Job cuts, plant closures ahead for Dow, Dow Corning

MIDLAND, Mich.—Dow Chemical Co. is eliminating 2,500 jobs, 4 percent of its work force, in an effort to achieve “cost synergies” with its new silicones unit and former 50/50 joint venture Dow Corning Corp.

Dow will shutter silicone manufacturing facilities in Greensboro, N.C., and Yamakita, Japan, in addition to other administrative, corporate and manufacturing facilities to further enhance competitiveness and streamline costs associated with the joint venture purchase, the firm said in a June 28 news release.

The company said 700 reductions will occur within the Great Lakes Bay Region, which is where Dow is headquartered, from both Dow and Dow Corning. Dow said notifications to affected employees will start in the coming weeks and continue through the end of the third quarter of 2016.

Roles will be eliminated on various timetables throughout the two-year integration period.

A Dow spokeswoman said executives would not be made available to comment on the move. The firm said that it plans to capture $500 million in combined run rate annual synergies, including $400 million in cost synergies. Both figures increased by $100 million compared to initial projections.

“By shutting down these facilities we are able to shorten the supply chain to enhance competitiveness, streamline costs and deliver better service to our customers. Product lines and technologies used there will be moved to other existing facilities in our manufacturing grid,” the spokeswoman said in an email.

The company would not disclose employment levels at the two facilities or give exact specifics of how many other administrative, corporate and manufacturing jobs would be affected.

“We are moving quickly and effectively to integrate Dow Corning and deliver the synergies that will drive new levels of value creation for our customers and generate even greater returns for our shareholders,” Dow CEO Andrew Liveris said in a statement.

Corning Inc. and Dow came to an agreement in December 2015 under which Dow paid $4.8 billion in cash to acquire Corning's stake in the joint venture. The firms finalized the agreement in June, with the two companies maintaining their equity stake in Hemlock Semiconductor Group, a polysilicon manufacturer comprised of several joint venture companies currently owned in majority by Dow Corning.

Howard Ungerleider—Dow's vice chairman and chief financial officer—will serve as chairman of Dow Corning in addition to his current responsibilities.

The firm also appointed Dow Vice President Mauro Gregorio, who led the Dow Corning integration team, as the new CEO of Dow Corning. Andy Tometich, a 27-year veteran of Dow, was appointed business president of Dow Corning's silicones business.

In a separate move, Dow revealed a series of actions in conjunction with state and local economic development and community organizations aimed at helping offset the economic impact of its work force reduction. They include:

c Partnering with the Michigan Department of Talent and Economic Development, local economic development agen-cies, and others to help affected Dow and Dow Corning employees find new work;

c Unveiling a facilities plan for the region, which maximizes the number of Dow and Dow Corning facilities that will remain open and operational; and

c Confirming that Dow Corning's total overall corporate charitable giving programs will remain at 2016 levels throughout the restructuring period, which began on June 1 and runs through June 1, 2018.

“With the difficult but necessary actions Dow is announcing today to enable faster and more efficient growth from Dow Corning, we are also calling into action multiple efforts to minimize the economic impact on the Great Lakes Bay Region,” Ungerleider said in a statement. “We believe, by working together as one community with one singular focus, we can make both Dow and the region stronger and more economically resilient in the future.”

Dow said since January it has implemented a hiring slowdown of external experienced candidates, resulting in a number of open roles. The firm intends to prioritize impacted Dow Corning and Dow talent for selection into these open roles to minimize the impact of job loss.

Additionally, a number of open roles in Dow's U.S. Gulf Coast Manufacturing and Engineering operations also will be included in this effort, and Dow will host hiring managers from those locations in Midland soon to discuss employment options there with impacted Dow Corning and Dow employees.

In conjunction with the Michigan Department of Talent and Economic Development and local economic development corporations, the company is launching a series of actions to help affected employees find new work in the region and across Michigan, including a customized online job portal designed to match talent with jobs around the state.

Finally, Dow said it is driving its own initiative to match available talent with local employment by working with local chambers of commerce and businesses across the region.

Dow added that construction of its new corporate headquarters, scheduled to open at the end of 2017, will continue as planned.

Shareholders from Dow and DuPont Co. are scheduled to vote on the firm's proposed $83 billion merger into DowDuPont Inc. on Oct. 7, according to a recent filing with the Securities and Exchange Commission. If approved, the merger will be finalized.

The firms are planning to spin off the merged company into three separate business portfolios—agriculture, specialty products and material sciences—and capture about $3 billion of cost synergies by the end of 2017. The Dow spokeswoman said it was too early to speculate on the added synergies from this transaction, and whether or not it would lead to similar job reductions.

Advisory committees are being developed for the spinoffs. Edward Breen, DuPont's chairman and CEO, will be responsible for the establishment, integration and operation of the agriculture and specialty products businesses.

Liveris will be in charge of material sciences. However the executive said during the firm's fourth quarter earnings call in February that he will step down sometime after the merger is complete and no later than the second quarter of 2017.