Inside this Article

• PCI Editors weigh in on how quarterly earnings are revealing a shift from AI experimentation to AI as an operating tool across chemicals and coatings.
• Dow’s latest results and transformation plan illustrate how AI and automation are being positioned as levers for productivity and simplification during a prolonged downturn.
• Restructuring and portfolio reshaping are emerging as recurring themes as companies respond to uneven demand, pricing pressure and higher operating costs.
• AI is increasingly being discussed not as a pilot technology but as part of broader operating-model changes tied to efficiency, compliance and decision-making.
• Execution, timing and real-world impact are becoming the key questions as companies outline multi-year transformation plans.

As quarterly results continue to roll in across the chemical and coatings industry, Dow Inc. has paired its latest earnings update with a broad transformation plan that places artificial intelligence and automation at the center of how the company intends to operate going forward.

For the fourth quarter of 2025, Dow reported net sales of $9.5 billion, down 9% year over year, citing continued pricing pressure and softer demand across multiple end markets. The company posted a GAAP net loss for the quarter and described the current environment as an extended industry downturn.

Alongside those results, Dow announced Transform to Outperform, a multi-year initiative aimed at simplifying its operating model, improving productivity and strengthening profitability. Dow said the plan targets at least $2 billion in annualized operating EBITDA improvement, with most of the gains expected to come from productivity actions. The company anticipates approximately $1.1 billion to $1.5 billion in one-time costs associated with the initiative, including an estimated $600 million to $800 million in severance tied to roughly 4,500 roles, as well as additional restructuring and implementation expenses.

What has drawn particular attention is how explicitly Dow has linked that productivity effort to AI and automation. In its announcement, the company said the plan is expected to deliver earnings improvement “in part by utilizing AI and automation to deliver step change in growth and productivity and improve shareholder returns,” while also seeking to “radically simplify the Company’s operating model, streamline its processes, reset its cost structure and modernize how it serves customers.” Dow CEO Jim Fitterling said the initiative is intended to “drive significant simplification in how work gets done,” with the company leveraging “leading-edge technologies” as part of that effort.

How the Announcement is Being Framed Externally

Dow’s transformation plan and workforce reductions have drawn broad attention across business and financial coverage, with reporting generally framing the move as a response to sustained margin pressure and uneven demand rather than a short-term earnings adjustment. Coverage has emphasized how Dow is positioning AI and automation as tools to improve operational efficiency and simplify its cost structure, while also noting that the company has outlined a multi-year timeline for realizing benefits. Across outlets, the focus has been less on immediate upside and more on execution, timing and whether productivity gains can be delivered consistently in a challenging operating environment.

Reporting has also highlighted the workforce implications of the plan, noting that Dow is explicitly tying the reduction of roughly 4,500 roles to automation- and AI-enabled changes in how work is performed. That coverage has largely reflected Dow’s own framing: that the actions are intended to strengthen long-term competitiveness and resilience rather than address near-term earnings volatility alone.

From a market perspective, the announcement was met with a cautious response. Dow’s shares fell by about 2% following the earnings release and restructuring announcement, according to financial reporting, even as the company reported adjusted results that exceeded expectations. Investor-focused coverage noted that some analysts maintained neutral or “hold” views on the stock, pointing to uncertainty around the timing and execution of the transformation plan and when productivity improvements may translate into sustained financial results.

Restructuring as a Broader Industry Theme

Dow’s announcement is also unfolding during a period of notable portfolio reshaping across the chemical and coatings sector. While each company’s strategy and circumstances differ, several major players have recently taken steps to reduce complexity or refocus their businesses.

Dow’s announcement comes at a time when portfolio reshaping and divestitures are visible themes across the coatings ecosystem. BASF has been active in repositioning its coatings footprint, including reaching a binding agreement to divest its global coatings business to a private-equity consortium while retaining a minority interest. As part of that repositioning, Sherwin-Williams acquired BASF’s Suvinil decorative paints business in Brazil for $1.15 billion, a transaction BASF described as aligning with its strategic focus on core areas.

In 2024, PPG Industries sold key segments of its U.S. and Canadian architectural coatings business as part of a broader strategic shift to focus on higher-growth and differentiated coatings markets, a move the company said was intended to streamline its overall structure.

Taken together, these actions suggest that restructuring, divestitures and operating-model changes have become recurring tools as companies respond to uneven demand, pricing pressure and higher operating costs, even as the specific levers being pulled vary by organization.

Where AI Fits Into the Picture

PCI has been tracking the growing role of AI across the paint, coatings and chemicals value chain for several years, well before it became a recurring theme in earnings calls and restructuring announcements. Recent PCI reporting has explored how AI is being applied in coatings development and performance evaluation, as well as how manufacturers are using data-driven tools to improve formulation workflows, testing efficiency and decision-making in increasingly complex environments.

That coverage has also examined how digital frameworks are helping companies manage regulatory complexity alongside operational demands. This context is relevant to Dow’s announcement, which positions AI not as a pilot initiative but as a core enabler of simplification and productivity across the business.

Questions to Watch

At this stage, Dow’s transformation plan raises some basic questions that will likely shape how it is viewed over time:

• Where does AI show up first in day-to-day operations? On the manufacturing side, in maintenance and planning, or in how the company serves customers and manages internal work?
• How will Dow know whether these tools are actually improving reliability, safety and consistency, not just lowering costs?
• What checks are in place to make sure automation doesn’t introduce new operational risks?
• As roles change or are eliminated, how will experience and institutional knowledge be preserved?
• What signs will indicate early progress before the full financial impact becomes visible?

PCI will continue to watch as the industry works through similar pressures.

Read more PCI coverage on artificial intelligence.