Dow Chemical Co (NYSE:DOW), the largest chemical maker in the United States, said on Tuesday it plans to cut 5 percent of its workforce and shutter 20 plants as part of a restructuring program aimed at countering a slow global economy.
Dow and other chemical companies face slipping demand for products around the world. Rival DuPont (NYSE:DD) slashed its earnings forecast and announced 1,500 jobs cuts.
"The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations..." Andrew Liveris, Dow`s chairman and chief executive, said in a statement.
The company, which hopes to save $500 million a year, said the cuts will result in a loss of around 2,400 positions worldwide.
Among its planned plant closings, Dow will shutter a high density polyethylene facility in Belgium, a sodium borhidrate plant in the Netherlands, as well as manufacturing facility in Midland, Michigan.
It will also take an unspecified charge related to its Dow Kokam LLC assets, reflecting weak demand for lithium-ion batteries.
Dow initially planned to release its restructuring plans along with its third quarter earnings on Thursday, but the news was inadvertently sent to a reporter at the Bloomberg News, according to a source on Dow's board of directors.
Dow said it will pare capital spending and investment in programs that are no longer a priority. It said those cuts should save it an additional $500 million.
The company will take fourth-quarter charges of around 50 cents to 60 cents per share for asset impairments and write-offs, severance and other costs related to the measures.
Shares of the company's fell 20 cents to $28.55 after the close of regular trading. The stock fell 4 percent in New York Stock Exchange trading.