Dow Chemical to reduce jobs as it spins off chlorine unit

• Dow Chemical Co. plans to cut about three per cent of its global workforce and close some facilities following the US$5 billion deal it struck last month to separate its chlorine business.

Dow will eliminate 1,500 to 1,750 jobs as a result of the chlorine deal, the Midland, Mich.-based company said Monday in a statement. In addition, less than one per cent of company assets by value will be consolidated or shut.

Second-quarter earnings will be reduced by US$330 million to US$380 million for writedowns, severance and other costs related to the measures.

The company, which had 53,000 employees at the end of last year, has come under pressure from an activist shareholder to cut costs and streamline its business.

Dow, the largest U.S. chemical maker by revenue, said the actions will be completed over two years and are expected to save about US$300 million in annual operating costs.

In November, Dow agreed to give Third Point two board seats after the hedge fund criticized the company’s performance and called for a spinoff of Dow’s petrochemical business to improve profitability.

The company has a nnounced plans to sell almost all of its chlorine business to Olin Corp., with Dow shareholders gaining a majority stake in what will become the world’s largest producer of the chemical used to sanitize water and produce vinyl.

Dow is focusing on valueadded products such a plastics used in autos and genetically modified corn seed.

Dow closed down 0.8 per cent at US$51.65 in New York trading.

The shares have gained 13 per cent this year.