Tech companies have staged the largest wave of recent layoffs.
In his case, a change in consumer habits after the pandemic, the deterioration of the economic situation and the hiring binge in recent years were mixed.
Some banks have joined the cuts, but now it is also industrial and consumer companies that are beginning to cut jobs.
This week they have announced layoffs, among others, the industrial conglomerate 3M, the toy company Hasbro and now also the chemical company Dow.
The company based in Midland (Michigan) will reduce some 2,000 jobs worldwide, around 5% of its workforce.
The company announced this Thursday to the United States Securities and Exchange Commission (SEC) that its board of directors approved the day before restructuring measures to cut structural costs "in response to the continued economic impact of the global recessive environment and to improve their long-term agility and competitiveness throughout the business cycle.”
The program includes a reduction in costs of the global workforce, amortization and cancellation of assets and commissions for the termination of contracts.
Dow will record a charge in the first quarter of 2023 for costs associated with these activities of $550 million to $725 million.
The bulk of that figure will go toward severance pay and related benefit costs that will range from $330 million to $425 million for that global headcount reduction of approximately 2,000 positions.
In addition, there will be costs associated with asset disposal activities that will range from $20 million to $50 million;
and amortizations and cancellations of assets that will oscillate between 200 and 250 million dollars.
Future cash payments related to severance pay costs, termination fees, and environmental cleanup costs are expected to be approximately $450 million to $550 million and will be paid primarily over the next two years.
In addition, the company will incur costs to implement these and other efficiency measures, which will be expensed as incurred and will range from $400 million to $450 million over the life of the program.
With all of this, Dow expects to achieve $1 billion in cost savings by 2023. Half will correspond to structural measures, including reducing labor costs due to layoffs, increasing productivity with process improvements, and review and cancellation of assets, especially in Europe.
The other 500 million will be cuts in operating expenses in aspects such as raw materials, logistics, reconditioning and general expenses.
In the long term, Dow remains on track to increase its gross operating income by more than $3 billion by 2030, while reducing its carbon emissions by 30% compared to 2005, as it progresses on its path to carbon neutrality by 2050.
“We are taking these steps to further optimize our cost structure and prioritize business operations towards our most competitive, cost-advantaged and growth-oriented markets, as we navigate macroeconomic uncertainties and challenging energy markets, especially in Europe," said Jim Fitterling, president and CEO of Dow, in a statement.
