DuPont Begins Merger Cuts
30 Dezember 2015 - 9:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 12/30/15)
By Jacob Bunge
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."
(END) Dow Jones Newswires
December 30, 2015 02:47 ET (07:47 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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