Dow Chemical extends Freeport cutbacks through January

Jan 05, 2009 (Houston Chronicle - McClatchy-Tribune Information Services via COMTEX) -- DOW | Quote | Chart | News | PowerRating -- Dow Chemical Co. will extend production cuts and delay calling back thousands of contract workers at its massive complex in Freeport amid continued weak demand for its products, a company spokeswoman said today.

Last month, Dow said it planned to reduce the site's output to less than 40 percent of capacity and send home most of its 4,000 contract workers between Dec. 15 and Jan. 5.

With business still down, the company will keep operating the facility at the reduced levels until the end of January, pending further notice, said Tracie Copeland, a spokeswoman for the Midland, Mich-based chemical giant.

In addition, Dow has offered 50 voluntary buyouts to its 950 unionized plant operators in Freeport as part of a broader corporate restructuring program announced last month, she said. The site has roughly 4,500 permanent Dow employees.

The restructuring calls for a reduction of 11 percent of Dow's global workforce, or about 5,000 employees, a third of its 6,000 contractors, as well as production cuts at 180 plants and closure of 20 others worldwide.

Dow has about 6,000 employees in Texas at production sites in La Porte, Freeport, Texas City, Clear Lake, Seadrift and an administrative office in Houston. But it is still unclear how other sites will be affected by the cuts.

Dow and other major chemical makers including BASF and DuPont recently announced sweeping cutbacks after record energy and raw material costs in 2008 cut into profits and then a global recession sapped demand for autos, building materials and thousands of other consumer goods that contain their products. Dutch chemical giant LyondellBasell, with major operations in Houston, said last week it is considering a bankruptcy filing to restructure debts after announcing similar cutbacks.

The cuts will ripple through Houston and Texas, the largest chemical producing state and the backbone of the nation's chemical infrastructure.

Charlie Singletary, business manager of the International Union of Operating Engineers, Local 564, which represents 1,200 Dow workers in Freeport and Texas City, is paying special attention to the situation at Dow.

"Everything is up for grabs right now," he said.

Last week, the Kuwaiti government backed out of a $17 billion plan to buy half of Dow Chemical Co.'s basic plastics unit and form a joint venture known as K-Dow. Dow had planned to use cash from that transaction to help finance an $18.6 billion deal to acquire Rohm & Haas Co., a specialty chemical maker, also with operations in Texas. Without the money, doubts have been raised about whether the multibillion merger will go through.

Dow is still likely to go through with the Rohm & Haas merger, partly because of penalties involved in walking away, but it would be "a positive" if management could renegotiate a lower price for the company, Andrew Brady, industry analyst with CreditSights said in a report today.

Rohm & Haas, with 15,000 employees worldwide, has 1,000 employees at plants in Baytown and Deer Park.

Just before Christmas, the operating engineers union completed negotiations on a labor contract covering 157 workers from Dow's Freeport complex who had planned to go to work for K-Dow, the joint venture, Singletary said. The union will still press to get the contract ratified until it knows for sure that the deal is dead, he said.

Dow officials have said those workers who had been tapped for K-Dow jobs will revert back to their previous jobs at Dow.

brett.clanton@chron.com

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