Dow cuts 2,000 jobs and shuts down assets to save US$1B in 2023
31 Jan 2023 --- Dow has outlined targeted actions to advance the company’s cost structure in response to near-term macroeconomic uncertainty while maintaining its long-term competitiveness across the economic cycle. The company’s actions align with its previously stated plan to achieve US$1 billion in cost savings in 2023.
“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,” says Jim Fitterling, Dow chairman and CEO.
Cost saving structure
Dow expects to gain US$1 billion in cost savings in 2023 through:
Structural improvements of US$500 million, maintaining a low cost-to-serve operating model:
- Optimizing labor and services costs, including a global workforce reduction of approximately 2,000 roles.
- Shutting down select assets while further evaluating Dow's global asset base, particularly in Europe, to ensure long-term competitiveness and enhance cost efficiency.
- Increasing productivity via end-to-end process improvements.
Operating expense reductions of $500 million, focused on near-term cash flow:
- Decreasing turnaround spending with a continued focus on maintaining safety and reliability.
- Reducing purchased raw materials, logistics and utility costs.
- Aligning spending levels to the macroeconomic environment.
Aiming at carbon neutrality
The company will record a charge of US$550 million to US$725 million in the first quarter of 2023 for costs associated with these activities, which primarily include severance and related benefit costs, costs associated with exit and disposal activities and asset write-downs and write-offs.
Longer-term, Dow remains on track to grow its underlying Earnings Before Interest, Taxes, Depreciation and Amortization by greater than US$3 billion by 2030 while reducing its carbon emissions by 30% versus its 2005 baseline as it progresses on its path to carbon neutrality by 2050.
As Dow implements the announced actions, the company will engage local stakeholders in each region and in compliance with local regulations and consultation processes.
Dow in the news
In September last year, Dow announced a partnership with Mura Technology to build a new facility at Dow’s Böhlen site in Germany. Once complete, the plant is said to be the largest chemical recycling plant in Europe. It will also be the latest in a series of planned constructions across the US and Europe to scale up chemical recycling capacity.
The project is targeted for a final investment decision by the end of 2023. The new facility, expected to be operational by 2025, would deliver approximately 120 kilotons per annum of advanced recycling capacity when run at full capacity.
One month later, Mura Technology received an investment from Dow to fortify the duo’s partnership in furthering accessibility to advanced plastic recycling in the US and Europe.
The investment was said to enable UK-based company Mura to develop multiple HydroPRS plants in Europe and the US. The partnership plans to lead to the construction of numerous advanced recycling facilities, adding up to 600 kilotons of aggregate advanced recycling capacity by 2030.
Edited by Natalie Schwertheim
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