The Dow Chemical Co. will eliminate about 2,400 jobs and close roughly 20 manufacturing facilities as part of a restructuring plan aimed at coping with slowing economic growth in Europe and elsewhere.
The manufacturing giant said that the job cuts amount to five per cent of the company's workforce worldwide.
Dow expects the strategy will result in roughly US$500 million in annual cost savings by the end of 2014.
The company also plans to slash capital spending and investments. It expects that will save an additional $500 million. All told, Dow anticipates it will save US$2.5 billion, including other cost-cutting measures.
The company's business has been hurt by Europe's debt crisis and slower growth in China. Manufacturers, construction businesses and some transportation customers have reduced demand for Dow products. The company's coatings and materials for electronic devices also have been weak.
"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," Andrew Liveris, Dow's chairman and CEO, said in a statement.
Despite the sweeping cost reductions, Dow plans to continue to invest in areas where it believes that it can clearly expand its profit margins. Those include Dow AgroSciences, Dow Electronic Materials and its Sadara and U.S. Gulf Coast investments. "Taken on the whole, Dow's strategy remains intact, and our long-term growth fundamentals are strong," Liveris said.