RPT-UPDATE 2-Dow Chemical to take charge of up to $1.1 billion
* Fourth-quarter charge of $900 million to $1.1 billion
* Charge related to closure of 20 plants and layoffs
* Will also write down value of Dow Kokam battery venture
Oct 30 (Reuters) - Dow Chemical Co will take a fourth-quarter charge of as much as $1.1 billion related to last week's announcement that it will close 20 plants, write down the value of its lithium ion battery business and lay off thousands of workers.
Dow, the largest U.S. chemical maker, said the restructuring program - its second of 2012 - was necessary because of dropping demand for its plastics and other products.
Dow will record a charge of $900 million to $1.1 billion for the layoffs, plant closures, as well as a write-down of Dow-Kokam LLC, Dow's lithium ion battery joint venture with TK Advanced Battery LLC. The disclosure came as part of a filing with the U.S. Securities and Exchange Commission.
Before the filing, analysts had expected Dow to post a fourth-quarter net profit of about $429.3 million, according to Thomson Reuters I/B/E/S.
Roughly $400 million to $500 million of the charge will be in cash payments for severance and other items. The rest will be to write down the value of some projects, including the Dow Kokam venture.
Dow owns 61 percent of the Dow Kokam joint venture and had originally hoped it would bolster the company's sales in the renewable energy market.
In 2009, Dow Kokam received a $161 million grant as part of an $2.4 billion Obama administration program designed to build up an advanced battery industry in the United States. The program's goal was to add green jobs and put one million plug-in hybrid and electric vehicles on American roads by 2015.
Dow Kokam, which received the third-largest grant under the program, said it would use the funding from the U.S. Department of Energy to build an 800,000 square foot lithium-ion battery plant in Midland, Michigan, that was expected to employ up to 800 people, according to its 2009 news release.
Dow Chemical Chief Executive Andrew Liveris said at the time that Dow Kokam was evidence of a "rebooting" of manufacturing in the United States. U.S. Vice President Joe Biden attended a groundbreaking for the plant.
The plant was designed to build up to 600 million watt hours a year, making enough batteries for 30,000 pure electric vehicles equipped with a 20 kilowatt hour battery.
But over the last three years, demand for lithium-ion batteries has fallen short of expectations and analysts are skeptical that Obama's goal can be reached by 2015. During the first nine months of the year, sales of plug-in cars totaled about 31,000. Two other recipients of the 2009 battery grants, A123 Systems Inc and EnerDel, have filed for bankruptcy.
It was not immediately clear if the Dow Kokam plant is still under construction. Dow Chemical spokeswoman Rebecca Bentley said the plant is producing battery parts, but referred additional questions to a Dow Kokam spokesman, who did not immediately respond to a request for comment.
Dow Kokam also produces battery parts in Ohio and France.
Lithium-ion batteries are lighter and more powerful than the nickel-metal hydride batteries used in Toyota Motor Corp's popular Prius lineup.
Dow Chemical, based in Midland, Michigan, also plans to lay off 3,000 workers in total, but the net job loss will be roughly 2,400 as the company plans to boost staff in growth areas.
Dow shares have dropped 15 percent in the past six months.
- Canada's parliament attacked, soldier fatally shot nearby |
- NOAA employee charged with stealing U.S. dam information
- Sweden gets two new sightings, as hunt for undersea intruder goes on
- Canada probes Michael Zehaf-Bibeau as possible suspect in Ottawa shooting: source
- Special Report: Traffickers use abductions, prison ships to feed Asian slave trade