DowDuPont reported higher sales and profits in most of its businesses, except agriculture, as the temporary manufacturing giant created in August by the merger of Dow Chemical and the DuPont Co posted its first quarterly earnings Thursday.
The company says it has advanced its plans for $3 billion in savings from a new round of cost cuts. It announced the closing its cellulosic ethanol plant in the town of Nevada, Iowa, and reiterated plans to stop production at its fibers complex in Cooper River, S.C., and at a chemical complex in LaPorte, Texas.
Cuts will include "global workforce reductions, buildings and facilities consolidations and select asset shutdowns," as well as leveraging the combined businesses' procurement power to push supplier prices lower.
The company did not say how many current workers could lose their positions. CEO Edward Breen said the company also expected to boost sales, add new products and combine sales efforts, creating growth that will in time add jobs.
The cuts will be divided among the three companies DowDuPont plans to spin out over the next two years this way: Agriculture (pesticides and seeds from both Dow and DuPont) will save $1 billion; Materials Science (most of the rest of the former Dow, and a few DuPont product lines), $1 billion; Specialty Products (including DuPont's electronics, food additives, construction and military, and other businesses, plus complementary former Dow units), $800 million.
DowDuPont also says it expects to boost sales by $1 billion by combining products from its predecessor companies and selling more aggressively.
For example, "Packaging & Specialty Plastics has begun the process of integrating DuPont's resins and ethylene copolymers portfolio to deliver high performance packaging solutions. Electronics & Imaging has identified opportunities to leverage its deeper channel access and broader suite of materials (OLED films, laminates, semiconductor materials) with its customers," the company said in its statement.
UPDATE: DuPont spokesman Daniel Turner adds: "Creating three strong independent growth companies requires that we integrate our operations and create streamlined, efficient, built-for-purpose organizations. Through this integration and greater focus we are capturing the synergies we previously communicated, primarily through procurement efficiencies, buildings and facilities consolidations, select asset shutdowns, and global workforce reductions.
"It's important to note that the actions we are undertaking to deliver on cost synergies – procurement, buildings and facilities consolidations, asset shutdowns and other activities – collectively are a larger source of savings than global workforce reductions.
"Restructuring will occur over a few years and will include natural attrition.
"While there will be near term site consolidation and job impacts as we integrate our operations, we will also expand facilities and add jobs aligned with each division's business strategy. We are already delivering revenue growth that contributes to this type of expansion.
"We are building three global leaders and we expect each one to be a major contributor to its local communities with a vibrant global presence and significant level of employment over time.