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Dow Chemical to take charge of up to $1.1 billion

(Reuters) – Dow Chemical Co (DOW.N) will take a fourth-quarter charge of up to $1.1 billion related to last week’s announcement 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 on Tuesday.

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.

‘REBOOTING’ U.S. MANUFACTURING

Dow Kokam was formed in 2009, the same year it won a $161 million grant as part of a $2.4 billion Obama administration program designed to build up the advanced battery industry in the United States, add green jobs and put one million plug-in hybrid and electric vehicles on American roads by 2015.

The joint venture, 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.

In June 2010, U.S. Vice President Joe Biden attended the groundbreaking for the Midland plant. At the time, Dow Chemical Chief Executive Andrew Liveris said Dow Kokam was evidence of a “rebooting” of American manufacturing.
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