U.S. Chemical Giants Cutting Jobs After a Devastating Third Quarter
After a bleak third quarter and expectations of a further weakening in the short-to-medium term, U.S. chemical giants Dow Chemical and DuPont have announced plans for massive job cuts. Midland, Michigan-based Dow said it would cut 2,400 staff, about 5% of its global workforce, and close 20 production sites in the U.S., Europe and Asia. DuPont in Wilmington, Delaware, has announced 1,500 global job cuts.
At Dow, where Q3 pretax profit was down 24% and sales down 10% to $13.6 billion, CEO Andrew Liveris said the restructuring moves demonstrate the U.S. group's resolve to tightly manage operations. One plant closure has already been identified, an 180,000 mt/y HDPE production facility at Tessenderlo, Belgium.
In September, Dow replaced its corporate divisions with a global business unit model that Liveris hopes will put the largest North America's largest chemical producer back on track. The chief executive said Dow made progress toward cost reduction in the third quarter, adding that the group is profiting from its "low-cost advantage" in leveraging shale gas feedstock.
DuPont CEO Ellen Kullman blamed weaker than expected demand for titanium dioxide (TiO2) for the falling Q3 numbers, in addition to shrinking demand from the once buoyant photovoltaics industry. Across its business segments, the U.S. conglomerate saw its quarterly pretax income plummet by 54% to $355 million on consolidated net sales 9% lower at $ 7.4 billion.
For Q4, Kullman has revised earlier earnings guidance downward to $3.25-3.30 per share, based in part on a predicted steeper fall in TiO2 demand in the wake of weakening industrial and construction markets. To pull numbers back upward, DuPont has launched a restructuring program that targets pretax annual cost savings of $450 million and lower capital spending.