Dow to cut 2,000 jobs; looking to save US$1 bn in costs

US materials giant Dow Inc. says it will cut 2,000 jobs worldwide as part of a corporate restructuring plan to secure US$1 billion in cost savings in 2023, as a result of higher energy costs afflicted from the ongoing Ukraine/Russia conflict.

The company said it will shut down certain operations, “particularly in Europe,” in response to the challenges, "to ensure long-term competitiveness and enhance cost efficiency”. Dow is also reducing purchases of raw materials and seeking to cut logistics and utilities costs, according to a statement.

The Michigan-based company said the shakeup was necessary against the back of “near-term macroeconomic uncertainty”.

As of the end of 2021, Dow had about 35,700 full-time employees, and it didn’t identify specific sites where the cuts will take place.

The restructuring plan will allocate US$500 million for structural improvements and US$500 million in operating expense reductions with an emphasis on near-term cash flow.

"We are taking these actions to further optimise our cost structure and prioritise business operations toward our most competitive, cost-advantaged and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe," Dow CEO Jim Fitterling said.

We remain committed to capitalising on our long-term growth opportunities in a disciplined and balanced manner, and these actions further position us to advance our decarbonise and grow strategy and strengthen our competitive position," he added.

The US company is not the first to seek savings and is joining European rivals in response to the surge in energy costs. Germany’s BASF SE last year began a cost-cutting drive, adding that it would adjust its European production network after domestic facilities began losing money.

The news comes against the drop in profit declared by Dow. For full-year 2022, Dow reported sales of US$57 billion, up 3.5% against 2021, but the firm's net profit declined almost 28% to US$4.64 billion.

(PRA)

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