Dow and DuPont announced earlier this month that they would join to create a giant chemical producer that will eventually be split into three independent companies.
At that time, DuPont announced a $700 million cost savings and restructuring program but did not specify how many jobs would be impacted or where. DuPont CEO Ed Breen sent a letter to employees Tuesday informing them that approximately 1,700 Delaware positions would be eliminated in the beginning of the year.
DuPont, which has been based in Delaware for 213 years, said it would have preferred to let affected employees know of the news first. But it made the announcement now, amid the holidays, because it is legally required to inform the state by the end of the year of the local job cuts. The company has approximately 54,000 employees worldwide and the restructuring program will ultimately affect about 10 percent of that workforce.
Delaware governor Jack Markell said the announcement of the job cuts is "deeply disappointing."
"DuPont's number one asset is its people, and the innovations that the company has produced during its storied history are a testament to the quality of those people," Markell said in a statement.
The combined company, called DowDuPont, will split into three separate entities that will focus on material science, agriculture, and specialty products.
That specialty products company, which would combine DuPont's nutrition and health, industrial biosciences, safety and protection, and electronics and communications segments with Dow's electronic materials business, will be based in Delaware.
The combined Dow-DuPont business will have dual headquarters in Delaware and Michigan, where each company is based, until it separates into three independent publicly traded companies focused on agriculture, material science and specialty products.
The Dow, DuPont deal, if it goes forward, would be among the largest in an unprecedented year in mergers and acquisitions. The value of buyouts proposed and completed this year has reached a staggering $5.03 trillion, up 37 percent from just last year, according to Dealogic.
It is the first time that takeovers have exceeded the $5 trillion level, fueled by extremely low interest rates. The Federal Reserve raised interest rates for the first time in nearly a decade less than two weeks ago.
Dow and DuPont expect their combination will cut annual expenses by $3 billion.
A spokesperson for DuPont shared Breen's letter to employees with Action News. The letter, titled "DuPont's Next Chapter in Delaware", reads as follows:
- Dear Delaware-based Colleagues:
DuPont has called Delaware home for more than 213 years. The company has created countless scientific discoveries and built leading businesses, and we can be proud of the major social and economic impact DuPont has had in the State. However, as we face a pivotal time unlike any other in our company's history, we have begun a necessary journey down a new path to a stable and secure future for DuPont.
The planned merger with Dow and intended creation of three strong, independent companies-coupled with our own 2016 cost reduction program-has created concerns about our future in Delaware. I want to reinforce that these decisions were made only after careful and serious deliberation, taking into account every possible alternative, including continuing on our previous path. In the end, the Board of Directors and I unanimously agreed that this is the best path to a better, sustainable future for DuPont.
The first step is the $700 million cost reduction and associated restructuring we announced on December 11th. While this program is being implemented globally, I want to be straightforward with you about the impact on our local workforce. 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. The change also reflects the impact of our efforts to move corporate functions into the businesses, closer to our customers.
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. However, by December 31st, we are legally required to file a notice with the Delaware State government detailing the expected local job reductions, and I wanted you to hear the difficult news-directly from me-that approximately 1,700 Delaware-based positions will be eliminated in the beginning of the year.
I am deeply aware that these decisions affect the lives - and families - of many people. As we work through these notifications, we are committed to doing so in a way that is consistent with our Core Values. We will honor each colleague's service to the company by providing separation packages, career placement services and training allowances as part of our effort to help our team members through these transitions.
Along with this sobering news of our Wilmington-area reductions, we fortunately are also able to announce that the corporate headquarters for the combined, post-merger Specialty Products business will remain in Wilmington, Delaware. Specialty Products will be a technology driven innovative leader, focused on unique businesses that share similar investment characteristics and specialty market focus. The businesses will include DuPont's Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business. Together, their complementary offerings create a new global leader in Electronics Products, and each business will benefit from more targeted investment in their productive technology development and innovation capabilities. Our leadership in these key areas will be the foundation for further growth - in the world, and in Delaware.
We have much more work to do with the three independent companies we intend to establish, including selecting the corporate headquarter location for our Agriculture business. I look forward to updating you on our selection progress in the months ahead.
DuPont has evolved many times over the past two centuries. In each era, our leaders recognized that change was inevitable to remain successful. By building our strength through the merger of equals with Dow and focusing our businesses to compete more effectively, we will enhance our ability to invest in the future. Each business will be able to create the value-added solutions its customers expect through targeted, highly productive investments in science and R&D.
I recognize this is a lot of change in a short time and in the New Year you will hear much more from me personally and from the leadership team regarding our strategic direction. As we go forward, we need to stay focused on our Core Values, ensuring the company is as strong as it can be for an increasingly competitive future. I believe we will build on our history and create a new phase of progress and opportunity for DuPont.
Information from the Associated Press was used in this post.