Dow Chemical is to cut 11% of its global workforce.

One of America’s biggest chemical producers, Dow Chemical, announced yesterday (8 December) it is planning to reduce its workforce by 11% when it closes 20 of its production plants.

It will lay off 5,000 full-time staff, and in addition, reflecting poor current market conditions, Dow will temporarily idle approximately 180 plants and significantly reduce its contractor workforce worldwide by approximately 6,000 as predicated by reduced operations.

With a total of 43,000 people employed worldwide, Dow’s products include food ingredients, pesticides, plastics and Styrofoam.

Once fully implemented, these actions are expected to result in $700 million (£473 million) in annual operating cost savings by 2010 and are additional to the previously announced cost synergies of $800m in the same timeframe for the anticipated Rohm and Haas acquisition.

Chairman and Chief Executive Officer, Andrew Liveris, said: “Today’s restructuring is designed to support the Dow of Tomorrow. However, 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.

“Today’s announcement marks the next phase in our transformation…We will create a leaner corporate center, a shared business services group, and three businesses operating models.”

The new Dow will comprise three different business operating models: Joint Ventures/Asset Light; Performance Products; and Health & Agriculture, Advanced Materials and other Market Facing Businesses.

Liveris continued: “Dow is the only company in the Fortune 200 to have paid its regular quarterly cash dividend without reduction or interruption since 1912. That’s 388 consecutive quarters.
“I’ve said it before but I will say it again. We will not break that string. Not Dow. Not on my watch.”

Shares in Dow rose more than 7% on Wall Street yesterday to close at $20.37 (£13.78).