Michigan-based chemicals company Dow Inc. (NYSE: DOW), which has a significant presence in the Houston area, is the latest major company to cut jobs.
Dow plans to cut about 2,000 positions, or around 5% of its global workforce, as part of its previously announced goal of $1 billion in cost savings in 2023, the company said Jan. 26. Other parts of the plan include “shutting down select assets, while further evaluating Dow’s global asset base, particularly in Europe, to ensure long-term competitiveness and enhance cost efficiency.”
For comparison, the company cut 800 positions in 2020, dropping from 36,500 employees just before the pandemic began to 35,700 by the end of 2020.
Dow currently employs approximately 37,800 people across 31 countries. The company did not indicate where the job cuts or asset closures would occur, but it said it “will engage local stakeholders in each region and in compliance with local regulations and consultation processes” as it implements the changes.
In Texas, Dow’s presence includes several Houston-area locations, two farther south in Victoria and Port Lavaca, and one near the Louisiana border in Orange, according to its website. The company first established a Texas presence in 1940 in Freeport and has since grown to include manufacturing sites in Freeport, Deer Park, Texas City, Seadrift and La Porte as well as a business center in Houston. Dow opened a new Texas Innovation Center in Lake Jackson to replace its Freeport research and development facility, and the company announced in June 2021 it would shut down its polyurethane assets at the La Porte site after building a new facility at its Freeport site.
Dow makes plastics, industrial intermediates, coatings and silicones for a broad range of products across various industries, such as packaging, infrastructure, mobility and consumer applications.
Other parts of Dow’s cost-savings plan include:
“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,” said Jim Fitterling, Dow chairman and CEO. “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.”
Dow expects to record a charge of $550 million to $725 million in the first quarter related to these changes, primarily due to “severance and related benefit costs, costs associated with exit and disposal activities, and asset write-downs and write-offs.”
Also on Jan. 26, Dow reported its fourth-quarter 2022 net income dropped 63% year over year to $647 million, or 85 cents per share, as its net sales fell more than 17% to nearly $11.86 billion. The company also reported 46 cents in operating earnings per share, which exclude the after-tax impact of significant items. Analysts had expected adjusted earnings per share of 58 cents and revenue of $12.01 billion, according to Yahoo Finance.
However, the company’s full-year net sales increased 3.5% to $56.9 billion, while its net income fell 27.6% to $4.64 billion, or $8.38 per diluted share. Dow reported $8.98 in operating earnings per share for the full year. Analysts had expected revenue of $57.15 billion and adjusted earnings per share of $6.39 for 2022.
In the fourth quarter, Dow faced “slowing global growth, challenging energy markets, and destocking,” Fitterling said. “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. These actions resulted in $2.1 billion of cash flow from operations. …
“As we enter 2023, we remain focused on managing near-term dynamics while continuing to position the company for long-term value creation,” he added. “While we see initial positive signs from moderating inflation in the U.S., improving outlook for energy in Europe, and re-opening in China, we continue to be prudent and proactive by implementing a playbook of targeted actions focused on optimizing labor and purchased service costs, reducing turnaround spending, and enhancing productivity.”
DowDuPont Inc. spun out its materials business as Dow Inc. in 2019. That spinoff had been planned since a massive merger between The Dow Chemical Co. and DuPont was announced in late 2015.
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