The largest chemical company in the US, Dow Chemicals, announced a rationalization plan on December 4 to cut 1,000 employees and shut down a number of factories, in its ongoing drive to improve the efficiency and cost effectiveness of its global operations. The company will post an extraordinary charge in the range of $500 million to $600 million which includes such costs as severance pay and asset write-downs in the last quarter of 2007. Once these actions are fully implemented, the company expects to realize cutbacks of $180 million a year. Resources that can be saved with this plan will be re-directed toward value-creating growth opportunities.

The company has been suffering from increasing costs of raw materials and the ongoing downturn in North America, and is expected to announce large-scale mergers or acquisitions to reduce dependency on low-margin general chemical products later.

The details of the rationalization plan announced by the company this time are as follows.

(1)The company will shut down an agrichemical manufacturing site of Dow AgroSciences in Lauterbourg, France (manufacturing fungicides including Dithane.)

(2)The company will exit the automotive sealers business in North America, Asia Pacific and South America (within the next 9 to 18 months). It will explore strategic options in Europe.

(3)The Company will cancel its investment in a petrochemical joint venture, P?tromont of Canada (manufacturing HDPE and olefin).

(4)The Company's SM plant in Cama?ari, Bahia of Brazil, will be left idele. (on January 1, 2008).

(5)The Company will close its manufacturing plant for hydroxyethyl cellulose located in Aratu, Brazil (in the first quarter of 2008).

(6)Union Carbide Corporation, a wholly owned subsidiary of the Company, will shut down its polypropylene factory at St. Charles in Louisiana.

(7)The Company will significantly reduce support functions, including its research and development division at the Union Carbide site in South Charleston, West Virginia.

Aside from this, the company announced on the same day that the engineering plastics division of the company would withdraw from ABS and SAN businesses except for automotive applications in America.