DuPont will lay off 1,700 workers in Delaware by March. That's the news Tuesday from the chemical giant, in the first wave of effects from a planned merger with Dow Chemical.
It also comes with a promise that at least a third of the combined company's production base will stay in Wilmington -- but some say it might not be enough.
DuPont emailed its Delaware employees about the layoffs on Tuesday, just four days after Christmas.
In that message, CEO Edward Breen notes the timing's not ideal: "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," he writes.
But DuPont is up against a year-end deadline to to tell the state about job cuts.
"The corporate structure that was once here doesn't exist anymore."
Those cuts will be swift and significant, covering a quarter of DuPont's Delaware workforce by March. And they're just some of the thousands more jobs the combined DowDuPont plan to trim next year as part of its merger -- 10 percent of its combined 100,000-person workforce.
Delaware Chamber of Commerce CEO Rich Heffron says it's another death knell for the familiar DuPont of the past 200 years. And they're not the only local company that's undergone change.
"What's happened is that the corporate structure that was once here doesn't exist anymore," Heffron says.
He's not surprised by the layoffs, either, though he wasn't anticipating so many. He expects the jobs will come mostly from DuPont's well-paid corporate sector in Wilmington.
"It's not good," he says. "One of the problems over the years has been -- not just in Delaware, in the economy in general, the U.S. -- we're not replacing high-paying jobs with other high-paying jobs."
That's a concern for state officials like Gov. Jack Markell, who'd been in talks with DuPont from the day the merger was announced to try to keep the company intact in Delaware.
In a statement Tuesday, Markell called the layoffs "deeply disappointing, especially to the thousands of Delawareans who helped this company grow and succeed for generations." He said the state would work to help affected employees as they look for new jobs.
"We're not replacing high-paying jobs with other high-paying jobs."
For now, Rich Heffron says severance packages and the near-retirement age of some laid-off employees means it'll be a while before Delaware feels the full impact of the job cuts.
"But in the long run, it's going to affect the economy of the state," he says.
That kind of dilution has happened for lots of former Delaware companies over the years. Heffron thinks the First State might have wasted time trying to keep names like GE and Chrysler here in the past -- and with DuPont paring down, too, he says it's high time to find their next big business.
"Obviously, you don't have new products without research … so we'll keep an eye on that," he says. "That's an unknown, but I think it's important to the success of U.S. corporations that they continue what we've been known for in the global economy, is developing products."
Wilmington-area state Sen. Greg Lavelle (R-Sharpley) says he hopes some of the laid-off employees can re-enter a modernized state workforce:
"Inserting those 1,700 immensely qualified Delawareans in a knowledge economy, while challenging, also represents a great incentive for entrepreneurship and new growth in our state," he wrote in a statement. He adds that lowering industrial energy rates and improving vocational education programs will help with that goal.
Delaware's Business Roundtable is working with consultants to explore options for new corporate tenants and industries. Their report is due out in the spring.
"We intend to fight hard to prevent future layoffs, and to keep DuPont's agriculture business here."
Meanwhile, DuPont will keep all its Delaware offices open for now, including its experimental research station.
And they say they'll keep some of their biggest brands in Delaware, too, if the post-merger split in three companies takes place. The planned specialty products arm, maker of Tyvek and Kevlar, would stay in Wilmington.
Still, state leaders say the planned agricultural chemicals division is their biggest priority to help keep Delaware's farm-driven economy stable. In a statement, Sen. Tom Carper calls it "absolutely critical that the agriculture business is headquartered here in our state."
Rep. John Carney says he and Delaware's senators are "laser-focused on that goal." He writes, "The delegation and I made clear to DuPont's leadership that we intend to fight hard to prevent future layoffs, and to keep DuPont's agriculture business here."
DuPont will choose a home for that sector and the third one -- material sciences -- in the coming months.
Still, unlike the layoffs, the three-way split isn't a done deal yet; it's tied to the success of the merger. In his statement, Sen. Chris Coons, who sits on the Senate Judiciary Committee, calls the layoffs "heartbreaking" in a statement, and says he plans to scrutinize the merger closely.
Read the full text of DuPont CEO Ed Breen's email to Delaware employees, titled "DuPont's Next Chapter in Delaware," below.
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. Sincerely, Ed Breen
