NEW YORK - The Dow Chemical Co. said yesterday that it would slash 5,000 full-time jobs - about 11 percent of its total workforce - close 20 plants, and sell several businesses to rein in costs amid the recession.
The firm, which this year bought Philadelphia's Rohm & Haas Co., expects the plan to save about $700 million a year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll.
Exactly which workers and plants will be affected is still being determined, a company spokesman said.
"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 officer and chairman Andrew N. Liveris said in a statement.
Last month, Dow had said it would review all options to reduce costs and eliminate or defer capital spending. Dow's actions follow those of rival DuPont Co., of Wilmington, Del., which last week said it would cut 2,500 jobs.
DuPont is releasing 4,000 contractors, halting discretionary spending, slowing or stopping noncritical projects, and temporarily idling more than 100 manufacturing units. The yearlong restructuring plan will affect about 4,200 employees, or roughly 7 percent of DuPont's workforce.
Dow said it would take a fourth-quarter charge of $700 million, or 50 to 60 cents a share, to cover $350 million in severance payments and $350 million worth of plant-shutdown costs.
But the firm assured shareholders it had no plans to cut its dividend, which has been issued quarterly for nearly a century.
The plan appeared to be well-received on Wall Street, where Dow's stock jumped $1.37, or 7.21 percent, to close at $20.37. The broader markets also rallied on an infrastructure-spending plan put forth by President-elect Barack Obama.
Dow also is scheduled to close on its $15.3 billion buyout of Rohm & Haas early next year, a deal it hopes will help it grow into the high-margin specialty-chemicals market. The firm expects that deal to result in about $800 million in savings over time.
The joint venture and Rohm & Haas deal, as well as other industry deals such as Ashland Inc.'s buyout of Hercules Inc., of Wilmington, and Huntsman Corp.'s potential sale to private equity, come as the global credit markets have all but ground to a halt, leading some to question the validity of high-priced deals in the industry amid the economic turmoil.