe, and to preferentially invest in our fast-growing, technology-rich businesses," said Andrew N. Liveris, Dow's chairman and chief executive officer, in a company statement.
"Today's announcement further demonstrates our resolve and ability to take swift, strategic cash flow interventions that will keep Dow solidly on a trajectory to deliver $10 billion in EBITDA in the near term."
Over the next two years, Dow plans to shut down three plants that produce Styrofoam-brand insulation projects. These facilities are located in Estarreja, Portugal; Balatonfuzfo, Hungary; and Charlestown, Ill. In addition, Dow will idle a plant in Terneuzen, The Netherlands. In Camacari, Brazil, the company will close a toluene diisocyanate (TDI) plant.
Dow said Monday that it will also consolidate certain other assets in its Polyurethanes and Epoxy businesses. In addition, the company plans to cancel certain capital projects.
Dow will take an estimated $350 million in charges during the first quarter for asset impairments and write-offs, severance and other costs related to eliminating the roughly 900 positions worldwide. The company projects the $250 million in cost reductions announced Monday will augment approximately $500 million in cash flow the company has already freed up after launching its "Efficiency for Growth" program in May 2011.
In 2011, Dow employed approximately 52,000 people and had annual sales of $60 billion.