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DuPont Cuts 2016 R&D Budget Ahead Of Merger With Dow Chemical

Spending: CEO Ed Breen tells investors DuPont is “still one of the highest R&D companies in the world”

by Marc S. Reisch
January 28, 2016 | APPEARED IN VOLUME 94, ISSUE 5

Continuing to pare research and development, DuPont plans to cut its spending on R&D in 2016 to between $1.6 billion and $1.7 billion, a roughly 10% decline from the $1.9 billion the firm devoted to research in 2015.

DuPont revealed the budget cut while announcing a decline in fourth-quarter sales and earnings. The reduction will take the firm’s R&D spending to roughly the same amount it spent in 2010. And it follows the company’s January dismissal, according to C&EN sources, of more than 200 Central Research & Development scientists at its Experimental Station near Wilmington, Del.

Those layoffs were part of a larger cost-saving effort that includes cutting 10% of the firm’s 54,000 employees and reducing costs by more than $700 million. The effort is in advance of DuPont’s planned merger with Dow Chemical, which will be followed by a split of the combined company into separate agricultural, materials science, and specialty products firms.

During a conference call with investors, CEO Edward D. Breen defended DuPont’s research spending, saying the firm will still be “one of the highest R&D companies in the world.”

Breen noted “we were very selective” in making the R&D reductions. He also attempted to reassure investors that “the long-term success of our businesses will be driven by innovation and strong returns on R&D investments.” He added, “I know there’s been a lot said and talked about it, but through the last 15 years, R&D has averaged $1.65 billion.”

Breen also revealed that DuPont would reduce spending on new plants and equipment by more than 20% in 2016. “After looking hard at every project and its expected returns, we approved 2016 capital expenditures of $1.1 billion,” he said.

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