The new year might not bring much cheer to DuPont Co.'s workforce and research operations.
On Dec. 11 — the same day that it unveiled its historic merger with Dow Chemical Co. — DuPont announced a global cost savings and restructuring plan that could result in the elimination of more than 5,000 jobs.
Wilmington, Del.-based DuPont also is ending its well-known Central Research & Development unit, which led to the creations of nylon and synthetic rubber and which hosted the work of 1987 Nobel Prize winner Charles Pedersen.
The restructuring plan will affect around 10 percent of DuPont's global headcount of 53,000. Officials said in a Dec. 11 news release that the plan will save $700 million annually. It includes “a range of structural actions across all businesses and staff functions globally” and is designed “to operate more efficiently by further consolidating businesses and aligning staff functions more closely with the businesses.”
DuPont will record a pretax charge of $780 million in relation to the plan, including $650 million for employee separation costs and $130 million in asset-related charges and contract terminations.
The moves are the fourth round of massive job cuts announced by DuPont in the last seven years. The previous three moves eliminated 6,000 jobs. In December 2008, DuPont announced 2,500 job cuts, followed by 2,000 more in May 2009 and 1,500 more in October 2012.
“Given global economic conditions in agriculture and emerging markets, [DuPont] expects sales growth in 2016 to be challenging,” officials said in the release.
Central R&D dates back to the 1920s and includes the 2,500-employee Experimental Station in Wilmington. That unit now will be combined with all other company R&D into a single unit called Science & Engineering. That move — first reported by Chemical & Engineering News — is effective Jan. 1.
Industry sources estimate DuPont's total number of global science and engineering employees at 10,000 — almost 20 percent of its overall employee count.
The restructuring was overshadowed by news of the Dow merger. Both firms have been under fire from activist investors for alleged financial underperformance. Now, the global plastics and chemicals titans will merge to create a single firm that then will soon split into three separate public companies.
Plastics units will be contained in a material science company that by far will be the largest of the three with annual sales of $51 billion. Current Dow President, Chairman and CEO Andrew Liveris will lead the material science firm in addition to his role of executive chairman of the new company, which will operate as DowDuPont.
Liveris is a 37-year Dow veteran. About 70 percent of the materials company's sales will come from three key end markets — packaging, transportation and construction.
DuPont CEO and Chairman Edward Breen will serve as CEO of the combined firm. Breen joined DuPont's board during 2015 and replaced company veteran Ellen Kullman as CEO in October. He's best known for leading industrial conglomerate Tyco International out of bankruptcy. Breen led Tyco from 2002-12.
Midland, Mich.-based Dow is a major producer of polyethylene and also makes a range of specialty plastics. DuPont is a market leader in nylon 6/6 and other engineering resins. Both firms also operate large plastic film businesses.
News of the deal leaked early on Wall Street, sending Dow's per-share price up from just under $51 on Dec. 8 to almost $57 on Dec. 9. It's receded from that point and was at $52.20 in late trading Dec. 28.
In the same comparison, DuPont's per-share price jumped from less than $67 on Dec. 8 to more than $74 on Dec. 9. It also fell from that level and was near $66.50 in late trading Dec. 28.