DuPont Co. plans to cut 1,700 jobs in its home state of Delaware in early 2016 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 about a quarter of DuPont’s Delaware-based employees, come as DuPont consolidates some of its scientific research operations and moves corporate functions to other locations that are closer to its customers, Mr. Breen wrote.
“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, according to Mr. Breen.
DuPont already had been scaling back its Delaware workforce, which has declined to about 6,100 from more than 7,000 before spinning off its performance-chemicals division as Chemours Co. in July. DuPont, which announced in mid-December a plan to cut about 10% of its global workforce, hadn’t previously outlined how many of the affected positions would be in Wilmington.
“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,” Mr. Breen wrote. Laid-off employees will be provided separation packages, career-placement services and training allowances, according to the letter.
The deal, announced Dec. 11, is expected to close in the second half of 2016, pending approval from regulators.
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.
The cost cuts outlined in the planned Dow-DuPont merger, which would create an entity with roughly $120 billion in market value, have stoked anxiety in both Wilmington and Dow’s hometown of Midland, Mich., with both cities’ histories entwined with the companies. Dow also has been shedding jobs, announcing in May a restructuring that would eliminate 1,500 to 1,750 jobs, or about 2.8% to 3.3% of its 2014 staff level, in a plan to help save $300 million in annual costs.
Mr. Breen wrote that the specialty-products company—which will produce food ingredients, bullet-resistant fibers and solar-panel components—will be based in Wilmington. The businesses generated a combined $13 billion in sales in 2014.
A. Richard Heffron, president of the Delaware State Chamber of Commerce, said the news was a blow but not a total surprise given DuPont’s stepped-up efforts to cut costs in recent years, as the company’s profit suffered from a rising U.S. dollar and slumping commodity prices.
“DuPont was Delaware,” said Mr. Heffron, who welcomed the news that one of the spinoff companies would remain in Wilmington. “On the other hand the world’s changing, and you’ve got to adapt to the changes.”
By Jacob Bunge
Source: Wall Street Journal
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