Today's KNOWLEDGE Share : Dow Slashes European Operations Amid Profitability Push

Today's KNOWLEDGE Share

Dow Slashes European Operations Amid Profitability Push

Dow announced today its board of directors has approved the shutdown of three major upstream assets in Europe as part of a broader restructuring effort to address what the company describes as "structural challenges" in the region.

The closures include an ethylene cracker in Böhlen, Germany; chlor-alkali and vinyl assets in Schkopau, Germany; and a basics siloxanes plant in Barry, UK. According to the company, the shutdowns are scheduled to begin in mid-2026 and will be completed by the end of 2027, with the UK facility closing first in mid-2026 and both German facilities following in the fourth quarter of 2027.

Asset action plan

This move builds upon Dow's initial European asset action plan first revealed in April 2025, and represents a step in the company's strategy to improve profitability in its European operations.

"Our industry in Europe continues to face difficult market dynamics, as well as an ongoing challenging cost and demand landscape," Jim Fitterling, Dow chair and CEO, said in a statement. "Over the past decade, we have demonstrated Dow's commitment to operating with a best-owner mindset by taking proactive actions across higher-cost or non-strategic assets."

The company states the shutdowns will right-size regional capacity, reduce merchant sale exposure, and eliminate higher-cost, energy-intensive portions of its European portfolio. Dow expects these actions to generate operating EBITDA improvements beginning in 2026, reaching approximately $100 million by year-end 2027 and the full target of approximately $200 million by 2029.

The restructuring comes at a significant cost. Dow will record charges between $630 million and $790 million for asset write-downs, severance, and related expenses. The company also anticipates a cash outlay of approximately $500 million over four years to complete the shutdowns, with potential decommissioning and demolition continuing into 2029.

Approximately 800 Dow positions will be eliminated as a result of these closures, according to the company.

Cost-savings initiative

In January 2025, Dow announced a cost savings initiative that would eliminate 1,500 jobs globally to cut labor costs, and trim another $500 million to $700 million in a reduction of direct costs, primarily focused on purchased services and third-party contract labor. 

Fitterling acknowledged in January that the decisions are difficult.

“We must continue to take proactive actions to reduce costs while we navigate through this ongoing slower-than-expected macroeconomic recovery," he said. “These cost actions support our commitment to our long-term growth objectives, while aligning spending levels to the realities of the current macroeconomic environment. As 2025 progresses we will continue to evaluate options to reinforce our competitiveness and take further action if necessary.

In addition to the moves to save $1 billion, Fitterling said in January that the company would conduct a strategic review of select European assets.

“These collective actions represent a continuation of Dow’s commitment to maintaining our strong financial foundation and supplementing near-term cash flow,” Fitterling said in a statement at that time.

Dow has committed to involving local stakeholders in accordance with each country's regulations and consultation processes as the shutdowns proceed.

The company maintains that these actions will ultimately improve its ability to supply profitable derivative demand and optimize margins across its operations, supporting Fitterling's stated commitment to "realizing the value of our incremental growth investments and enhancing profitability and cash flow through more than $6 billion in near-term cash support.

Continuing to innovate

Last month, Dow announced advances in sustainable packaging technology with its Innate TF 220 resin, a breakthrough innovation designed to address the dual challenges of recyclability and performance in flexible packaging applications.

The new resin features a unique molecular architecture that delivers processing efficiency while maintaining the high-performance characteristics required by brand owners. According to Dow, the material achieves superior extrusion stability and biaxial stretching processability, substantially reducing manufacturing waste while enhancing end-use performance.

The innovation comes at a critical time for the flexible packaging industry, which has historically struggled with low global curbside recycling rates. The Innate TF 220 resin addresses this challenge by enabling mono-material structures that maintain functionality while improving recyclability.

Recent deals

In May, Dow signed a second memorandum of understanding with PT Eterna Persada Indonesia, an Indonesian recycling company under the Pan Era Group.

According to the companies, this agreement will strengthen the collaboration between the two companies to increase the supply of high-quality PCR resins and advance the plastics circular economy in Indonesia.

In March, Dow announced it had purchased an equity stake in Xycle, a Rotterdam-based provider of advanced recycling technology, alongside investors ING, Invest-NL, Polestar Capital, and Vopak.

According to Dow, this investment marked a significant milestone in its ongoing commitment to converting plastic waste into high-value materials and advancing a circular economy for plastics by increasing and diversifying access to circular feedstock.

In December, Dow announced the completion of its previously announced sale of the company's flexible packaging laminating adhesives business, within Dow's Packaging and Specialty Plastics segment, for $150 million to Arkema, a specialty materials leader.

The company said in December the proceeds from the transaction would support its capital allocation priorities, including accelerating the company’s growth strategies and delivering long-term shareholder value.

Dow continues to demonstrate its position as a leader in materials science, with its network of manufacturing facilities across 30 countries and a workforce of approximately 36,000 people worldwide. The company had sales of approximately $43 billion in 2024.

source:David Hutton Plastics Today