Wednesday, October 24, 2012

On earnings reports, DuPont, Dow to cut 4,000 jobs

After some optimistic comments, comes the reality of earnings season. From Chemistry World's Andrew Turley:
The chemical industry was hit by news of nearly 4000 planned job cuts, and multiple site closures, yesterday as two iconic firms, DuPont and Dow, announced dramatic restructuring plans alongside their financial results for the third quarter (Q3) of 2012. Sales from continuing operations fell 9% to $7.4 billion in Q3 as a result of weaker than expected demand in the markets for titanium dioxide and photovoltaic materials, said chief executive Ellen Kullman. 
DuPont said it would reduce its global workforce by 1500 (2%) over the next 12–18 months with the aim of saving $450 million (£280 million) in annual costs. The move will cost the company $152 million in 2012. 
[snip] Meanwhile, Dow said it would cut 2400 jobs, representing 5% of its global workforce, and close 20 manufacturing plants, in a bid to shave $500 million off its annual costs over the next two years. Sales at Dow fell 10% – 7% when adjusted for recently sold business activity – to $13.6 billion in Q3, with economic instability in Europe leading to lower prices cited as a key factor.
The DuPont press release does not mention the actual cuts to come, while the Dow press release actually delivers the butcher's bill:
Dow will shut down a high density polyethylene facility in Tessenderlo, Belgium, a sodium borhidrate [CJ's note: sic] plant in Delfzijl, the Netherlands, as well as a number of Performance Materials manufacturing facilities, 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, the Company will record an impairment charge related to the write-down of Dow Kokam LLC’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.
While I'd like to take a moment to kick Andrew Liveris in the shins a bit, I just don't have the heart to do that. Suffice it to say that it is broadly confusing to me what is going on in the global economy right now. Things in the US economy seem to be bumping along fine (for example, both consumer sentiment and the ACC's Chemical Activity Barometer are up), Europe is still more or less hurting and Asia seems to be slowing. I have my skepticisms about Paul Hodges and his economic predictions, but his insistence that we live in a world defined by uncertainty and unpredictability rings true to me.

To those people who are going to lose their jobs, best wishes to them, and to all of us.

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