DowDuPont Job Cuts for 2017
It’s a time of flux for DowDuPont Inc (NYSE:DWDP). The Dow-DuPoint merger that brought together Dow Chemical Company and DuPont Company into a single entity was meant to undergo a schism of sorts, splitting into three companies focused on agriculture, specialty chemical products, and materials. But due to activist investor opposition, the company has now revised that plan and instead pushed its restructuring timeline from 18 months to two years, with a key closing in Nevada leading to these DowDuPont job cuts in 2017, while the company is also looking to save about $3.0 billion in costs.
The formation of DowDuPont, while initially pitched in 2015, only came together in September of this year. Despite its relatively short time in existence, however, the company has undergone a major course correction.
The current plan involves moving business with more than $8.0 billion in annual revenue from the materials spin-off, which is meant to house the legacy Dow operations and will be named Dow, into the specialty-chemical concern.
This new plan was formulated to help fend off several activist investors who feared that the original move to split the company into three—Agriculture, Materials Science, Specialty Products—over the next 18 months would end up costing the company value. Those who supported the plan ultimately claimed that some of these activist investors were short-sighted, but did capitulate to their demands and restructure the break-off.
Ultimately, chemical company job cuts were one of the consequences of the company’s new plan as one of its cost savings measures.
DowDuPont Merger: $3.0 Billion Cost-Cutting Measures
While the company has gone back-and-forth in terms of how exactly the final split will shake out, what is certain is that DowDuPont’s cost-cutting measures will involve selloffs, facility shutdowns, and, of course, job cuts.
The company is readying to make these cuts in anticipation of its split into three separate companies. The DowDuPont merger was meant to combine the two companies’ strengths in different fields under a single umbrella, and it’s now looking to streamline its business before the three new companies are formed.
Part of the cost-cutting measures include consolidating distribution centers, negotiating new supply contracts, shutting down certain facilities and operations, and layoffs.
DowDuPont registered a pro forma net income of $232.0 million in the latest quarter, down 53% from a year ago.
DowDuPont Closes Cellulosic Ethanol Plant at Nevada, Leading to Job Cuts
As part of the cost-savings plan, a DowDuPont closing will take place at a cellulosic ethanol plant, which will result in Nevada layoffs.
The company is shopping the plant, which is valued at $225.0 million and contains a 30-million-gallon facility that uses corncobs, husks, and stalks to produce renewable fuel.
The plant closure resulted in an additional 90 DowDuPont layoffs in 2017.
Another hitch is that the company has received $14.0 million in state grants since 2010, plus another $3.54 million or so in tax credits. The state is currently looking into how much the company may owe.
In addition to the plant layoffs, DowDuPont also announced that it will cut its global workforce by five to seven percent, as well as consolidate and shut down some facilities.
“DowDuPont shutters Nevada cellulosic ethanol plant, looks for a buyer,” Des Moines Register, November 2, 2017.
“DowDuPont Plans Job Cuts as Part of $3 Billion Savings Push – Update,” Fox Business, November 2, 2017.
“DowDuPont to Change Breakup Plan,” The Wall Street Journal, September 12, 2017.