DOW Chemical Cuts Back on Almost Everything
This morning, stocks jumped almost 3% after President-elect Obama pledged the largest spending increases on domestic infrastructure since President Dwight Eisenhower created the national highway system.
It’s been rumored for weeks that Obama would make “New Deal” type investments in our nation’s energy and power arteries. Adding state infrastructure projects onto the list makes sense. It also makes mining and chemical companies very happy. And they’ve needed some good news.
The largest U.S. chemical producer, Dow Chemical (NYSE: DOW), announced it would trim almost 11% of its workforce, close 20 plants and idle 180 more. It follows 3M (NYSE: MMM) and DuPont (NYSE: DD), which have both announced layoffs and cutbacks in recent days.
The plastics and rubber chemical sector has lost almost 40% this year – about the same as the S&P 500 (.INX). But it could have been worse. The metal mining sector has dropped almost 60% this year.
Miners BHP Billiton Limited (NYSE: BHP), Freeport McMoran Copper & Gold (NYSE: FCX) and Alcoa (NYSE: AA) are welcoming Obama’s proposal. They stand to profit from massive spending on everything from roads, bridges, power plants and transmission lines. Obama’s plan may not help this year’s earnings, but it does shine a light at the end of a tunnel.
Interestingly, Dow’s CEO insisted that the company would pay its regular dividend – making it the only company in the Fortune 200 to consistently pay a dividend without reduction or interruption since 1912. In an age of executives peddling excuses, or using the economy to justify cutbacks, it’s refreshing to see management sticking to their guns, principles and dividends.
Companies mentioned in this article: DOW, MMM, DD, BHP, FCX and AA.
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