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Volume 94 Issue 4 | pp. 22-24
Issue Date: January 25, 2016 | Web Date: January 21, 2016

Why DuPont Shrunk Its Central Research Unit

Experts see the cuts to the illustrious unit as part of a trend that puts business first
Department: Business
Keywords: Central Research, CR&D, DuPont, industrial research, R&D spending
Read C&EN’s full coverage of the Dow-DuPont merger:
ACS members can also watch an archived version of a webinar with C&EN’s Alex Tullo on the future of R&D at DuPont.

Less than a week after DuPont announced its merger with Dow Chemical on Dec. 11, DuPont managers told scientists at DuPont Central Research & Development in Wilmington, Del., to halt all laboratory work. The researchers were to label unmarked samples and leave everything else in place. Severe and unprecedented cuts, the researchers were warned, were coming.

Between Christmas and New Year’s Day, employees received Microsoft Outlook invitations for 10-minute meetings with their supervisors. On Jan. 4, they took their turns learning if they would be let go. Cardboard file boxes were left in the lobbies at DuPont’s Experimental Station for workers to carry out their personal effects. Delaware state troopers were on-site in case of incident.

[+]Enlarge
DRAWING A FIBER
Julian Hill, who collaborated with Wallace Carothers in early polymer discoveries in the 1930s.
Credit: DuPont
09404-bus2-nyloncxd
 
DRAWING A FIBER
Julian Hill, who collaborated with Wallace Carothers in early polymer discoveries in the 1930s.
Credit: DuPont

“It was one by one all day long,” a former researcher who asked not to be named tells C&EN. “And it was one of the most miserable days I ever had.”

The layoffs were part of a DuPont plan to roll up its storied Central R&D (CR&D) organization and fold it into a new group called Science & Innovation. The move was part of a larger program at DuPont meant to save $700 million annually, cut 10% of its workforce, and prepare the company for the merger with Dow.

DuPont was vilified by many in the chemistry community for the maneuver, which was seen as a capitulation to Wall Street’s lust for short-term profits and a triumph of the suits over the lab coats. DuPont, many said, was eating the seed corn that would lead to tomorrow’s breakthrough products.

“Kevlar, to my understanding, took 20 years to get from the red to the black,” says Andrew Feiring, a chemist who was with CR&D from 1974 to 2006. “Wall Street just isn’t going to stand for that sort of thing today.”

The demise of CR&D may have been abrupt, but an astute company watcher might have seen it coming. Over the past two decades, CR&D has been evolving away from the exploratory research for which it is best known and toward science that addresses perceived needs of businesses such as electronic materials and industrial biotechnology.

DuPont will retain a centralized R&D function, but not one like it had before. According to data obtained by C&EN but not confirmed by DuPont, the number of employees devoted to centralized research is now a small fraction of what it was only a year ago.

Two component organizations within CR&D, Molecular Sciences & Engineering and Materials Sciences & Engineering, saw 173 of their staff laid off. Another 63 employees are transferring to other DuPont business units. Thirty-four, among them 17 Ph.D.s, remain in the new Science & Innovation group. Before a previous round of layoffs last summer, the two organizations had 330 employees.

[+]Enlarge
SHIFTING GEARS
Over the years, DuPont has been publishing fewer chemistry journal articles and filing more patents.
a Number of chemistry-related articles published in academic journals for which a DuPont employee is the first author.
b Patent information is likely incomplete for 2014 and 2015 because some patent applications may not have been made public by the U.S. Patent & Trademark Office.
SOURCE: Chemical Abstracts Service
09404-bus2-bargraphs
 
SHIFTING GEARS
Over the years, DuPont has been publishing fewer chemistry journal articles and filing more patents.
a Number of chemistry-related articles published in academic journals for which a DuPont employee is the first author.
b Patent information is likely incomplete for 2014 and 2015 because some patent applications may not have been made public by the U.S. Patent & Trademark Office.
SOURCE: Chemical Abstracts Service

Another CR&D affiliate, the Corporate Center for Analytical Sciences, has had its staff cut from 102 to 50 people. An unknown number of layoffs hit DuPont Engineering Technologies as well as Biochemical Sciences & Engineering, a former CR&D unit that is now part of the Industrial Biosciences business.

DuPont’s chief Science & technology officer, Doug Muzyka, acknowledges the reorganization was meant to save money and boost returns on R&D spending. “We are taking our costs down to align with what we think is affordable in the current business environment that we are facing and the challenges we have,” he says. “It is not what you spend. It’s what you get for what you spend.”

Science & Innovation, Muzyka says, is the next step in the evolution of DuPont R&D toward greater alignment with the business units. Even before the cuts, he notes, the business unit represented about 90% of DuPont’s $2.1 billion annual R&D budget.

The new organization, Muzyka says, will serve as a clearinghouse for ideas that originate from both inside the company and outside research partners. These projects will get handed off to the business units. For example, Science & Innovation will cultivate the technology of microbial genome specialist Taxon Biosciences, which DuPont purchased last year.

Furthermore, R&D staffing will be more fluid than it had been in the past, Muzyka says. Researchers will drift from Science & Innovation to the businesses and from the businesses back to Science & Innovation as they follow research projects.

The model is different from the science power center DuPont housed in its heyday. But although centralized research at the firm is much smaller, it is the culmination of a trend that has been building for years.

CR&D’s origins can be traced back to 1903, when Francis I. du Pont founded the Experimental Station in Wilmington for research into manufacturing explosives. In the 1920s, Charles M. A. Stine was given a budget of $300,000 to pursue pure research. He brought nylon inventor Wallace Carothers to the Experimental Station from Harvard University.

DuPont formally established the modern CR&D in 1957. For the next 40 years, it would function not only as a strong corporate research arm but also as a group on par with the world’s leading academic chemistry departments.

William A. Nugent, who specialized in organic synthesis with the company from 1976 through 2001, recalls that when he started at CR&D, the prevailing attitude was that the key to “finding the next nylon” was conducting exploratory chemistry. “It was really believed that if you went out and you did good science, that DuPont, as big as they were, would find a use for that science,” he says.

CR&D produced a lot of good science. Potassium titanyl phosphate crystals, which double laser frequencies and turn infrared beams to green, were invented there. CR&D brought the world group transfer polymerization, used in inkjet inks and automotive paints.

Hyperbaric crystallization of ultra-high-molecular-weight polyethylene, used for knee and hip replacement joints, was also a CR&D breakthrough. Other accomplishments include non-ozone-depleting refrigerants and the hydrocyanation of butadiene to adiponitrile, which gave DuPont a cost advantage in making nylon.

Leading-edge chemistry flourished at CR&D. “It was, for many years, arguably the world’s center of fundamental research in organometallic chemistry,” noted Harvard chemistry professor George M. Whitesides recently in an essay in Angewandte Chemie International Edition (2015, DOI: 10.1002/anie.201410884). Influential carbene chemistry specialist Anthony J. Arduengo III, now at the University of Alabama, began his career at CR&D in the 1970s. So did Massachusetts Institute of Technology chemist and Nobel Laureate Richard Schrock.

At CR&D, publishing “was viewed as a worthwhile objective in its own right,” Nugent recalls. “We were expected at the end of the year to have publications in primary, revered, peer-reviewed journals.”

In the 1960s, according to Nugent, CR&D was publishing more papers in the Journal of the American Chemical Society (JACS) than MIT and California Institute of Technology combined. “That is beyond belief,” he says. “Sixty papers a year.”

DuPont, Nugent says, was one of six companies—including Bell Labs, Eastman Kodak, Exxon, IBM, and Merck & Co.—that represented a large chunk of JACS articles from the 1950s through the 1990s. These six companies continued to be responsible for two-thirds of the JACS submissions from industry in the 1980s even as central R&D waned at many firms.

By that time, Nugent says, companies were getting diminishing returns from their basic research in chemistry. R&D wasn’t as sure a winner as it had been in the 1950s and 1960s.

During that golden age, “there were things you could do with cheap building blocks that were abundantly available to the industry. Chemistry exploratory research made immense sense, and people made money off of it,” he says. But in more recent decades, “corporate executive boards have come to the conclusion that you can’t afford to go down and mine exploratory chemistry anymore.”

By the 1990s, DuPont was changing, too. The company’s scientists had always considered whether a line of research might eventually turn out well for DuPont, but increasingly, the business potential of the science was becoming the major consideration.

Muzyka says that was intentional: “There was a common perception in DuPont and more broadly in industrial research that to get a return on the kind of science that we do, whether it be fundamental or applied, you needed to tie it to some kind of commercial reality in the marketplace that provided a pull for it.”

A watershed occurred in 1998, when DuPont launched a redesign of how CR&D worked called the Apex research process. Feiring, the former DuPont chemist, says Apex meant the business units were making the decisions.

“The biggest change was that you needed a buy-in from a business organization, and you almost had to prove that you were going to have a commercial product—as opposed to having a technically good idea, which could lead to a commercial product, and then being allowed to try and demonstrate it,” Feiring says.

The former DuPont researcher who asked not to be named recounts that research projects needed to overcome a hurdle of $100 million in potential value to DuPont to be taken on by a business unit. “If it were $20 million or $50 million, there was no point putting a proposal together,” he says.

Science became the loser, Feiring contends. “Nobody would have approved of Charles Pedersen’s work that led to the Nobel Prize,” he notes. “That simply would not have happened at the modern DuPont.” Pedersen’s Nobel Prize recognizing his work in crown ethers was conducted at the Experimental Station.

Although the emphasis was shifting at DuPont, no one raised the specter of eliminating CR&D until recently.

Sources say CR&D was far too sacred to dismantle for an executive who grew up in DuPont, like former chief executive officer Ellen J. Kullman. They finger outsiders like Edward Breen, who took over as CEO last October, and the activist investor Nelson Peltz, as well as the upcoming Dow merger.

Read C&EN’s full coverage of the Dow-DuPont merger:
Join C&EN’s Alex Tullo on Feb 11 for a special webinar on the future of R&D at DuPont. Or ask him anything on Reddit on Feb 2.

According to Muzyka, since he became technology chief five years ago, he has pushed to make CR&D “increasingly relevant to the businesses and to drive better returns on R&D by aligning what we work on with what has commercial potential.”

The current plan, which Muzyka calls the next iteration of that model, has been in the works for about six months. When asked whether it took the ascension of Breen to execute the plan, Muzyka declines to answer directly. “Ed is supportive of the direction that we’re taking,” he says.

 
Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society
Comments
Dupont - The Last Miracle of Science  (January 21, 2016 11:12 AM)
Doug Muzyka somewhat timidly responds here.

Is there a sword of Damocles hanging over his head????

As the planets align, so shall all the workers that are still employed.

Good luck in your new direction.......
anonymous  (January 22, 2016 7:42 AM)
The sword of Damocles? More like the chainsaw of Leatherface.
Dustin  (January 23, 2016 7:54 PM)
While the (largely positive) impact of materials and chemicals invented at Dupont on modern life can never be overstated, the mention of Hylamer as orthopedic implant materials may not be their strongest success story. These had to be taken off the market in the 90s due to a "extremely high failure rate of 67.6 per cent within five years, or thirteen times the expected failure rate for the device"
https://www.lawyersandsettlements.com/features/hip_and_knee_replacement_implant_failure/hip-knee-breaking.html
David M. Pasquariello  (January 26, 2016 4:30 PM)
There's no such thing as a free lunch. This is another example of short-sightedness in the guise of a logical business decision.
Michael E. Webb  (January 27, 2016 9:35 AM)
Congratulations to CR&D for avoiding this tide as long as they were able. Understanding and controlling risk is the modern business manager's prime directive, and limiting R&D operations to business operations is (unfortunately for industrial scientists) an effective strategy to achieve that objective. It also features a lucrative second act- conceiving and implementing programs (gleaned from consultant friends or business publications) to promote 'innovation' among any demoralized creatives they elect to retain.
Gerald Ceasar  (February 3, 2016 10:15 AM)
And soon Michael will have business men doing R&D huh? There won't be any chemists left.
Michael E. Webb  (February 4, 2016 10:58 AM)
I suspect there will always be chemists, but the role of industrial innovation itself- including our part in it- has changed. Michael Hanlon's essays on innovation suggest this is part of a broader societal trend and not just a business/technological one. The US apparently is contemplating a "moon shot" program to cure cancer- perhaps we'll soon see if we still have The Right Stuff.
Geoff Lindsay  (January 27, 2016 2:21 PM)
We have watched this trend in the chemical industry over the last thirty years. We saw it happen at BF Goodrich, at Bell Labs and at many other companies. We even see it happening in the biotech industry. We see cut backs in government chemical research facilities. But the chemical sciences will stay alive in academia as long as there are jobs for chemists somewhere in the world. Using government grants (and a few from industry) professors will start new companies and be able to hire a few of their foreign postdocs. The number of domestic college students electing a career in chemistry will continue to dwindle, and the jobs that are available will largely be in the biochemistry sector (medical and renewable resources).
Art  (January 27, 2016 2:45 PM)
I believe that Charles Pedersen, Nobel Laureate, spent most of his career at Jackson Laboratory. Jackson Laboratory, now closed, was located at DuPont Chambers Works in Deepwater, NJ. Jackson Laboratory was where Teflon was discovered. Jackson Laboratory had many brilliant and creative Scientists.
Rudy Pariser  (January 29, 2016 1:13 PM)
Art, you are entirely correct. Please see my comment below.
Rudy
Paul H.L. Walter  (January 27, 2016 2:52 PM)
This is a sad day for Wilmington, Delaware, science and ultimately for DuPont. I spent 7 fabulous years in the 60's enjoying the science and the general intellectual ferment in what was then CRD, the Central Research Department. The switch from CRD to CR&D occurred long after 1957 and was really the first sign of the new age. Even those of you who remain will be in a very different place. You have my sympathy.
Gary D. Grantham  (January 27, 2016 3:09 PM)
It isn't accurate to say that Ellen J. Kullman "grew up" at DuPont. She came to DuPont from GE and started as a high level executive running a business unit, unlike her predecessor who started at DuPont as an entry level engineer.

The article also glosses over the successful research that has been conducted in the business units. Over the last 30 years Crop Protection has arguably been DuPont's most successful business unit, and all the major discoveries (e.g. George Leavitt, sulfonylureas)came from research done by the business unit, not CR&D.
Rudolph (Rudy) Pariser  (January 27, 2016 3:37 PM)
Regarding Charlie Pedersen and his Nobel Prize winning research on the "Crown Ethers", it was actually performed at the old Jackson Laboratory located in the Chambers Works in New Jersey. In 1959, the Organic Chemicals Dept, where Charlie and I worked, was split and a new Elastomers Dept. was created to which he and I transferred. I was Laboratory Director at the time of the new Elastomers Laboratory which was located at the Experimental Station, and where Charlie officially reported to me, although he continued to do his research at the Jackson Laboratory (located close to his home.) He patented his work and published in JACS in 1967. His publication inspired two university professors, Donald Cram and Jean-Marie Lehn to elaborate on Charlie's work and later to share the Nobel Prize with him, which was awarded in 1987.

(A more detailed account has been published in CHEMTECH, June 1998, page 48.)
Matthew E Hermes  (February 3, 2016 2:12 PM)
I am so glad that Rudy Pariser clarified the issue that Pedersen's work was done at Jackson Lab. Proud as I am to have worked at CR&D from 1959-1966 (and later elsewhere for Dr. Pariser), the fact is Carothers brilliant science, and the invention of nylon and neoprene, created an aura that what we would do there would certainly benefit Dupont. It did, but the benefit was not direct to the bottom line. C. M. A. Stine's original intent for a fundamental research unit saw the benefits as advancing Dupont within the academic and research community (it did), drawing great scientists to the company (it did) and providing a talented pool of individuals to populate the rest of the company (it did). The fourth and last objective was the tentative idea that fundamental work might produce bounty. That was always a struggle, always a struggle for the "new nylon".

And of course, Rudy Pariser is one of the great scientists hired by Dupont. It was 60 years ago in Ellis Lippincott's quantum chemistry class I first heard Rudy's name, tagged onto a new theory, "Pariser-Parr".
Chemiker  (January 27, 2016 6:48 PM)
State Troopers on site? Did they think that this would turn into a coal strike and a United Mine Workers war?

This is a short term move that will prove to be a long-term bad idea. Great ideas in technology can easily require 20 years to make money. However, the managers will be long retired.
Rakesh Mehta  (January 27, 2016 7:15 PM)
End of an era at Dupont, one of the most admired company in the world for research in chemistry. This event is going to affect research funding at other chemical companies globally.
Henry F. Russell  (January 27, 2016 7:28 PM)
The recent earthquake felt in Delaware was only Pierre and Irenee rolling over in their graves.
William J. Vullo, PhD Northwestern U., 1959  (January 27, 2016 8:00 PM)
Frankly I am disappointed to see Dupont descend from its premier status as an industrial research organization to just another technical based company. The end of an era where a few select companies lead the world in innovation and new products. I guess I'll sell my long held stocks.

Jrwute42  (January 28, 2016 8:32 AM)
See new Ava employment guidelines per DuPont is you are furnished with your own cardboard box. Looks like chemists may be among first white collar employees going the way of steelworkers and now coal miners
Robert Buntrock  (January 28, 2016 12:20 PM)
The number of scientists retained in some manner is cited but the number laid off/fired is not.

I commiserate with their Draconian/scrooge-like Christmas present, been there, done that. This baseball chemist (three strikes/job losses but I'm not out) lost 3 jobs but managed to avoid being out the door in a day. The first was Nov. 19, 1969, my birthday, when the Ag Chem unit of a certain Eastern PA chemical company was disbanded and put up for sale (Happy Birthday to me). Technicians were out the door the same day but the professionals, other than the 2 retained and the 2 who went with the technology, were kept on until we found new jobs. The last one, 21 years ago, a "reengineering", was threatened all year but I was overseas giving a presentation. When I returned I found out that my group had negotiated to keep me on for a week to pick my brain on the various services I had provided so I was spared the ignominy of out the door in an hour like a fired butler.

I know these hard hearted procedures have been recommended to management for decades, including in the Wall Street Journal, but to subject professionals with good service and production records in such a way borders on the criminal and should be condemned by the NLRB. Of course, management would not do this to themselves. Hopefully, the severance provided was at least "silver" if not golden. Fortunately, my severance allowed my wife and I to set up a successful and rewarding business.

Brickbats and worse to both DuPont, Dow, and their myopic financial management and investors.
Sanford  (January 28, 2016 3:05 PM)
I was watching a documentary about Nikola Tesla earlier today. At one point in his life, he dug ditches in order to scrape together enough money to do research. I hope it never comes to that again! However, his experience does illustrate a point. Then, as now, business was not fully sold on the value of basic research as an engine of innovation. It falls to the creatives - the bold thinkers - to develop sufficient technical and business acumen to both develop and sell their ideas to those who control the purse strings. As Tesla experienced, this can be challenging. But the future still belongs to those whose creative abilities help shape it.

Tesla was also an independent inventor for much of his life. This may portend the future as well. Who can tell - maybe the basement or garage lab will come back into fashion!
Vadim Krongauz  (January 29, 2016 12:46 PM)
Well, what did you expect? Did Copernicus or Jordano Bruno get rich? Perhaps Archimedes get royalties from the Syracuse sailors for his water pump? Even famous Lavoisier was guillotined because he dared to earn money to subsidize his research. His lovely wife fled to America and as I recall, started Du Pont Company using Lavoisier gun powder formula. It was fun while it lasted for all of us-I published 11 paper from my Experimental Station days and edited a book. Then, like a medieval scholar, packed my things and found another master. Good luck guys.

By the way, are the new managers selling the portrait of Lavoisier and his wife from the Lavoisier Library at the Experimental Station? If so, I would put on a bid.
Al Anderson  (February 1, 2016 4:16 PM)
I have seen the picture to which you refer. Lavoisier's wife didn't start the DuPont company. The DuPont family had apprenticed a son to work for for Lavoisier and learned the technique of gunpowder manufacture from him. The family fled France to avoid the guillotine. Lavoisier was not so lucky. Referring to Mr. Lavoisier, you might say that "cutting staff" dates from the very founding of the DuPont Company.
Jim Hopf  (January 29, 2016 12:57 PM)
I believe this short look will hurt the Pioneer "LONG LOOK" as it takes at least 7 years to develop and test new corn hybrids. How long did it take to develop and test Pioneer hybrid 3394?
David Redfield  (January 31, 2016 12:01 PM)
I hear and feel the loss expressed by the above alumni. I was fortunate to work for the austere E I DuPont from 15 years beginning in 1979. I was and remain extremely proud and grateful for those experiences and the people I worked with over the years. How 8 itthat "we" think that this is a bbetter road to follow? And better for whom?
Jim Kelley  (February 1, 2016 1:31 PM)
I think that the destruction of this corporate bureaucracy was overdue. As the global technical director for one of DuPont's strategic business units for 8 years until I retired in 2001,I could not justify spending $400,000/year for a CR&D scientist when our internal costs were $200,000/ year. Some of these extra costs were because of the higher costs of being in Wilmington, but some were due to the poor practice of sending flunk-out technology managers from the business units to CR&D as non-lab staff assignments, which just added to their overhead costs. Also, I found the CR&D management and supervision to be quite arrogant. They just wanted me to send them money and go away. They wanted to define how the money was spent instead of working on things that our business needed. What's happening now may be too draconian, but that's probably what it takes to focus the R&D on real business needs.
Gene Peters  (February 1, 2016 4:13 PM)
The publication and patent graphs show an interesting trend, particularly related to the timing of the 1998 "Apex Research Process" mentioned. Until and unless these data are normalized, though, it's hard to tell if this Apex process has had a positive or negative influence on productivity. Regardless, though, these data show an inverse relationship between publications and patent filings. Is this correlation real? Would've been nice if CEN had done more thoughtful analyses with these data.
J C  (February 1, 2016 7:17 PM)
This country is beyond myopic, only scientists and engineers can research and invent new products.

As a researcher/scientist at a small firm, I cannot count how many finance and accountants we have to deal with. They are well meaning - but with 50-100 finance/laywers/MBAs per scientist, I am worried not only about those brilliant people at DuPont, but the shortsightedness that trickles down from our politics, to our universities and the cutting off the noses of the contributors.

How many of the MBAs have developed any product, and worked until 1 AM in the mornings and weekend to get things done?
Brooker  (February 2, 2016 4:02 PM)
Blah blah blah....."business"....blah blah blah..."commerce".....blah blah blah..."productivity".

Where is the science in R&D anymore?
Anonymous  (February 3, 2016 6:52 AM)
For a period of time Dupont management referred to R&D spend as "the burn rate". That was one bullshit bingo term I really hated and was insulted by.
Anonymous  (February 2, 2016 4:06 PM)
Gene Peters: I am a former CR&D PI, just laid off. A significant contribution to that uptick in patent filings beginning in the mid-2000's is due to a QUOTA placed on patent filings established circa 2005. I do not believe that the businesses had quotas - I know for sure many did not - but CR&D certainly did. Once the quota was handed down by upper management you can rest assured that lower management did everything they could to ensure the targets were met. It was insanely stupid and costly, the only benefit was that it enabled CR&D upper management (Chowdhry and Connelly at the time) to wave the filing numbers in front of Wall Street to show them how great Dupont science was. The quota was eliminated about two years ago and Muzyka was disturbed to see a > 50% drop in patent filings the first year alone as a result. Dupont is now abandoning filed patent cases en masse due to the ongoing prosecution and maintenance costs.
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