4,500 to lose jobs as Dow Chemical pares $1.1 billion

May 02, 2001|By BLOOMBERG NEWS

MIDLAND, Mich. - Dow Chemical Co. said yesterday that it will eliminate $1.1 billion in costs in the next two years, including 4,500 jobs, as the largest U.S. chemical producer works to absorb Union Carbide Corp., which it purchased in February.

The savings are more than double what Michigan-based Dow predicted in August 1999 when announcing the plan to buy Carbide.

Dow is trying to boost profit by eliminating 8 percent of the combined company's work force after being hurt by rising energy and raw materials costs and a slowdown in the U.S. economy. Soaring natural gas prices had dragged down profit at Carbide in particular, and some investors had questioned the merit of Dow paying what it did for the chemical rival.

"This is makeup to people who felt they should've readjusted the price last year or scrapped the whole deal," said Nick Redfield, an analyst with Banc One Investment Advisors, which holds Dow shares. "It should reassure. There's still a lot of uncertainty in the investment community."

Dow took a $1.4 billion charge against first-quarter earnings before taxes for costs associated with the acquisition.

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