Nov. 14 (Bloomberg) -- Dow Chemical Co., the largest U.S. chemical maker, will take ``radical actions'' to reach earnings targets next year amid a spreading global recession, Chief Executive Officer Andrew Liveris said.

Factory closings and other cost-cutting efforts will help keep earnings in a range of $2 to $3 a share in 2009, Liveris said yesterday in a telephone interview from the company's headquarters in Midland, Michigan. Dow was expected to earn $2.54 a share next year, the average estimate of 14 analysts surveyed by Bloomberg. Profit may fall to a cyclical low next year and remain depressed into 2010 unless renewed growth in China helps the global economy recover, he said.

Liveris is relying on factories in places such as Kuwait and Oman, where petroleum-based raw materials are cheaper, and the acquisition of specialty-chemicals maker Rohm & Haas Co. to keep earnings from falling too low. The chemical industry will be forced to close older factories in Europe and the U.S., where costs are higher, he said.

``Dow and others I think will be taking some radical actions to take out capacity,'' said Liveris, 54. ``There could be acceleration of capacity rationalization because of acute pain.''

Sales volumes have dropped 10 percent to 20 percent in the fourth quarter, and Dow is planning for that to continue through the first half of next year, Liveris said. Dow has closed 92 plants since the last industry trough in 2001, he said.

``This is as bad as we have ever seen it in our lifetimes,'' Liveris said. ``We could be looking at a couple years of trough and severe correction.''

Shares Fall

Dow fell $1.09, or 4.9 percent, to $21.15 at 4:15 p.m. in New York Stock Exchange composite trading, the lowest since February 1995. The shares have dropped 46 percent this year.

Demand is falling in East Asia, including China and Japan, and the U.S. and Europe, which together represent 80 percent of the global economy, he said. The world has never had so many regions in decline simultaneously, he said.

``To see a global contagion of this order of magnitude, I think that is what we are currently living and that is probably unprecedented,'' Liveris said.

The chemical industry may operate at less than 80 percent of capacity as demand declines, he said. The prices Dow charges for polyethylene and polypropylene, two of the most-used plastics, fell as much as 40 percent since September, giving up gains achieved since June, he said.

`Near Impossible'

``Holding price in the commodities is probably going to be near impossible in the next three to six months,'' Liveris said.

Dow has announced plans to cut spending and reduce working capital this year in addition to plant closings, which Liveris hasn't detailed. The company has sufficient cash flow to maintain its dividend through the recession, Liveris said.

``In a terrible market, a value stock has to protect its dividend,'' Liveris said. ``This company and this CEO will protect the dividend.''

Liveris bought 20,000 shares of Dow Chemical stock on Nov. 11, the company said in a regulatory filing. Dow managers personally have spent more than $1.2 million buying more than 53,000 shares since Oct. 27, the company said today in a statement. Liveris paid $23 a share and boosted his stake in the company to 368,500 shares.

``Nothing speaks louder than action,'' Liveris said in the statement.

Lower Demand

The industry may recover in 2010 or 2011 as plants shut to conform with lower demand, Liveris said in the interview. Dow is building new plants with state-owned companies in China, Saudi Arabia, Libya, Kuwait, Malaysia and Oman to gain access to cheaper raw materials and faster growing markets.

``We are in a massive footprint shift,'' Liveris said. ``You have got to take out your older, higher-cost assets.''

By the end of the year, Liveris expects to complete the sale of a 50 percent stake in Dow's basic-plastics business to Kuwait's Petrochemical Industries Co. for $9.5 billion. Dow will use the proceeds to help pay for its $15.4 billion purchase of Rohm & Haas, gaining more profitable chemicals used to make electronics and paints.

To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.

Last Updated: November 14, 2008 16:33 EST