Dow Chemical Plans Cuts

Dow Chemical (DOW Quote - Cramer on DOW - Stock Picks) will let go of 1,000 employees and shut some of its plants in an effort to improve "efficiency and cost effectiveness."

The layoffs will cut about 2.2% of Dow's work force, which was about 45,000 as of Sept. 30, and will accompany closings and other actions that should cost $500 million to $600 million in the fourth quarter. Once the changes fully play out, the Midland, Mich.-based chemical giant expects annual savings of $180 million.

As an example of what CEO Andrew Liveris described as "businesses that are not delivering appropriate value," over the next 18 months Dow will exit automotive sealers operations in North America, the Asia Pacific and Latin America, while exploring strategic options in Europe.

Dow will also idle and shut down Brazilian plants making styrene and hydroxyethyl cellulose and close a polypropylene facility in Louisiana. The company will also write down its investment in a joint venture, Petromont & Co., citing an unfavorable financial outlook. Also, an agricultural-sciences manufacturing site in France will incur a "significant" impairment charge.

Additionally, a substantial reduction in R&D and other support functions is planned for the West Virginia site of its ethylene-making subsidiary, Union Carbide.

"Decisions like this are not easy," said Liveris, who said the goal is "freeing up capital and resources" in order to fund operations with more growth potential.

"We recognize the uncertainty and anxiety that these decisions will cause our employees, their families and those living in the communities near our sites," he added, "and we will work hard to minimize the impact of these changes on those affected."

Dow shares were lately losing 41 cents, or 1%, to $41.13 on Tuesday.