Dow announces cost-cutting actions as DuPont merger approaches

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Dow DuPontThe Dow Chemical Company announced actions that aim to cut costs and integrate Dow Corning. The company has acquired Corning’s stake in the joint venture.

Dow says the actions could result in a half-billion dollars in savings. The cuts are not as deep as those at DuPont Co., which is slated to merge with Dow,  with the combined companies separating into three publicly traded companies.

A Dow spokeswoman did not immediately respond to a request for comment on the impact on Dow manufacturing operations in Delaware that include electronic polishing technologies.

“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,” said Andrew N. Liveris, Dow’s CEO.  “With these difficult but necessary actions, we are bringing together the best of each company’s talent and technology, accelerating Dow’s strategy to go narrower and deeper into attractive, targeted market sectors, and setting the stage for the new Dow – the world’s leading material science company.”

Cost synergies will be achieved through a combination of workforce consolidations and savings from actions such as harmonizing energy contracts at large sites, optimizing warehouse and logistics footprints, implementing materials and maintenance best practices, combining information technology service structures and leveraging existing research and development (R&D) knowledge management systems.

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Dow will shut down silicones manufacturing facilities in Greensboro, North Carolina, and Yamakita, Japan, as well as certain administrative, corporate and manufacturing facilities to further enhance competitiveness and streamline costs associated with the transaction, a release.

These collective actions will result in a reduction of approximately 2,500 positions globally, or approximately four percent of Dow’s workforce.

The company will take a charge of approximately $410 million to $460 million in the second quarter of 2016 for asset impairments, severance and other costs related to these measures, which are expected to be completed in the next two years.

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