Dow Inc. (NYSE: DOW) announced on July 7, 2025, that it will close three upstream chemical facilities in Europe, impacting approximately 800 jobs, as part of a strategic restructuring to address persistent market challenges in the region. The closures, approved by Dow’s Board of Directors on June 30, 2025, target an ethylene cracker in Böhlen, Germany, chlor-alkali and vinyl assets in Schkopau, Germany, and a basics siloxanes plant in Barry, U.K. The shutdowns, set to begin in mid-2026 and complete by the end of 2027, aim to streamline operations and boost profitability in a region grappling with high energy costs and weak demand.
The decision follows an April 2025 review identifying these assets for action across Dow’s operating segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure, and Performance Materials & Coatings. The closures are expected to reduce exposure to volatile merchant sales and eliminate energy-intensive, high-cost assets, with an anticipated operating EBITDA uplift of $200 million by 2029, starting in 2026. The restructuring will incur charges of $630 million to $790 million for asset write-downs, severance, and disposal costs, with a $500 million cash outlay over four years.
Jim Fitterling, Dow’s chair and CEO, emphasized the necessity of these measures, stating, “Our industry in Europe continues to face difficult market dynamics, as well as an ongoing challenging cost and demand landscape.” He highlighted Dow’s “best-owner mindset,” noting a decade-long strategy of divesting non-strategic assets to enhance margins and cash flow.
The European chemical industry is under strain from rising production costs, stringent environmental regulations, and reduced demand, exacerbated by the loss of affordable Russian gas since the Ukraine conflict began. Reuters reported that these pressures have forced global chemical companies to rethink strategies, with Dow’s move aligning with broader industry trends. For instance, BASF SE recently announced plans to cut 2,600 jobs and exit unprofitable businesses in Europe, citing similar economic challenges.
The closures will impact 800 employees, in addition to the 1,500 global job cuts announced in January as part of a $1 billion cost-saving initiative. Dow, which employs about 36,000 people across 30 countries, plans to engage local stakeholders in Germany and the U.K. to comply with regional consultation processes. The shutdowns are also expected to yield $60 million in annual capital expenditure savings, supporting Dow’s focus on high-growth markets like packaging and infrastructure.
Analysts view the restructuring as a response to structural, not cyclical, issues in Europe’s chemical sector. Mizuho recently lowered Dow’s stock price target to $31, citing weak polyethylene pricing, while BMO Capital downgraded the stock to underperform due to soft market conditions. Despite these challenges, Dow’s strategic moves, including a recent $1.2 billion court award from NOVA Chemicals, provide financial flexibility to navigate the transition.
The closures mark a significant step in Dow’s global portfolio optimization, reflecting a broader industry shift toward cost efficiency and sustainability amid economic headwinds. As the company prepares for decommissioning through 2029, stakeholders will watch closely to see how these changes reshape its European operations and long-term profitability.
By Michael Kern for Oilprice.com
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