Dow Inc., a Michigan-based material science company, announced today that approximately 2,000 jobs will be cut globally as part of the corporation’s goal to save $1 billion this year.
In a press release, Dow outlined a series of targeted actions to reduce spending through structural improvements and operating expenses, which the company expects to realize in 2023.
Besides the job cuts, which amount to about 5 percent of its total workforce, the plan will also include optimization of labor and service costs, the shutdown of select assets, as well as further evaluation of its global asset base, with a particular focus on Europe.
Additional steps include decreasing turnaround spending, cutting raw material purchases, as well as aligning spending levels to the macroeconomic environment, the company said.
Dow announced it would record a charge of $550 million to $725 million in the first quarter of 2023 for costs associated with these activities.
“We are taking these actions to further optimize our cost structure and prioritize business operations toward our most competitive, cost-advantaged, and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe,” Jim Fitterling, Dow’s chairman and chief executive officer, said in the release.
“We remain committed to capitalizing on our long-term growth opportunities in a disciplined and balanced manner, and these actions further position us to advance our Decarbonize and Grow strategy and strengthen our competitive position,” Fitterling said.
The announcement comes as production costs have risen in recent quarters following the war in Ukraine.
The COVID-19 lockdowns in China have also squeezed demand for Dow, which sells its chemicals to industries, ranging from automobiles and food packaging to electronics, that are facing supply chain disruptions.
Dour Quarterly Results
The company also reported its fourth-quarter 2022 results (pdf) on Jan. 26, which missed Wall Street’s estimated results due to higher energy costs and weaker demand.
Shares of the company fell nearly 4 percent in premarket trade to $55.80.
Net sales in the fourth quarter fell 17 percent to $11.86 billion, pressured by customer destocking, missing the average estimate of $12 billion, according to Refinitiv IBES data.
The company also missed its profit estimates, posting an operating income of 46 cents per share, compared with the average expectation of 58 cents per share.
Quarterly sales volume fell 8 percent, hurt by an 18 percent decline in Europe, the Middle East, Africa, and India (EMEAI) and destocking in building & construction and consumer durables end-markets in the United States and Canada.
“In the fourth quarter, Team Dow continued to proactively navigate slowing global growth, challenging energy markets, and destocking,” Fitterling stated in the fourth-quarter earnings report. “In response, we shifted our focus to cash generation in the quarter as we lowered operating rates, implemented cost savings measures, and prioritized higher-value products where demand remained resilient.”
Reuters contributed to this report.