BUSINESS INSIGHTS
Company Of The Year A bold new transformation makes DUPONT this year’s choice ALEXANDER H. TULLO, C&EN NORTHEAST NEWS BUREAU
NEARLY EVERY MAJOR chemical company has at one time or
most conspicuous purchase was the seeds and plant genetics firm another ditched a commodity business in favor of value-added maPioneer Hi-Bred, a cornerstone of DuPont today. The period also terials. Right now, Dow Chemical and Ashland have such programs saw the company’s exit from the nylon fibers business. under way. But it is the boldness of DuPont’s decision to spin off its Holliday’s successor, Ellen J. Kullman, is furthering the stratperformance chemicals division into a new company that makes it egy. She spearheaded the $6.6 billion purchase of Danisco in 2011, C&EN’s choice for the 2013 Company of the Year. which plunged DuPont into food ingredients. If you want to make It is difficult to imagine DuPont without Teflon, or Teflon with“industrial bread” with an “artisan look,” DuPont is now the name out DuPont. But we’ll need to make that adjustment after DuPont, you flip the Rolodex to. Probiotics are also a big thrust of DuPont’s sometime in 2015, consummates the spin-off. food ingredients business. Kullman sees a future in mass-produced In doing so, DuPont will midwife one of the largest chemical foods that are healthy for consumers. companies in the U.S. By itself, the performance chemicals division DuPont has conducted other sales under Kullman. Early last racked up $7.2 billion in sales in 2012, year, the company sold off its automore than firms such as Albemarle motive coatings business to the CarREINVENTION DuPont’s makeup has and Celanese did that year. lyle Group for $4.9 billion. undergone major changes in the past decade. The largest performance chemicals business is titanium dioxide, which HOWEVER, unlike the coatings busiElectronic & Comunication generated nearly half of the division’s ness, the performance chemicals Technologies Safety & 2012 sales. The business is the world’s division generates a lot of cash. It 10% Protection 13% largest producer of the white pigment, has been DuPont’s most profitable Textiles & commanding a 20% market share, acbusiness for the past three years. The Interiors 23% Agriculture & cording to the research group TZMI. spin-off will come at a cost. Nutrition DuPont’s fluorochemicals and But the company isn’t leaving the 17% Coatings & Color fluoropolymers businesses, including business for financial reasons. The Performance Technologies Suva refrigerants and the Teflon brand division’s results are volatile, which Materials 19% 18% of polytetrafluoroethylene, represent distracts DuPont’s management and Sales in 2002 = $26.7 billion another 33% of sales. Many other busipigeonholes the firm to the investing nesses in the segment—such Nafion public as a cyclical chemicals maker. Electronics & Industrial ion-exchange membranes and sodium To pursue science, Kullman says, Communications Biosciences 8% 3% and lithium metals—have strong posiDuPont needs to shed chemicals. Last tions in niche markets. fall, she told C&EN that when DuPont Nutrition & Health Agriculture Most of the performance chemicals managers evaluate businesses they 10% 30% businesses have been with the comask themselves, “How can science Safety & pany for generations. DuPont got into make the difference?” And although Protection 11% the TiO2 business in 1931. Teflon was chemists such as Plunkett made a Performance Chemicals Performance one of the chemical industry’s great world of difference a half-century ago, (unit to be sold) Materials serendipitous discoveries: DuPont sciin Kullman’s estimation there is little 20% 18% entist Roy J. Plunkett found it as a resithat science can still do to improve Sales in 2012 = $35.2 billion due in a metal cylinder after reacting the performance chemicals division. tetrafluoroethylene under pressure. The part of DuPont that Kullman But longevity does not make a business too sacred to dispose wants to keep is building a plant in Iowa that turns corncobs into of, especially at DuPont, where the culture of reinvention has been ethanol. That’s science solving today’s problems. around longer than Teflon. DuPont, after all, was founded as an Many analysts approve of the spin-off. “The parallel that comes explosives company in 1802. Explosives were DuPont’s bread and to mind is the separation of Solutia from Monsanto in the late butter for more than a century, until professional R&D conducted 1990s, which turned out to be highly rewarding for Monsanto by chemists like Plunkett, Wallace H. Carothers, and Julian W. Hill shareholders,” Citi Research stock analyst P. J. Juvekar wrote to ushered the world into the polymer age. clients after the spin-off announcement. If Kullman can manage to In fact, the spin-off is tame compared with some of the other achieve similar results without the profits from the performance twists and turns of DuPont’s history. For instance, DuPont was a chemicals division, the move will go down in DuPont’s future hismajor General Motor investor for decades. And DuPont owned the tory as yet another successful reinvention. oil firm Conoco from 1981 until 1999. Charles O. (Chad) Holliday Jr., DuPont’s chief executive officer Views expressed on this page are those of the author and not when it divested Conoco, led the company into life sciences. His necessarily those of ACS. CEN.ACS.ORG
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JANUARY 13, 2014
