DowDuPont merger creates uncertain future for Delaware economy
In the First State, industry watchers are reacting to news of Dow Chemical and DuPont's plans to merge -- and what it might mean for Delaware's economy.
Chamber of Commerce CEO Rich Heffron says he expected something like this after DuPont CEO Edward Breen took the helm of Wilmington's flagship chemical company.
"He is known as someone who in the past has been able to take companies and split them up, and obviously that's what the plan was," Heffron says.
That planned post-merger split into three separate companies makes it unclear how much of a footprint DuPont will maintain in the First State. Heffron says the new agricultural chemicals group may well shift to the Midwest, where Dow is based -- though it's a sector that supplies Delaware, too.
Details like that are murky in a 50/50 merger like this, says University of Delaware corporate governance expert Charles Elson. And he says both companies' leaders holding onto executive power could set up conflict:
"Who effectively dominates the organization -- the old Dow, or the old DuPont?" Elson says. "Clearly, from whether you're in Wilmington, Del. or Midland, Mich., that's going to be a very important question. Where does this thing end up?"
Either way, he says it means Delaware needs to weigh its next move carefully.
"I think we need to really start thinking quickly about luring other kinds of corporations ... to headquarter here, because I don't think DuPont is going to be a sure thing," Elson says. "In fact, a very unsure thing, for a long time."
Heffron agrees that it's well past time to start thinking more critically about the state's economic future. He hopes this might be what finally motivates the state to have that conversation in earnest, after a long period of change for what was once Delaware's flagship corporation.
"We now know for sure that the DuPont company we knew is no longer the DuPont company we knew. And it affects the community, in a lot of ways," Heffron says, including outside the industry -- like for nonprofits and the arts, of which DuPont has been a corporate patron.
Now, Heffron and other leaders at the state business roundtable are on the lookout for new industries to fill any void that DuPont's transition leaves and shore up what he describes as an unsustainable economy. Heffron says they're awaiting a new study by outside consultants on a few of those concerns:
"One is our current revenue structure is not sustainable, in the long run. Number two, we know we have to compete on a global scale," Heffron says. "And I think we know what some of our weaknesses are and we know what our strengths are. We have to take advantage of those and see where are our opportunities. I don't know what they are, but that's why we're doing the study."
It's due out in the spring -- around the same time DuPont expects to be in the midst of laying off 10 percent of its employees worldwide.