As the DowDuPont saga unfolds, one of the more interesting story lines will be the fate of DuPont’s best-in-class biomaterials business, which began with a collaboration more than 10 years ago and evolved into a fascinating R&D effort to produce basic chemical building blocks from plants.
Today, its Bio-PDO propanediol and Sorona polymer operate manufacturing plants in the US and China and have sales exceeding $250 million in more than 25 countries. That’s not bad for a startup biomaterials business in a time frame that saw a major global economic collapse and weak oil prices.
The group is now investigating the commercialization of a completely new way to make high-performance polymers directly from sugar. This novel enzymatic process is said to closely mimic the way nature builds polymers like cellulose.
This type of work took place at a company with deep pockets, a commitment to world-leading research, and a belief in making the world a better place. DuPont was one of the last relics of a deep American manufacturing commitment to corporate research. Think Bell Labs.
Now great American companies from GE to DuPont are being ripped apart by aggressive minority investors who want companies built to produce maximum short-term profit. One of the last stalwarts, Procter & Gamble remains, but is under attack.
Dow and DuPont, which had significant synergy only in crop sciences, were forced together into DowDupont on Sept. 1 in what was clearly a poorly though-out exercise. Just 12 days after its formation, many businesses were spun out of a Dow-heavy group into one of the two Delaware-based divisions, one of which is a hodgepodge of specialty businesses including biomaterials. The goal is to spin the businesses into three separate companies within 18 months, led by the Dow group, which seems to be driving the bus.
The crop sciences group—the smallest of the three– will do fine, and may become a darling on the stock market. It may be branded as a DuPont company. The massive Dow business is an olefins-silicon behemoth that will ride the shale gas boom.
The Specialty Products Division includes:
- Electronics & Imaging,
- Industrial Biosciences,
- Nutrition & Health,
- Safety & Construction (Kevlar, Nomex, Tyvek, Styrofoam, and Corian brands),
- Sustainable Solutions (management consulting), and
- Transportation & Advanced Polymers. (Dow jettisoned Zytel, Hytrel and Delrin here 12 days after the merger took effect).
It’s hard to imagine that this grab-bag of businesses will make a coherent whole. It resembles the Tyco business formerly headed by cost-cutting specialist Edward Breen, who is now CEO of DowDuPont. Breen was brought in to break up DuPont.
Most of the businesses are very valuable, such as the performance plastics and construction brands, and will find a home with no problem.
It’s harder to imagine the future of the biomaterials’ business, which will require forward thinking and deep pockets, both of which are in short supply today.