Dow is launching a workforce reduction—2,000 workers, over 5% of its total workforce—as the company continues to grapple with economic turbulence, primarily in Europe.
Increase in Dow’s sales in 2022
Decrease in Dow’s earnings in 2022
Dow is the first major chemical company out of the gate with full-year 2022 financial results. Dow managed a 3.5% sales increase, but earnings declined by a sharp 32.5%.
On a Jan. 26 call with analysts, Dow CEO Jim Fitterling said the year began well, with strong demand across the company’s businesses. The picture changed in the second half. “Economic conditions deteriorated, driven by record inflation, rising interest rates, ongoing pandemic lockdowns in China, and continued geopolitical tensions,” he said.
Europe, where Russia’s invasion of Ukraine has driven up energy prices and caused many chemical producers to shut plants, was responsible for 60% of Dow’s earnings decline.
The layoffs are part of a Dow program, originally unveiled when Dow released third-quarter earnings in October, to save $1 billion in 2023. Half the savings will come from structural improvements, including the job cuts. Dow will also shut plants, particularly in Europe. It says it will announce the locations set for closure later this quarter. The company says that for now the program will focus on smaller facilities.
Another $500 million in savings will come from reductions in operating expenses. Dow says it will spend less on maintenance turnarounds and cut purchases of feedstocks and utilities.
During the call, Fitterling said that Europe, Germany in particular, has done an “admirable job” switching away from Russian natural gas to other sources of energy but that more work needs to be done. “We’re a long way away from long-term competitiveness in Europe,” he said.