NEWS OF THE W EEK
DOW TO CUT JOBS DOWNSIZING: Eliminating 1,000
jobs worldwide will result in a $600 million charge against earnings
D
OW CHEMICAL plans to close at least four
plants and cut 1,000 jobs—about 2% of its current workforce of 45,000—in what the firm says is an effort to improve the efficiency and cost-effectiveness of its global operations. Dow expects to take a charge against fourth-quarter earnings of $500 million to $600 million to cover costs such as severance and asset write-downs. The firm says it should realize annual savings of $180 million per year when it completes all cutbacks now planned.
SHUTDOWNS
Plans call for four site closures, among other downsizing measures SITE AFFECTED
PRODUCT
Aratu, Brazil Camaçari, Brazil Lauterbourg, France
Hydroxyethyl cellulose Styrene Agricultural chemicals
Hahnville, La.
Polypropylene
DISPOSITION
To close first-quarter 2008 To close Jan. 1, 2008 To close after consultation with employees To close by end of 2007
SOURCE: Dow Chemical
FDA ‘IN CRISIS’ REPORT: Serious deficiencies in
funding and science support at the agency endanger lives
T
HE FOOD & DRUG Administration is so understaffed and underfunded that it puts lives at risk, concludes a scathing report from the Science & Technology Subcommittee of FDA’s own Science Board. The panel, which includes 33 industry, academic, and government leaders with a wide range of scientific expertise, was convened by FDA Commissioner Andrew C. von Eschenbach and chaired by Gail H. Cassell, Eli Lilly & Co.’s vice president for scientific affairs. “It is the second time in history that an external committee has reviewed the agency as a whole, focusing on science,” Cassell says. Because of rapid scientific advances and more than 100 new statutes passed during the past two decades, the “demands on FDA have soared,” the report says. But the agency’s resources and number of scientists have FDA HISTO RY O FFICE
Scientific research at FDA is in a precarious position because of poor funding and understaffing.
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Andrew N. Liveris explains that this first major downsizing since he became CEO in 2004 “reflects our commitment to prune businesses that are not delivering value and tackle tasks more efficiently.” The cutbacks are not what investors have been expecting since the firm cancelled a meeting with the financial community that was scheduled for last month. Many investors speculate that Dow is planning a major deal that would reduce its exposure to the commodity chemicals and plastics business and focus the firm on higher margin specialty products. Gregg Goodnight, an analyst at investment banking firm UBS, told clients in a research note on the Dow announcement that the cutbacks were “typical housecleaning” and “totally unrelated” to an expected major deal. In addition to the plant shutdowns, Dow intends to exit the automotive sealers business in North America, the Asia-Pacific region, and Latin America within the next 18 months. The firm says it will explore “strategic options” for automotive sealers in Europe. Dow also plans to write down its investment in the Pétromont ethylene and olefin derivatives joint venture outside Montreal with partner Société Générale de Financement du Québec. A Dow spokesman says the write-down will not immediately affect production plans at the struggling operation. In addition, Dow plans to significantly reduce administrative and R&D operations at the former Union Carbide site in South Charleston, W.Va., affecting 200 jobs.—MARC REISCH
remained essentially stagnant. With the possible exception of some drug and medical device review offices supported by industry user fees, the report says, there are “substantial weaknesses across the agency.” The subcommittee is “extremely disturbed” about FDA’s information technology infrastructure. For example, the panel says, agency inspectors are not given computers, so their reports are handwritten and cannot be rapidly analyzed. Much critical data, including clinical trial data, reside in warehouses in piles of paper documents with no backup. “You have to have modern informatics and IT resources in order to do your job, and FDA scientists definitely do not have that,” Cassell says. Another major deficiency, according to the panel, is that FDA has 600 fewer food inspectors now than it had four years ago, putting the food supply at risk. “When I came to FDA in the early 1970s, we performed 35,000 food inspections per year, but now the agency does only about 6,000,” says former FDA associate commissioner William K. Hubbard. The impacts of deficiencies in funding, personnel, and IT “are profound precisely because science is at the heart of everything the agency does,” Cassell observes. Although previous reviews of FDA warned that crises would result unless major changes were made, “our findings indicate that some of those crises are now realities and American lives are at risk,” she says.—BETTE HILEMAN
D EC E M BE R 10, 20 07
