Dow Inc. outlined a series of targeted actions aligned to its previously stated plan to achieve $1 billion in cost savings in 2023.
The proactive actions will further optimize the company's cost structure in response to near-term macroeconomic uncertainty, while maintaining its long-term competitiveness across the economic cycle.
Dow expects to realize $1 billion in cost savings in 2023 through the following moves:
Structural improvements of $500 million, maintaining a low cost-to-serve operating model:
- Optimizing labor and services costs, including a global workforce reduction of approximately 2,000 roles
- Shutting down select assets, while further evaluating Dow's global asset base, particularly in Europe, to ensure long-term competitiveness and enhance cost efficiency
- Increasing productivity via end-to-end process improvements.
Operating expense reductions of $500 million, focused on near-term cash flow:
- Decreasing turnaround spending, with a continued focus on maintaining safety and reliability
- Reducing purchased raw materials, logistics, and utilities costs
- Aligning spending levels to the macroeconomic environment.
"We are taking these actions to further optimize our cost structure and prioritize business operations toward our most competitive, cost-advantaged and growth-oriented markets, while also navigating macro uncertainties and challenging energy markets, particularly in Europe," said Jim Fitterling, Dow chairman and CEO. "We remain committed to capitalizing on our long-term growth opportunities in a disciplined and balanced manner, and these actions further position us to advance our Decarbonize and Grow strategy and strengthen our competitive position."
The company will record a charge of $550-$725 million in the first quarter of 2023 for costs associated with these activities, which primarily include severance and related benefit costs, costs associated with exit and disposal activities, and asset write-downs and write-offs.