Restructuring to Optimize Regional Capacity and Reduce Costs
The US-based chemical company, Dow, has announced the closure of three ‘upstream’ facilities in Europe—two in Germany and one in the UK. This strategic move aims to resize regional capacity, decrease exposure to commodity sales, and eliminate high-cost, energy-intensive parts of its portfolio in the region. The restructuring will impact approximately 800 jobs.
Facility Closures and Timeline
- Closure of a plant in Barry, UK, expected by mid-2026.
- Closure of a cracking ethylene plant and chlor-alkali and vinyls assets in Böhlen and Schkopau, Germany, by Q4 2027.
- The closure process is set to begin in mid-2026, with an estimated completion by late 2027. Demolition and dismantling may continue until 2029 if required.
Financial Implications and Future Benefits
Dow will incur charges between $630 and $790 million, covering asset write-offs, severance payments, and other related costs. This restructuring will lead to an increase in operating EBITDA from 2026, with a projected 50% of the target $200 million by the end of 2027, fully delivered by 2029. The initiative will require approximately $500 million in cash over four years.
Additional Cost-Saving Measures
These measures complement the $1 billion cost-saving initiative announced in January, which included a global workforce reduction of around 1,500 positions.
Context and Relevance
Dow Inc. is a leading chemical company that produces and supplies a wide range of products, including plastics, chemicals, and agricultural products. The company operates globally with significant presence in Europe, where it faces complex market dynamics and challenging cost and demand landscapes.
Jim Fitterling, Dow’s President and CEO, acknowledged these challenges stating, “Our industry in Europe continues to face complex market dynamics as well as a challenging cost and demand environment.”
Key Questions and Answers
- What is Dow closing in Europe? Dow is closing three ‘upstream’ facilities—one in Barry, UK, and two in Germany (cracking ethylene plant and chlor-alkali and vinyls assets in Böhlen and Schkopau).
- When will these closures take place? The closure process begins in mid-2026, with an estimated completion by late 2027. Demolition and dismantling may extend until 2029.
- How many jobs will be affected? Approximately 800 jobs will be impacted by these closures.
- What are the financial implications? Dow will incur charges between $630 and $790 million, with operating EBITDA expected to increase, reaching 50% of the target $200 million by the end of 2027.
- What other cost-saving measures are being implemented? Dow announced a $1 billion cost-saving initiative in January, which included reducing the global workforce by around 1,500 positions.
