Dow Chemical plans to close 20 plants and cut 2,400 jobs as part of a global cost-cutting program over the next two years, the company said on Wednesday.
The 2,400 layoffs amount to 5% of Dow's global workforce.
With the moves, Dow expects to save $500 million in annual operating costs by the end of 2014.
"The reality is we are operating in a slow-growth environment in the near-term and, while these actions are difficult, they demonstrate our resolve to tightly manage operations particularly in Europe and mitigate the impact of current market dynamics, said Andrew N. Liveris, Dow CEO.
Dow says it also plans to further reduce capital spending and investments for certain unspecified growth programs. Those measures are expected to save the company an additional $500 million in cash.
Earlier this year we announced targeted actions levers we planned to pull to reduce costs and protect our earnings growth path," said Liveris. "The interventions we are announcing today represent the next phase in our path to driving efficiency and prioritizing our growth programs.
"Importantly, we will continue funding projects where differentiation is rewarded even in this environment and where margin expansion opportunities are clear for example in Dow AgroSciences, Dow Electronic Materials, and our Sadara and US Gulf Coast investments."
Plants to be shut down include a high-density polyethylene (HDPE) facility in Tessenderlo, Belgium, and a sodium borhidrate plant in Delfzijl, the Netherlands.
Moreover, a number of performance materials manufacturing facilities will be closed, including an automotive systems diesel particulate filters manufacturing facility in Midland, Michigan; formulated systems manufacturing facilities in Ribaforada, Spain, Birch Vale, United Kingdom and Solon, Ohio; and an epoxy resins facility in Kina Ura, Japan.
Additionally, Dow says it will record an impairment charge related to the write-down of Dow Kokam's assets, reflecting weak global demand for lithium-ion batteries; and will consolidate certain assets in its oxygenated solvents business, as well as shut down a number of other small manufacturing facilities. These actions are expected to take place over the next two years.
Dow said it plans to involve local stakeholders as defined in each country and in compliance with relevant information and consultation processes.