Dow Inc. plans to cut about 2,000 jobs as the chemical maker seeks $1 billion in savings and confronts a flareup in energy costs that followed Russia’s invasion of Ukraine.
The company said it will shut down certain operations, “particularly in Europe,” in response to the challenges. Dow is also reducing purchases of raw materials and seeking to cut logistics and utilities costs, according to a statement Thursday.
The maker of plastics, chemicals and agricultural products cited macroeconomic challenges as well as higher energy costs. The company said it will take a charge of $550 million to $725 million in the first quarter related to the measures, after net sales fell 17% in the fourth quarter.
Dow shares fell as much as 2.4% in New York trading Thursday before paring some of the decline.
The US company is joining European rivals in seeking savings in response to the surge in energy costs. Germany’s BASF SE last year began a cost-cutting drive, saying it would adjust its European production network after domestic facilities began losing money.
Although the energy crisis has been easing in recent months, the gas-intensive chemical industry is getting hit hard and production is falling at the fastest rate since the financial crisis.
Output Falls
Germany’s chemical output dropped 10% this year and will continue to languish in 2023 as soaring gas prices weigh on the country’s most energy-intensive industries, according to an association of producers.
The retrenchment at Dow also adds to a growing wave of corporate job cuts that started with technology companies and has spread to other sectors.
Software maker SAP SE said Thursday that it plans about 3,000 job cuts this year, a day after International Business Machines Corp. announced 3,900 reductions.
As of the end of 2021, Dow said it had about 35,700 full-time employees.
The company’s European headquarters is in Horgen, Switzerland, and it has 37 manufacturing sites across 15 countries in the Europe, Middle East and Africa region, according to its website. It didn’t identify specific sites where the cuts will take place.
--With assistance from William Wilkes.
©2023 Bloomberg L.P.
