Leadership & People

UPDATE 3-Dow Chemical to close facilities, cut 5,000 jobs

(Reuters) - Dow Chemical Co (DOW.N) said on Monday it will close 20 facilities, divest several businesses and cut 11 percent of its global workforce, the latest in a string of U.S. corporate actions aimed at tackling the global economic slump.

In addition to cutting 5,000 full-time jobs, the company will reduce its contractor workforce by 6,000, or about 30 percent of this segment, and temporarily idle about 180 plants. Dow's shares rose 8 percent in morning trading.

Dow's action, which comes less than a week after its U.S. rival DuPont (DD.N) announced cutbacks, is an acceleration of its "transformational strategy" and will lead to annual cost savings of $700 million by 2010.

The freeze in the global credit markets and a recession in many developed economies has hurt Dow and its peers. The companies have also suffered from a sharp slowdown in many emerging regions, which had been driving growth for them in recent quarters.

"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," Chairman and Chief Executive Officer Andrew Liveris said in a statement.

The Midland, Michigan, chemicals maker is also in the process of buying specialty chemicals maker Rohm & Haas (ROH.N: Quote, Profile, Research, Stock Buzz) for $15.3 billion, a move the companies said would yield $800 million in savings by 2010.

Dow, the largest U.S. chemical maker, will close 20 facilities in high-cost locations and sell non-strategic businesses.

Dow expects its restructuring actions to result in fourth quarter pre-tax charges of $700 million. The moves will also hurt earnings in the quarter by 50 cents to 60 cents a share, the company said in a presentation.

The company expects its actions to result in annual cost savings of $350 million by the end of 2009 and $700 in annual cost savings by the end of 2010.

Fears that the year-long U.S. recession will deepen prompted DuPont to cut 2,500 jobs and phone company AT&T (T.N) to eliminate 12,000 jobs.

Shares in Dow have slumped about 50 percent so far this year, a steeper slide than the 40 percent loss in the broader Standard & Poor's 500 .SPX.

Dow's shares rose $1.52 to $20.52 on the New York Stock Exchange. (Reporting by Euan Rocha and Matt Daily, editing by Maureen Bavdek, Steve Orlofsky, Dave Zimmerman)