For more than 80 years, The name DuPont was almost synonymous with plastics. Some of the industry’s greatest innovations emerged from the company’s famous labs in Delaware. Nylon, DuPont’s name for polyamide, was the first commercially successful synthetic thermoplastic. Until then, the industry was dominated by hard-to-process thermosets resins such as phenolic. DuPont later made significant advances in acetals, elastomers, and polyesters, and more recently in bioplastics that have made big headway in fiber.
Those plastics will definitely survive, but the attachment of DuPont is in name only. And even that will end soon. They are now part of a company in Midland, Michigan that clearly is placing its emphasis elsewhere, including on a newly acquired silicone business.
It will be interesting to see how well DuPont’s engineering and renewable plastics fit into the new DowDuPont Materials Science Division, which became a legal entity on Sept. 1 and is scheduled to be spun out as a standalone company no later than March, 2019.
The new operation is very Dow-dominated. It will be headed by Andrew Liveris, the former CEO of Dow. The only DuPont member of the advisory committee (a kind of board in waiting) is former CEO Edward Breen, a cost-cutter who earned his stripes at Tyco, not DuPont.
A fact sheet distributed by the new entity says it will be focused on three molecules: ethylene, propylene and silicone. The key chemistries in the DuPont Performance Plastics business are polyamides, polyacetal and PBT-type polyester. Dow assets dwarf those of DuPont, which had long ago divested commodity-type polyethylene assets. A $100 million Innovation Center in Midland, Michigan is being built to drive growth in the silicone sciences and organic chemistry from new acquisition Dow Corning Corp. Interestingly, Dow divested its stake in engineering plastics (Calibre polycarbonate) seven years ago. In another footnote, Dow had tried to largely exit the ethylene and propylene businesses 10 years ago. The 2008 financial meltdown derailed a plan to create K-Dow with Kuwait Petroleum Corp. For $9.5 billion, Dow agreed to give up 50 percent of its interest in five global businesses: polyethylene, polypropylene and polycarbonate plastics, and ethylenamines and ethanolamines.
Sure, the global plastics business has looked something like “As the World Turns” as investors pushed global giants to emphasize high-return businesses such as pharmaceuticals. GE and Bayer–two other historical giants in plastics –also set new courses.
It wouldn’t be a stretch, at least in my view, to see much of the DuPont performance plastics assets divested before the new materials company is formed. Not surprisingly, BASF—a global giant in polyamides—was rumored to have had interest. That obviously would make no sense from a competitive aspect. But the DuPont assets would be a good fit for several other companies.
DuPont’s global-leading effort to find new, renewable ways to make chemical feedstocks looks to me like an unfortunate loser in the new DowDuPont. Under investor pressure, DuPont had already begun cutting overall R&D, except in ag seeds–an investor sweet spot. The industrial bioscience business looks like an orphan in the new Specialties group.
DuPont’s “performance” chemicals business is now owned by an entity called Chemours, which took over the DuPont building in Wilmington, Delaware. DuPont donated significant art collections to local museums and charities and sold the DuPont Hotel.
The new DowDuPont companies centered on agriculture and specialties will be based in DuPont’s new home at Chestnut Run, a suburban research site in Delaware.
It’s possible that the new ag business will retain the DuPont name, and maybe even some of its culture of innovation. From gunpowder to seeds in 200 years. Performance plastics? Didn’t make the cut.