Tech & Biz

Dow Chemical to close 20 plants and layoff 5,000 but dividends will be paid

by Tina Kells | December 8, 2008 at 09:31 am

3053 views | 19 Recommendations | 6 comments

Dow Chemical is the latest major corporation to announce layoffs and plant closures, but if you hold dividend paying stocks don't worry, Dow Chief Andrew Liveris guarantees that you'll still see your cash.

Dow Chemical will close 20 plants and layoff 5000 employees in an effort to increase cash reserves. It will also take a downgrade in stock price to put some money in the bank. The cost cutting measures were deemed necessary after quarterly profits came in far below predictions and are an acceleration of a previously announced Dow Transformation Strategy.

Shareholders need not worry too much, Dow will not suspend dividend payments to conserve cash. Cash strapped companies often suspend dividends as a first line of attack when they need to keep cash in the bank for the short term, but instead Dow will cut jobs just before the holidays.

Andrew Liveris has done a good job of protecting investors who rely on dividend paying stocks but what has he done for his employees?

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 moves to save about $700 million per year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll.

"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. "We are going to take necessary, bold and proactive measures to manage our transformation through these extremely challenging times," Liveris said at the time.

The company 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 denied it will suspend dividend payments as a way to conserve cash. In a conference call Monday, Liveris said Dow has paid a dividend each quarter for nearly 100 years, and has no plans to stop that trend.

"We will not break that string...not on my watch," he said.

1 See all footage | View Slideshow

Share: email story | add to any | | facebook | stumbleupon

recommend This comment thread is now closed

boys (not verified)

at 17:48 on December 8th, 2008

Na, we'd rather [expletive deleted] our employees who actually contribute to the everyday functionality of our business than suspend dividends to rich white guys.

Maybe they (Dow) can get some of that free bailout money too.

Dow employee (not verified)

at 08:16 on December 9th, 2008

I am a Dow employee and i am worried about my job. My heart goes out to all that lose their jobs in this cut. Being a single parent and being the sole bread winner of a home . This is a tragic time for families and the hardship of wheather or not you can enjoy the christmas season not knowing where tomorrow will bring you. Its a time of uncertainty. I pray for every Family and hope and wish everyone the best in this hard economic times.

rrios28 (not verified)

at 16:21 on December 9th, 2008

Sorry to say but you should start packing, i cant believe this is happening.

Another Dow Employee (not verified)

at 08:13 on December 30th, 2008

Now I understand why Dow needed to save 700 million by laying off people...that's about the amount of money required to cancel the Rohm & Haas Deal...now that K-Dow will not happen. Why hide the fact that Dow made a mistake by not being patient and paying way more than R&H stock says it is worth? Why should the employees suffer from the mistakes of bumbling idiots! R&H takeover is a great idea, but let's be smart about it!!

Another Dow Employee (not verified)

at 16:40 on December 10th, 2008

5000 jobless workers on your watch Andy? Atta-boy! I nominate you for a 1 karat award. I hereby forfeit my dividend earnings for one year.......can they keep they're jobs now?

Randy Crochet (not verified)

at 07:06 on January 21st, 2009

Way to go Andrew, after making monumental mistakes with K-Dow and Rohm & Haas, you cover yourself by punishing your workforce with layoffs, remember your workforce (formerly known as the Human Element)?