DuPont Co. confirmed April 12 that it will cut 3,500 jobs by the end of 2004 - with more than 2,000 coming from U.S. and Canadian operations.
``These are difficult but necessary decisions as we align our resources with market needs,'' DuPont Chairman and Chief Executive Officer Chad Holliday said in a news release.
The move will affect about 6 percent of Wilmington, Del.-based DuPont's current global workforce of 59,000. That number does not include its Invista fibers unit, which is being sold to Koch Industries Inc.
About 500 of the cuts will come through retirements and normal attrition. Most employees affected will know by the end of the month, spokesman Irv Lipp said by phone April 12. Most of the cuts will take place by the end of June.
Seventy percent of the cuts - or 2,450 jobs - will be in the United States and Canada. The remainder will be spread across the globe, but most will be in Western Europe, Lipp said.
Two early moves have occurred, in Worthington, Ohio, and Old Hickory, Tenn. In Worthington, DuPont's Liqui-Box Corp. liquid packaging unit has stopped production of water bottles, resulting in the loss of 15 jobs, according to company spokeswoman Leslie Beckhoff.
The Worthington site will continue to employ 55. Beckhoff said a total of about 90 jobs will be cut from Liqui-Box's 11 plants in the United States and United Kingdom. Liqui-Box's 130-employee injection molding site in Upper Sandusky, Ohio, and its 120-employee film- and bag-making site in Ashland, Ohio, will be unaffected by the cuts, Beckhoff added.
In Old Hickory, DuPont will stop producing dimethyl terephthalate, a polyester precursor, and eliminate 125 jobs.
The cuts will provide annual savings of $325 million and will affect 2004 pretax earnings by between $250 million and $275 million, according to Lipp. In late 2003, DuPont officials set a goal of achieving $900 million in cost reductions by the end of 2005.
Officials have not announced yet what portion of the cuts will come from its Performance Materials unit, which is a major producer of nylon, polyester, acetal and other specialty plastics. The unit ranked third among DuPont's business units in 2003, with sales of almost $5.4 billion. The company did not split out how many of the current 59,000 employees are in the Performance Materials unit, which also represents DuPont in the DuPont Dow Elastomers and DuPont Teijin Films joint ventures.
Performance Materials largely was spared in a round of 4,000 job cuts enacted in early 2001. Since then, the firm has cut 550 jobs from its film and fluoropolymer businesses.
DuPont officials previously had said part of the firm's cost-cutting would include reducing a product portfolio that had swelled to include 700,000 individual products. Plastics industry consultant Austin Peppin said the firm may be able to do that by eliminating some resin grades that have become ``more commoditylike.''
``From the engineering-resin side, [DuPont] still wants to emphasize specialization as much as possible, because that's where they believe they have the competitive edge,'' said Peppin, president of Peppin & Associates in Chesterfield, Mo. ``But based on profitability, why would you keep selling millions of pounds of a product if it's only returning 2 percent?''
DuPont ``will still emphasize growing applications for differentiated products, but they can't afford to have too many grades of standard glass-reinforced nylon, for example,'' Peppin added.
Performance Materials' 2003 sales were up 9 percent vs. 2002, but its operating profit dropped 45 percent to $262 million. Overall, DuPont's sales were up 12 percent to almost $27 billion in 2003. The company also turned a profit of $973 million after losing $1.1 billion in 2002. Results for 2003 include the Invista business, which generated about 25 percent of DuPont sales last year.
Based on annual sales, DuPont is the second-largest chemical firm in the United States, trailing only Dow Chemical Co. of Midland, Mich.