Dow Chemical cutting 5,000 employees, 6,000 contractors

Three-month trading for Dow Chemical

The slumping global economy has prompted Dow Chemical Co. to slash 5,000 full-time jobs, or about 11 per cent of its total workforce, and close 20 plants in an effort to reduce costs.

The company announced Monday that it will also sell several businesses, temporarily idle 180 plants and cut about 6,000 contractors from its payroll.

Dow, one of the world's largest chemical makers, with 45,000 employees, said it expects the moves to save about $700 million US per year by 2010.

The company employs about 1,300 people in Canada and operates plants at Prentiss and Fort Saskatchewan in Alberta, Toronto and Sarnia in Ontario and at Varennes, Que. Dow did not say how the cuts would affect its Canadian operations.

"We are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn," CEO Andrew Liveris said in a statement.

Dow said last month that it would review all options to reduce costs and eliminate or defer capital spending.

The company said it will take a fourth-quarter charge of $700 million US, or 50 to 60 cents per share, to cover $350 million in severance payments and $350 million in plant shutdown costs.

The company said it will not suspend dividend payments as a way to conserve cash.

In a conference call, Liveris said Dow has paid a dividend each quarter for nearly 100 years. "We will not break that string … not on my watch," he said.

Shares of Dow Chemical were up $1.40, or more than seven per cent, to $20.40 US in midday trading on the New York Stock Exchange. They've been as high as $45.50 during the past year.

With files from the Associated Press