The plan by Dow Chemical Co (NYSE:DOW) to lock up the doors of its plants in North Carolina and Japan has its pros and cons. On one end the company will gain from the $500 million in cost savings. It will also take home more revenue as a result of embracing full control of its Dow Corning Corp. silicone venture whose mandate has previously been shared with Gorilla glass maker Corning Inc.
The purchase of Corning Inc.’s 50% stake into the joint venture partnership that has lasted for stake cost Dow $4.8 billion.
However, as this happens, a 4% of its workforce will be rendered jobless given that 2,500 jobs will have gone to the drain. Other manufacturing facilities that would face a close down include Greensboro, North Carolina, and Yamakita, and Japan. The company argues that shutting off these plants will give it a competitive edge as well as enhance the streamlining of costs.
Speaking about the new unfolding, Dow Chemical Chief Executive Officer Andrew Liveris said that the incorporation of Dow Corning is to drive new levels of value creation to customers as well as greater returns for the company’s shareholders.
Dow Chemical says that its deal with Dow Corning would bring into the company more operating earnings per share. The annual cost saving estimation for the deal is way up to $400 million from $300 million. It also has a target of $100 million in growth synergies.
Apparently, as it takes up the revamping move, it is also working towards the completion of a megamerger with E I Du Pont De Nemours And Co (NYSE:DD). The entry of the new company will bring forth three units which are expected to take shape within three years. These units are agriculture, industrial materials, and specialty products. The combination n of the two companies will require a labor force of not less than 100,000 employees.
Nevertheless, Dow Chemical’s conjunction with DuPont Co is still under antitrust scrutiny.