DuPont's recently announced growth strategy could have long-term repercussions on its polyester film and resin businesses, but shouldn't have much of an impact on the company's nylon resin business.
The Wilmington, Del.-based chemical giant said March 12 that it is following through on plans to reduce costs and create alliances and joint ventures in its polyester business, which includes film, resins and fibers.
DuPont's polyester film business ranks first in North America, and its polyester resin business includes PET injection molding and bottle resin, polybutylene terephthalate and copolyester thermoplastic elastomers.
The firm ranks fifth in North American PET production with more than 7 percent of the market.
DuPont combined its polyester films business with that of Teijin Ltd. of Tokyo in February to create a films goliath with more than 25 percent of the world market. However, DuPont Chairman and Chief Executive Officer Charles Holliday indicated that the company may have more changes in store.
``If we do not see the anticipated improvements [in polyester operations] , we will pursue other alternatives,'' he said in a news release.
DuPont films spokeswoman Anne McIntosh said no layoffs or job cuts have been announced, but several steps to improve the unit's performance already have been set in motion.
The films group opened what the company says is the world's largest thin-film line in Dumfries, Scotland, last month and plans to open an ultrathin-film line in Contern, Luxembourg, later this year. In addition, the firm has closed several older, less productive lines in the past 18 months, including four lines in Circleville, Ohio, and three in Dumfries. A film recycling plant in Cape Fear, N.C., also has been shut down.
``We're traveling on our own journey and it's been a positive one,'' McIntosh said. ``We've made some changes at our existing plants, and we expect the Teijin joint venture to enhance our product portfolio.''
The polyester resins business, which makes up less than 20 percent of the overall polyester unit, also doesn't expect great changes, according to Americas marketing director Rebecca Stimson.
``We're certainly tuned into [the growth strategy], but it won't have any impact on our business,'' Stimson said.
The resins group will receive a boost later this month with the opening of a new plant in Cooper River, S.C., that will produce both PBT and co-polyesters.
Industry consultant John Uhlein said he was surprised to hear Holliday's remarks about DuPont's polyester business, because most recent company feedback has centered on the underperformance of its nylon unit.
Uhlein, a consultant with Peppin & Associates in Chesterfield, Mo., said several companies would be interested in DuPont's PET, PBT and TPE resin businesses if the company should decide to sell them or otherwise spin them off.
In nylon resins, where DuPont also is a global leader, the impact of the plan also will be minimal, according to Americas marketing manager Mike Crickenberger.
``The impact won't be in resins per se,'' Crickenberger said. ``Resins have been more profitable and have been growing two to three times as fast as [nylon] fibers.''
The March 12 news release came three days before DuPont acquired seed giant Pioneer Hi-Bred International Inc. for $7.7 billion. The move is DuPont's largest yet in its effort to expand into life sciences such as seed genetics and away from traditional chemical markets. The company also recently issued separate stock in its life-science efforts to differentiate it from the company's core businesses.
DuPont's stock price has struggled in the past year because of industry overcapacity and other cyclical issues. Per-share prices stood at less the $57 March 18 after being around $80 in late May.