By JACOB BUNGE
DuPont Co. plans to cut 1,700 jobs in its home state of Delaware as the agriculture-and-chemical giant pursues $700 million in cost savings ahead of its planned merger with Dow Chemical Co.
In a letter to DuPont staff on Tuesday, Chief Executive Ed Breen also sought to soften the holiday blow, announcing that Wilmington, its hometown of 213 years, will be the headquarters of one of three planned spinoffs following the Dow tie-up.
The layoffs, which represent nearly a quarter of DuPont's roughly 7,000 employees in Delaware, come as DuPont consolidates some of its scientific research operations and moves corporate functions to other locations that are closer to its customers, Breen said.
(The effect in Delaware will be significant, reflecting the urgent need to restructure our cost base and, as part of that effort, reduce our corporate overhead costs so that we can remain competitive,) he wrote. Delaware state law required DuPont to file a notice of the layoff plans by Dec. 31, forcing the company to outline it publicly before all affected individual employees were told the news, Breen wrote.
Under DuPont's deal with longtime rival Dow, the pair plan to strip out $3 billion in annual costs from the combined company before it splits into three separate businesses, focused on agriculture, industrial materials and specialty products including food ingredients and electronic components. Those planned cuts are on top of the $700 million in annual savings DuPont is seeking before the merger.
DuPont's Next Chapter in Delaware
From: Ed Breen, DuPont Chair & CEO
Dear Delaware-based Colleagues:
DuPont has called Delaware home for more than 213 years. The company has created countless scientific discoveries and built leading businesses, and we can be proud of the major social and economic impact DuPont has had in the State. However, as we face a pivotal time unlike any other in our company's history, we have begun a necessary journey down a new path to a stable and secure future for DuPont.
The planned merger with Dow and intended creation of three strong, independent companies-coupled with our own 2016 cost reduction program - has created concerns about our future in Delaware. I want to reinforce that these decisions were made only after careful and serious deliberation, taking into account every possible alternative, including continuing on our previous path. In the end, the Board of Directors and I unanimously agreed that this is the best path to a better, sustainable future for DuPont.
The first step is the $700 million cost reduction and associated restructuring we announced on December 11th. While this program is being implemented globally, I want to be straightforward with you about the impact on our local workforce. The effect in Delaware will be significant, reflecting the urgent need to restructure our cost base and, as part of that effort, reduce our corporate overhead costs so that we can remain competitive. The change also reflects the impact of our efforts to move corporate functions into the businesses, closer to our customers.
Especially given that we are in the middle of the holidays, we would have preferred to wait until individual notifications were complete before reporting the full local impact. However, by December 31st, we are legally required to file a notice with the Delaware State government detailing the expected local job reductions, and I wanted you to hear the difficult news - directly from me - that approximately 1,700 Delaware-based positions will be eliminated in the beginning of the year.
I am deeply aware that these decisions affect the lives - and families - of many people. As we work through these notifications, we are committed to doing so in a way that is consistent with our Core Values. We will honor each colleague’s service to the company by providing separation packages, career placement services and training allowances as part of our effort to help our team members through these transitions.
Along with this sobering news of our Wilmington-area reductions, we fortunately are also able to announce that the corporate headquarters for the combined, post-merger Specialty Products business will remain in Wilmington, Delaware. Specialty Products will be a technology driven innovative leader, focused on unique businesses that share similar investment characteristics and specialty market focus. The businesses will include DuPont's Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business. Together, their complementary offerings create a new global leader in Electronics Products, and each business will benefit from more targeted investment in their productive technology development and innovation capabilities. Our leadership in these key areas will be the foundation for further growth - in the world, and in Delaware.
We have much more work to do with the three independent companies we intend to establish, including selecting the corporate headquarter location for our Agriculture business. I look forward to updating you on our selection progress in the months ahead.
DuPont has evolved many times over the past two centuries. In each era, our leaders recognized that change was inevitable to remain successful. By building our strength through the merger of equals with Dow and focusing our businesses to compete more effectively, we will enhance our ability to invest in the future. Each business will be able to create the value-added solutions its customers expect through targeted, highly productive investments in science and R&D.
I recognize this is a lot of change in a short time and in the New Year you will hear much more from me personally and from the leadership team regarding our strategic direction. As we go forward, we need to stay focused on our Core Values, ensuring the company is as strong as it can be for an increasingly competitive future. I believe we will build on our history and create a new phase of progress and opportunity for DuPont.