DuPont to cut 1,700 jobs in January

Posted: December 31, 2015

DuPont Co. will cut 1,700 of the 6,100 jobs in its home state of Delaware next month, chief executive Edward Breen told staff in a memo Tuesday.

The cuts, at offices and labs along the I-95 corridor, are part of Breen's effort to eliminate more than 5,000 of the company's 54,000 worldwide jobs before DuPont's proposed merger with Dow Chemical Co. and their planned breakup into separate pesticide, materials, and "specialty products" companies.

Breen, a Bucks County resident who is lead director of the Comcast Corp. board and chairman of Tyco International, told workers in his note that he and DuPont's board had considered alternatives. But in the end, he said, their decision was unanimous because DuPont faces an "urgent need to restructure our cost base" and "reduce our corporate overhead."

The memo and other documents were filed Tuesday with the Securities and Exchange Commission.

Last year, DuPont earned $3.5 billion in profits, on sales of $35 billion. Investors led by hedge fund manager Nelson Peltz have pressed DuPont to cut more expenses and ensure that research is efficient and product-focused.

The company's new suburban headquarters at Chestnut Run, its labs in Newark, Del., and the DuPont Experimental Station outside Wilmington will remain open even with fewer staff, but projects such as a planned $35 million crop-seed laboratory in Newark have been scrapped.

Jobs to be cut include 80 percent of the 250 scientific professional positions in DuPont's Central Research and Development unit, though some of the Ph.D. principal investigators and their associate investigators may escape layoffs and be reassigned to product groups where most DuPont scientists now work. The scientists expect to learn their fate Jan. 4.

Since the 1980s, Delaware residents have become accustomed to closings, consolidations, and spin-offs by DuPont, formerly the state's dominant private-sector employer.

But the severity with which the cuts will be applied to Delaware this time alarmed state leaders. In a statement, Gov. Jack Markell called Breen's decision "deeply disappointing," but he also pledged that the state will do "all that we can to promote" DuPont's remaining locally based business units, whose products include Kevlar bullet-proofing fabric and Tyvek weather barrier.

New Castle County Executive Thomas Gordon blamed the "devastating" cuts on "investment banker" domination of corporate America.

In his memo to the staff, Breen pointed out that the smallest of the three planned post-Dow-merger companies, Specialty Products, would be based in Delaware.

Specialty Products will include today's DuPont, minus the company's pesticide and crop-seed businesses, which will be folded into Dow Chemical's farm-products units to form a new agricultural company, and DuPont's performance-materials business, which will be added to Dow's materials businesses and based at Dow headquarters in Midland, Mich.

Units that will be part of the new Specialty Products company are DuPont's nutrition & health, industrial biosciences, safety and protection, and electronics & communications units, plus Dow Electronics Materials.

The electronics combination will "create a new global leader," Breen wrote. DuPont has been researching products such as organic light-emitting diodes (OLEDs), which engineers expect will make smart screens lighter, cheaper, and more flexible.

Chemical-industry analysts, including Jonas Oxgaard of Sanford C. Bernstein & Co., who wondered how the planned Specialty Products company could become more profitable or research-efficient than DuPont was before its pesticide and performance-materials arms are torn off, say they expect that Breen could sell the electronics group and other Specialty Products businesses after boosting their visibility and sales.

"DuPont has evolved many times over the last two centuries," Breen concluded in his memo. "Each business will be able to create the value-added solutions its customers expect through targeted, highly productive investments in science and R&D."

At the company's height in the 1950s and early 1960s, DuPont's family-led shareholders controlled General Motors and other big industrial companies that used its products, and members of its founding family wielded national political and cultural influence as well as economic clout.

Its concentration of scientists and managers, the spinoff companies (Axalta, Chemours, Endo, Incyte, and Invista, among others), the investment offices, and the theaters, golf courses, public gardens, and school and medical philanthropies the company and its founding family endowed still give stimulus and a cosmopolitan shine to the Wilmington area and just over the state line in Pennsylvania.

Though towers built to house former DuPont Co. offices and du Pont family-backed institutions still dominate Wilmington's central Rodney Square, the bank JPMorgan Chase & Co. has replaced DuPont as the state's largest corporate employer.

Dow, which bought Philadelphia based Rohm and Haas in 2009, employs about 2,500 in the Philadelphia area.

JoeD@phillynews.com

(215)854-5194@PhillyJoeD

www.inquirer.com/phillydeals

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