Dow Chemical Co. said Monday it will slash 5,000 full-time jobs - about 11 percent of its total work force - close 20 plants and sell several businesses to rein in costs amid the economic recession.
The company, one of the largest chemical makers in the world, expects the plan to save about $700 million per year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll.
Dow Chemical also is slated to close early next year on its $15.3 billion buyout of Rohm & Haas Co., which has a plant in Knoxville.
Exactly which workers and plants will be affected by the cuts is still being determined, a company spokesman said.
"We are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn," Chief Executive and Chairman Andrew N. Liveris said in a statement.
Last month, Dow Chemical had said it would review all options to reduce costs and eliminate or defer capital spending.
Because of this latest move, Dow said it will take a fourth-quarter charge of $700 million, or 50 cents to 60 cents per share, to cover $350 million in severance payments and $350 million worth of plant shutdown costs.
But the company assured shareholders it has no plans to cut its dividend, which has been issued quarterly for nearly a century.
The company expects "the new Dow" to be comprised of three units: joint ventures; performance products; and health and agriculture, advanced materials and other market-facing businesses.
The plan appeared to be well-received on Wall Street, where Dow's stock closed Monday up $1.37, or 7.21 percent, to $20.37.
Dow hopes the Rohm & Haas purchase will help it grow into the high-margin specialty chemicals market. The company expects that deal to result in about $800 million in savings over time.
The joint venture and Rohm & Haas deal, as well as other industry deals like Ashland Inc.'s buyout of Hercules Inc. and Huntsman Corp.'s potential sale to private equity, come as the global credit markets have all but ground to a halt.