In an effort to control costs in a scenario of global economic meltdown, Dow Chemical plans to cut about 11% of its work force totaling to 5000, shutter 20 plants and hive off some non core businesses. The company will also idle 180 plants temporarily and eliminate 6,000 contractors from its payroll.
When fully implemented, Dow expects the cost-cutting measures to result in US$700 mln in annual operating cost savings by 2010. This is in addition to the US$800 mln in cost synergies it expects from its merger with Rohm and Haas Co.
With effect from January 2009, Dow's transformation to a shared business services group and three business operating models will accelerate its ability to shed high-cost assets and centralized functional structures. The new Dow will comprise three different business operating models, namely, Joint Ventures/Asset Light; Performance Products; and Health & Agriculture, Advanced Materials and other Market Facing Businesses. The company said it will provide specific details on the business structures early next year.