City Council approves District Detroit community benefits deal, brownfield plan

Dow Chemical, XALT set to cut 800 jobs in Michigan

Ian Thibodeau
The Detroit News

Midland — Dow Chemical Co. will cut 700 jobs or about 11 percent of its Midland workforce as part of its drive to cut costs globally following its June acquisition of Dow Corning Corp.

The chemical company said Tuesday it will cut 2,500 jobs from it’s global workforce, or about 4 percent.

About “700 roles” or jobs in the Great Lakes Basin Region will be eliminated from Dow Chemical and Dow Corning, the company said in a statement. It is part of Dow Chemical’s overall cost reduction efforts following its purchase of Dow Corning’s stake in a decades-long joint venture less than a month ago.

The companies employ roughly 6,400 people in Midland.

Dow Chemical’s announcement came about six months after the company announced plans to merge with Wilmington, Delaware-based DuPont. Dow employs more than 5,000 workers in Midland, including about 1,600 at its headquarters. An additional 1,400 people work in the city for Dow Corning.

In a double blow, lithium-ion batterymaker XALT Energy earlier this month said it plans to lay off 100 workers at its Midland factory. In a notice to the state, XALT blamed the cuts on the loss of “two of its substantial contracts for work in China.”

It comes after XALT Energy — the former Dow Kokam — announced in March 2015 a $1 billion contract with a Chinese firm that it said would create 300 jobs in Midland.

Midland County had a seasonally unadjusted 4 percent unemployment rate in May, according to the Michigan Bureau of Labor Market Information and Strategic Initiatives. Of its 42,099-person labor force, 1,698 are unemployed.

Michigan has a seasonally adjusted 4.7 percent jobless rate.

Gov. Rick Snyder’s office said the state’s economy can cushion the layoffs.

“Michigan has faced employment challenges in the past,” Snyder spokeswoman Anna Heaton said in an email, “and while the Dow announcement is unfortunate, we believe residents will be well-positioned to find new opportunities as part of the state’s continued economic growth.”

“We are moving quickly and effectively to integrate Dow Corning and deliver the synergies that will drive new levels of value creation for our customers and generate even greater returns for our shareholder,” Dow Chemical Chairman and CEO Andrew Liveris said in a statement.

In a statement, Liveris called the firings “difficult but necessary actions.” He added that, “we are bringing together the best of each company’s talent and technology, accelerating Dow’s strategy to go narrower and deeper into attractive, targeted market sectors, and setting the stage for the new Dow — the world’s leading material science company.”

Dow Chemical said it plans to issue layoff notices to affected workers “in the coming weeks” through the end of September. “Roles will be eliminated on various timetables throughout the two-year integration period,” according to a company statement.

The company said it is hoping to minimize the number of layoffs by diverting affected Dow and Dow Corning employees into open positions created when the firm slowed its outside hiring in January. It also plans to hold hiring sessions in Midland so laid-off workers can apply for open positions in Dow’s U.S. Gulf Coast Manufacturing and Engineering operations.

Dow Chemical also is working with the Michigan Department of Talent and Economic Development and regional economic development agencies to help laid-off workers find new jobs.

When the proposed Dow-DuPont merger was announced in mid-December, Midland’s elected officials, residents and workers were cautiously optimistic that the equal merger of industrial giants would help the region and create more jobs. But the city’s mayor worried that “synergies” — reducing redundant jobs in combined companies — would result in job cuts.

Dow Chemical emphasized that Tuesday’s job cuts are tied to absorbing Dow Corning, not the $130 billion DuPont merger. Ahead of that tie-up, Dow Chemical will close silicone manufacturing plants in Greensboro, North Carolina, and Yamakita, Japan. The companies will form Dow-Dupont, which will focus on agriculture, industrial materials and specialty products.

All Dow Chemical or Dow Corning facilities will remain open in Michigan, the company said, “ while the company will continue to rationalize its oldest and idled locations from the combined facilities footprint.” The company still plans to continue building its new corporate headquarters with a scheduled opening at the end of 2017.

The Dow-Dupont merger is expected to close in the second half of this year. Dow and DuPont expect their merger will cut annual expenses by $3 billion. Dow and DuPont will have separate shareholder meetings on July 20 to vote on the merger. Dow employs roughly 49,500 people at 179 sites in 35 countries, while Corning employs 10,000 people worldwide.

On Tuesday, a JP Morgan analyst downgraded his outlook on Dow Chemical to “neutral” because “the risks of contraction in the major economic regions have increased.” Although analyst Jeffrey Zekauskas said he does not believe Dow Chemical’s “long-term business dynamics have materially altered,” investors are likely to seek safer investments, which will affect Dow Chemical’s stock price.

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Twitter: @Ian_Thibodeau