Dow Inc. outlined the series of actions it will take to achieve previously announced structural cost improvement targets and further enhance its long-term competitiveness as the global economy recovers from the coronavirus pandemic.
As announced during the Company’s second-quarter earnings on July 23, 2020, Dow is implementing a restructuring program to reduce its global workforce costs by approximately six percent and to rationalize certain manufacturing assets. These actions are expected to result in total annualized EBITDA savings of more than $300 million by the end of 2021.
Manufacturing asset impacts include:
Industrial Intermediates & Infrastructure will rationalize its asset footprint by shutting down certain amines and solvents facilities in the United States and Europe as well as select small-scale downstream polyurethanes manufacturing facilities. Performance Materials & Coatings will shut down manufacturing assets, primarily small-scale coatings reactors, and will also rationalize its upstream asset footprint in Europe and in the United States and Canada by adjusting the supply of siloxane and silicon metal to balance to regional needs. “Given the expected gradual and uneven global economic recovery from COVID-19, we announced in July that we are taking necessary actions to continue to optimize our asset footprint, reduce structural costs and enhance the competitiveness of our business over the long-term,” said Jim Fitterling, Dow chairman and CEO. “We continue to stay focused on delivering strong cash flow, strengthening our financial profile and maximizing our operational advantages, and we remain well-positioned to capture significant growth as market conditions improve.”
The Company will record a charge in the third quarter of 2020 for costs associated with the restructuring program activities. In total, these costs are expected to be in the range of $500 million to $600 million and will consist of severance and related benefit costs; costs associated with exit and disposal activities; and asset write-downs and write-offs.
The restructuring program is in addition to the $500 million of operating expense savings Dow will achieve by the end of 2020. The Company also remains on target to achieve its reduced target of $1.25 billion for capital expenditures in 2020, down from $2 billion in 2019.
Dow will involve local stakeholders as defined in each country and in compliance with relevant information and consultation processes.
Dow also confirmed that today it will close the sale of its rail infrastructure assets at six North American sites to Watco, three months ahead of its initial planned closing, for cash proceeds in excess of $310 million. Earlier this month the Company also announced plans to divest certain marine and terminal operations and assets to Vopak Industrial Infrastructure Americas for cash proceeds of $620 million, which is expected to close by year-end.
