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This is what Howard Ungerleider, Vice President Financial of Dow Chemical Company, declared. The problem is that, even with lower inflation, general costs remain quite high and layoffs are a fact.
No company’s economy can withstand the fact that their revenues are below expectations, and for the corporation, there was no other solution: Dow will lay off 2,000 employees. The forecast was announced last Thursday (1/26).
The Dow Chemical Company, known as Dow, is an American corporation for chemical, plastic, and agricultural products headquartered in Midland, Michigan, United States.
One of the causes for the rise in production costs in recent quarters, as well as for various other sectors, is the war between Russia and Ukraine. China’s social isolation measures also rank among the causes, combined with the global economic slowdown.
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And there’s also the fact that the automotive, packaging, and electronics industries have demanded much less chemical products from Dow. Even with the recent changes in social isolation policies in China against Covid-19, the demand increase will not rebound quickly enough to rebalance the corporation’s revenues.
In addition to the layoffs, market analysts still predict a rise in chemical product prices in general, already in the first quarter of 2023. However, Dow needs to adhere to its plan of saving at least US$ 1 billion this year, divest some assets, and assess the corporation’s global footprint more critically, especially in Europe. 2,000 employees represent 5% of Dow‘s workforce.
Considering Europe as the locus where a significant portion of the decline in earnings occurred, it wasn’t just the old continent that suffered from layoffs, according to James Fitterling, CEO of Dow. Layoffs occurred in all countries where the corporation operates.
According to the American-British global provider of data and financial market infrastructure, Refinitiv, analysts expected Dow’s revenue for the first quarter of 2023 to be around US$ 13 billion; however, the corporation expects slightly less, between US$ 11 and US$ 11.5 billion.
Along with the announcement of job cuts, Dow also spoke about its investment forecast: US$ 2.2 billion throughout the year, representing a 21% increase compared to what was invested last year.
Layoff as a Strategy to Overcome the Crisis
Other sectors are also resorting to mass layoffs, which have been used as a mechanism to escape the changes in the economic scenario that point to a global recession, especially considering that the world is still in the recent post-pandemic cycle.
The big techs have been one of those sectors. Layoffs have increased to almost 700%. In companies such as Microsoft, Google, and Spotify, layoffs exceeded tens of thousands of people. Other companies like Coinbase, Flexport, and Salesforce have also announced that they will adopt mass layoff policies.
For all these companies, in addition to the post-pandemic situation, the war between Russia and Ukraine and the disorganization of global supply chains are the causes that justify the layoffs.
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