Dow’s Transform to Outperform plan hopes that AI and automation will boost profitability by at least $2 billion, but the company has sparked criticism for cutting around 4,500 jobs.
Transform to Outperform is expected to unlock at least $2 billion (€1,685,637,108) in operating earnings before interest, taxes, depreciation, and amortization. Approximately two-thirds of these benefits are expected to come from productivity improvements, with the final third stemming from growth.
The development comes after the company’s shares fell 5.8% last Thursday, according to Reuters. By implementing AI and automation into its operations, Dow intends to boost its growth, productivity, and shareholder returns.
“Transform to Outperform will drive significant simplification in how work gets done, aimed at ensuring Dow’s continued global leadership,” explained chair and CEO Jim Fitterling. “Our efforts will build on Dow’s strong focus on safe and reliable operations while driving increased accountability and continuous improvement. This work aims to deliver improved growth, productivity and shareholder returns.”
“The goal of Transform to Outperform is to achieve significant growth and productivity gains that elevate Dow’s competitive position,” added chief operating officer Karen S. Carter. “We are building on the momentum of our current self-help measures – transforming Dow into a company that is more resilient, consistently delivers growth, enables customer success, and delivers greater shareholder value across the cycle.”
However, the plan is also set to result in around $1.1 billion to $1.5 billion (€927,195,500 – €1,264,357,500) in one-time costs, including approximately $600-800 million (€505,770,000 – €674,360,000) in severance for around 4,500 Dow employees.
In a LinkedIn post, ABB project director Swarandeep Singh blames this outcome on high energy costs across Europe, global oversupply, and persistently weak demand. While he believes that Dow will use AI for maintenance, production, and fulfilment, he criticizes the “corporate theatre” of upfronting this approach in the upcoming plan.
He goes on to illustrate a pattern of AI transitions across companies like SABIC, BASF, DOMO Chemicals, and Cefic – alleging that companies operate under a “playbook” of cutting jobs and promising transformation through technology to cover up for “structural cost disadvantages that no amount of AI, automation, or corporate messaging can fix.”
Back in January, The Consumer Goods Forum’s Plastic Waste Coalition of Action reported that artificial intelligence could help companies generate and optimize packaging design, sort waste effectively, and trace materials throughout the supply chain. Expert interviews with its members revealed that 70% of companies think AI can have the biggest impact in the design of plastic products.
In other news, International Paper has just announced plans to split its business into two independent, separate entities across geographical lines, with each one sharing recently-acquired DS Smith assets.
If you liked this story, you might also enjoy:
The ‘complex reality’ of reusable packaging in Europe
Single-use packaging versus reusable packaging: Which is more sustainable?
The ultimate guide to global packaging sustainability regulation
No comments yet