Dow Chemical is laying off workers.
Specifically, the US chemical giant, which had $US58 billion in sales in 2014, will cut 1,500-1,750 positions or 3% of its global workforce, in its effort to boost profitability.
“At our Investor Day last fall, we committed to a new, three-year $US1 billion productivity drive,” Dow CFO Howard Ungerleider said. “Our productivity efforts continue to center on cost-out actions and doing more with the resources we have in place, all to enable higher earnings. We executed against each of our financial, operational and strategic objectives again in the first quarter, and today’s announcement illustrates our ongoing commitment to the consistent implementation of our strategy moving forward and proactively addresses any stranded costs from the divestment of Dow Chlorine Products.”
Since the financial crisis, companies every where had been trimming their headcounts in their efforts to cuts costs and boost productivity. With the economy growing and demand improving, these lean operations saw modest revenue growth translate into earnings growth accelerating.
More recently, companies have either boosted hiring or complained about shortages of skilled labour.
Dow’s announcement is a bit of a contrast to that.
“The Company will take charges totaling approximately $US330 million — $US380 million in the second quarter of 2015 for asset impairments, severance and other costs related to these measures, which are expected to be completed during the next two years,” the company said in its press release today. “Once fully implemented, these actions are expected to result in approximately $US300 million of annual operating cost savings.”