Dow Chemical to Close Plants

Midland, MI, December 4, 2007--Dow Chemical Co said on Tuesday it would shut down a number of plants and eliminate about 1,000 jobs to cut costs and direct capital toward businesses with better growth prospects.

The largest U.S. chemical maker said it would incur a related charge of $500 million to $600 million, which includes severance costs and asset write-downs.

The plant shutdowns and job cuts will generate annual savings of about $180 million, the Midland, Michigan-based company said.

Dow this year has been hurt by soaring hydrocarbon feedstock and energy costs. It has been attempting to improve its earnings through a series of joint ventures and by expanding its more profitable specialty businesses.

"Our focus on financial discipline and low cost ... remains as sharp as ever, and we will continue to seek ways to refine our organizational structure, asset base and business portfolio," said Chief Executive Andrew Liveris, in a statement.

Dow has been under pressure from Wall Street and investors to announce a transformational deal that would reduce its exposure to the more cyclical and low margin commodity chemicals business.

The company postponed an investor meeting that was to be held last month, and the move has made analysts and investors believe that a deal from Dow is imminent.

Analysts expect the company to announce a joint venture for its North American commodity chemical assets or the acquisition of a specialty chemical company, both of which could change the company's earnings profile.

The company said it will exit the automotive sealers business in North America, Asia Pacific and Latin America within the next nine to 18 months. It will also explore strategic options for the business in Europe.

It will also take an impairment charge related to its plan to shut down its agricultural sciences manufacturing facility in Lauterbourg, France.

Dow plans to exit the business due to overcapacity within the industry, a disadvantaged cost position, and increasing pressure from generic suppliers.

The company will also write down an investment in its Petromont and Co polypropylene joint venture in Canada. Polypropylene is used in fibers as constituents of fabrics, upholstery and carpets.

Dow also said it will idle its styrene plant in Camacari, Brazil, from January 1, following escalating competition and weak industry fundamentals.

The company will close its manufacturing facility for hydroxyethyl cellulose located in Aratu, Brazil, in the face of capacity limitations, high structural and raw material costs.

Hydroxyethyl cellulose is a naturally derived polymer that is used as a thickener in creams and lotions.

Union Carbide Corp, a wholly owned unit of Dow, will shut down its polypropylene facility in Louisiana before the end of the year. It will also trim research and development efforts at its Union Carbide site in West Virginia.