Dow Cost-Cutting Plan Includes Axing 4,500

Dow Chemical Co. will eliminate $1.1 billion in costs over the next two years, including 4,500 jobs, as the largest U.S. chemical producer absorbs the February purchase of Union Carbide Corp. The savings are more than double what Midland, Mich.-based Dow predicted in August 1999 when announcing the plan to buy Carbide. The $10-billion acquisition was delayed by U.S. antitrust concerns. Dow is trying to boost profit by eliminating 8% of the combined company’s work force after being hurt by rising energy and raw material costs and a slowdown in the U.S. economy. Soaring natural gas prices dragged down profit at Carbide in particular, and some investors had questioned the merit of Dow paying what it did for the chemical rival. Shares of Dow rose 55 cents to close at $34 on the New York Stock Exchange. Dow took a $1.4-billion charge against first-quarter earnings before taxes for costs associated with the acquisition. Analysts had expected Dow would increase its early expense-cutting forecast of $500 million and 2,000 jobs. A spokesman said the savings will help Dow improve per-share earnings by 10% a year. The company is forecast to earn $1.18 a share in 2001.