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Web Date: December 18, 2015

DuPont Will Dissolve Central Research

Reorganization: DuPont is reshuffling its R&D organization in advance of its merger with Dow
Department: Business
Keywords: Dow, DuPont, merger , activist investors
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Science Center
DuPont’s Experimental Station in Wilmington, Del.
Credit: DuPont
Buildings near a river.
 
Science Center
DuPont’s Experimental Station in Wilmington, Del.
Credit: DuPont

DuPont Central Research & Development, one of the most prestigious and accomplished research organizations in the chemistry world, will soon cease to exist.

According to a memorandum obtained by C&EN and authenticated by DuPont, the company will combine DuPont Science & Technology and DuPont Engineering into a single organization called Science & Engineering, effective Jan. 1, 2016. “As part of this integration, Central Research & Development will be substantially redesigned to become ‘Science & Innovation’,” states the memo, attributed to DuPont Chief Science & Technology Officer Doug Muzyka.

DuPont isn’t commenting on questions regarding the numbers of possible layoffs or the fate of central research labs at DuPont’s Chestnut Run facility and Experimental Station, both in Wilmington, Del.

The news of the research restructuring comes just days after the blockbuster Dec. 11 announcement that DuPont will merge with Dow Chemical. In discussing the merger, DuPont Chief Executive Officer Edward Breen downplayed the potential impact on R&D, saying that only about $300 million would be cut from the combined firm’s research budget. Last year, DuPont alone spent $2.1 billion on R&D.

The research restructuring is part of a plan DuPont announced on Dec. 11 to cut its own costs by $700 million, largely by eliminating 10% of the company’s workforce in 2016.

In recent years, DuPont has been under pressure from activist investor Nelson Peltz who, among other things, has criticized DuPont for high overhead and the ineffectiveness of its centralized R&D. “The company’s strategy to leverage ‘integrated science’ capabilities has, in our view, led to speculative corporate R&D investments and lackluster return on invested capital,” Peltz wrote in April.

DuPont Central R&D is one of the world’s oldest and most venerable corporate research organizations and has often been compared to the former Bell Labs. DuPont plunged into centralized, fundamental R&D in the 1920s under the guidance of Research Director Charles M. A. Stine. Stine hired Wallace H. Carothers away from Harvard University in 1928. Carothers’s work at DuPont would lead to neoprene and nylon.

DuPont’s labs even spawned a Nobel Laureate. DuPont chemist Charles J. Pedersen shared the 1987 Nobel Prize in Chemistry with Donald J. Cram and Jean-Marie Lehn for work in synthesizing macrocyclic polyethers, also known as crown ethers.

 
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Comments
Alfred (Sat Dec 19 15:13:11 EST 2015)
Capitalism has many faces. It used to be that many American corporations back in the 80's mission statements to maximize stakeholder's benefits. Now this has narrowed down to executives and shareholders.

I feel for all of those scientists that raised families in the area, built their social network and invested much of their lives innovating for DuPont that will now find themselves on the street.

G*d bless America!
SSankar (Tue Dec 22 05:33:53 EST 2015)
It is surprising that merger is pointing out towards cut-down in R&D instead of upsurge. The merger in principle should be able to utilize the best minds to tackle future problems. Moreover, an interesting point is that this merger is now going to compete with BASF, which already spends enormous amount in R&D.
Anonymous (Sun Jan 10 22:50:40 EST 2016)
Spending more money does mean better or more useful inventions. When institutions/organizations/research groups get stable for very long, members lost their energy. The groups are filled with vest-in-peace people, summer soldiers, and mediocre researchers. It is good time to let them leave and use the resource on the right projects with right people.
Anonymous (Thu Jan 14 10:09:15 EST 2016)
I actually know the people you refer to as vest-in-peace people, summer soldiers, and mediocre researchers. Most of them are not old guys waiting on retirement, but hard-working individuals. Many are innovative, rising scientists. I fear this could be the beginning of the end for a company that has done so much good for Delaware and its neighbors. I hope I am wrong. Either way, repercussions are going to be felt for years.
Rui Mariano dos Santos (Tue Dec 22 15:41:49 EST 2015)
I am sad to know this information!
Paul E. Eckler (Wed Dec 23 14:06:59 EST 2015)
Everyone worries about coming changes when major acquisitions are announced. It's a nervous time and we feel for all the workers and their families and wish them the best.

Still this is a merger between two companies that have always been technology leaders. I cannot imagine that changing. Sure there will be some consolidation and probably specialization but you would expect the cost savings mostly on the commercial side. Talented researchers are still a valued asset to both companies.
Art Tselepis (Sun Dec 27 21:52:00 EST 2015)
"Talented researchers" are difficult to measure. I have worked as a "Talented Researcher" for over 40 years' My first technical job was as a Lab technician for Mobil Chemical. The company was sold and merged with EXXON since I left. If the researchers are truly talented they will find that the disappearance of their jobs will mean better opportunities at their next job. The group that should be worried are the technical people working on the commercial side of the businesses. The job decisions will not be made by technical people the decisions will be made by the numbers people.
Roy Williams (Wed Dec 23 14:10:24 EST 2015)
The closing of a major research facility, and the pressure on large corporations to eliminate spending on basic science may benefit a few wealthy investors, but it is a loss for the U.S. and the world. In an era when the "typical" investor held stock for generations, corporations were motivated to insure their long-term growth. Now the "typical" investor wants a return in a few financial quarters. To insure the long-term scientific and technical superiority of the U.S. and of U.S. corporations, there needs to be a major change in the regulations about stock ownership, so that the pressure to meet a quarterly earnings target not exist. We as a society would also benefit from the "inefficiencies" of more competition in a marketplace dominated by more than a few mega-corporations - but we need very large companies in order to generate sufficient income to support long-term robust research programs. This is surely a case of an activist investor acting contrary to the general social benefit.
Bob (Wed Dec 23 14:19:48 EST 2015)
The term activist investor is much too positive a term for a group that is undermining the future of our country by reducing or eliminating innovation for the sake of their own short-term gains. It appears that 'wall street' greed has no limits.

Even those few 'activist investors' who understand science and innovation and it's positive effect on our economy would rather add to their billion-dollar fortunes than (re)build a company for the long-term. I wish them no success
Bruce Burton (Mon Jan 04 09:40:09 EST 2016)
Well put, and likewise.

BB
Bill (Wed Dec 23 14:42:10 EST 2015)
We use to look at Bell Labs, IBM, DuPont, major oil companies and others where such good 'industrial' research was undertaken. Sure, it was, in many cases, not likely to result in near-term profitability. But, transistors, Kevlar, advanced computing, catalysis, instrumentation and other advances resulted. Don't know where some of this research is now conducted. IT, computing, chemical analysis and storage of information seem to be more important.
J. Lowell Nafziger (Fri Dec 25 11:44:56 EST 2015)
With the exception of IT research conducted by Silicon Valley firms, none of the advances mentioned here will again be done by corporate research any time soon. In my experience, the only research done by corporations will be the type that yields ROI in the ensuing fiscal year. But long term scientific research is dead for the foreseeable future. The only places that will produce major advances will be universities financed by government grants. And those are under attack by the current congress as wasted tax expenditures. And the current leader of the Science committee, Lamarr Smith (R Texas) is openly hostile toward science.
William Rubin (Wed Dec 30 18:59:43 EST 2015)
Lamar Smith is not hostile to science, he is a critic of a number of global warming theories, as am I. He has subpoenaed the NOAA regarding global warming data. If you remember, in the 1970's, the scientific community warned about global cooling, which proved to be false hysteria - http://www.populartechnology.net/2013/02/the-1970s-global-cooling-alarmism.html. Many of the global warming models have proved to be inaccurate, and corruption and data falsification have been uncovered (as an example, I refer you to Dr. H. Sterling Burnett's article in Climate Change Weekly #172). Maybe you should rethink your position regarding global warming instead of following the scientific and political elitists. Be open-minded, not a lemming.
Joshua Telser (Wed Dec 23 15:01:47 EST 2015)
Nobel Laureate Richard R. Schrock of MIT began his independent career at DuPont CRD. So did the late Earl L. Muetterties (later of Cornell and Berkeley) who was of that caliber as well.
Valeriy Ginzburg (Thu Dec 24 21:17:53 EST 2015)
One should not forget the great Paul Flory who started his career at DuPont under Wallace Carothers and went on to build the foundations of most of today's polymer science. Tragically, Carothers committed suicide in 1937; Flory then had to leave DuPont and continued elsewhere (University of Cincinnati, Goodyear Tire, then Mellon Institute, Cornell, and Stanford). His contributions included understanding of polymerization kinetics, configuration of polymer chains in solutions, solubility and miscibility of different polymers, crystallization, rubber elasticity, and almost anything we associate with plastics today.
Andy Feiring (Thu Dec 24 15:20:45 EST 2015)
I worked at Central Research from 1974 until retirement in 2006 so I got to experience the world class science done in the early days. Bill is right: the laboratories at DuPont, Bell, IBM and a number of others made possible the current prosperity, such as it is, in the USA by finding and commercializing game-changing products. By my retirement in 2006, the end was in sight. I was fortunate enough to then land a job (part-time, by choice) with a small (ca 24 people) polymer membrane company. A privately held company with easily accessible management willing to take significant risks to develop and commercialize new products. Sure I miss the amazing facilities at the Experimental Station, but I love going to work in the morning. Think the small, privately held organizations which don't have to answer to wall street may be our salvation.
Ignacio Grossmann (Thu Dec 24 16:10:45 EST 2015)
Dan Loeb and Nelson Pelz, activists from the hedge fund companies Third Point and Trian Partners, are about to accomplish what no other foreign chemical companies have managed to do, which is to bring both Dow and Dupont down to their knees, and all at the expense of greed and short term profits. These individuals will be responsible for thousands of job losses, and for the weakening of the manufacturing and research infrastructure of the U.S. chemical industry.
Gerald Ceasar (Fri Jan 22 17:20:40 EST 2016)
Very well put, Ignacio. We here in the USA are just about at the end of all corporate funded R&D and the seed corn that generated most of the innovative, step out technologies of today
JGTinNJ (Sat Dec 26 14:03:57 EST 2015)
I would be interested in a comparison of the results in more recent years of R&D money spent by Dow, Dupont and 3M. For years 3M has set the standards that others have tried to achieve.
JBK (Mon Dec 28 10:35:58 EST 2015)
We live in a capitalistic environment and that has high- and low-lights.
This quite obviously is a low-light , that hedge-funds can dismantle a well respected chemical company as DuPont. What would have happened when DuPont would have fully neutrally reacted to the hedge pressure for restructuring , improving ROI . etc. ?
Would the company would have entered the Chapter 11 world ? By no means , I think.
Dow is a complete different company , and might have teamed up with these company hunters. Overall , it is a shame that one of the first measures is to " reorganize " the famous DuPont Central Research & Development Group. And to spread their works in a different , less innovative way, over other engineering and process groups. what means for sure a major lay-off of the involved personnel. The problem today is that many chemical companies are downsizing their R&D efforts, and need less scientists, and might well lay-off own scientists. China is building a huge system of " independent " high-tech " R&D institutes , which do not belong to Universities.
These Institutes can be compared with the German Max Planck Institutes . I visited one brand-new Institute in Shanghai, next door to a huge Technical University under construction , which will be finished by now. The scientists are Chinese PhD, which have not prepared their thesis at a Chinese University but at a foreign, well known University , like Stanford, Calltech ,Harvard, Cambridge , ETH Zurich , RWTH Aachen , etc. These Chinese Institutes might well have a good look at the upcoming lay-offs from DuPont Central Research & Development.
Joe (Tue Dec 29 16:11:42 EST 2015)
Unfortunately I never had the opportunity to work at Dupont. It appears that this company will no longer exist as it has in the past, and future engineers etc. will have to do something else, as I was able to do. Hopefully we still have the talent in the US to create some new companies, and the political climate to let it happen without regulating or litigating them to death. It is interesting to consider the 20 largest companies in the US in 1900 compared to today. Many of them also no longer exist (Ma Bell, Baldwin Locomotive, etc.). Nobody considered Google, Microsoft, or Boeing in 1900.
doris H. Llinton  (Wed Dec 30 10:34:40 EST 2015)
My husband Dr. H. Richard Linton love every moment he was a research chemist for DuPont starting in 1958.
He was fortunate to have a patent for "Afflair"early in his career. Dick is ill right now but I keep him updated on the DowDupont merger.

As a family, we enjoyed the many facilities DuPont offerred. I am sad for the families in DE who will never experience the fun we had at the DuPont Country Club etc.

This is not good.
Jane (Tue Jan 05 14:47:26 EST 2016)
Just to update all here - the number of layoffs announced at DuPont in DE: 1700. VERY unfortunate, but inevitable due to the merger. More layoff numbers coming in the near future. Here is the link:

http://www.chemweek.com/lab/DuPont-to-cut-1700-jobs-in-Delaware_76098.html?utm_source=CW+Newsletter&utm_medium=email&utm_campaign=20160105_insider
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