Dow to cut 1500 jobs as global chemicals industry reshapes

Dow has begun cutting around 1500 jobs across its global operations as part of a larger plan to save $1 billion (£800 million) in annual costs. The move comes as the global chemical industry continues to restructure and reshape. The situation is particularly bleak in Europe, with companies blaming high energy and feedstock costs, increased environmental and regulatory burdens, and administrative hurdles around innovation and human capital.

Several large companies are in cost-cutting and reorganisation mode. DuPont, for example, has confirmed that it will spin off its electronics division, although it will now retain its water division in a change to its original restructuring plan. Bayer has been working towards €500 million (£416 million) in cost savings by cutting about 5500 jobs, mostly management roles last year. And BASF has spent the last two years implementing plans to cut over €2 billion in annual costs, with hundreds of job cuts as well as plant closures at its Ludwigshafen site in Germany. The chemicals giant has also agreed to sell off its food and health performance ingredients business, and is planning to sell off its Brazilian coatings segment and spin off its Agriculture unit as a separate company.

‘The European chemical industry is at breaking point, having lost around 11 million metric tons of chemical production capacity in Europe in the past two years alone, corresponding to 10,000–20,000 jobs possibly impacted,’ says Sylvie Lemoine, deputy director general of Cefic, the European Chemical Industry Council. ‘Cefic’s [industry competitiveness report] shows that, without dedicated industrial competitiveness policies and market recovery, up to 150,000–200,000 jobs could be at stake. There should be no more plant closures and job losses as a consequence of Europe’s heavy, costly and slow system. Urgent, bold action from policy leaders is needed. Lowering energy costs, ensuring access to critical raw materials, cutting red tape and supporting investment at scale in innovative technologies, are absolutely critical.’

Europe is currently a very expensive place to run a manufacturing company, mainly because of energy and feedstock costs, says Victoria Meyer, a chemical industry consultant at Progressio Global based in Houston, US, and host of the Chemical Show podcast. ‘It’s also down to one-sided [environmental and green] policies.’ Meyer points to last year’s Antwerp Declaration for a European Industrial Deal – a coordinated call from industry leaders for policy support, but recognises that policy changes can take a long time. ‘The declaration asked for change but we’re not seeing it. [The result is] a painful process involving loss of employment which has a large collective impact on communities,’ she adds.

On a brighter note, Meyer says chemical companies have always been resilient and innovative, and found ways to survive. She predicts the industry will look very different across the world in five to 10 years’ time. ‘In Europe, companies may be smaller and more numerous, with new names appearing. I suspect a certain amount of change of ownership and rebirth. Green and bio-based products will continue to grow and develop, but will take decades to get to scale. The industry will shed the heavyweight so it can start fresh again,’ she suggests.

However, she remains concerned about the lack of investment in new products and assets. ‘China’s policy is very different and the Middle East’s policy is very different. They are deeply committed to investing in chemicals and will replace old assets with bigger, newer ones. Europe is shutting down assets without the investment in new products.’