02 December 2003 16:18 [Source: ICIS news]
DuPont has been working on this for 20 months but is getting to the stage now where it can pinpoint which costs Koch will assume as it takes control of Invista. As a smaller science-based chemicals giant DuPont will then be able to refocus in a way not seen in the past decade.
The result will be sharp cutbacks in business unit and personnel numbers, a clustering around common technologies and a sharper focus on sales and marketing as well as manufacturing. There are some new ways of doing things that DuPont wants to adopt. And the company realises that it has to grow much more strongly in rapidly advancing markets in Asia (China and India to be specific), Eastern Europe and Brazil.
Linking all this back to the strong research and development (R&D) pipeline will be a real challenge. “We can do more to get the razor thin technology improvements and service improvements that our customers want,” chief executive, Chad Holliday, said on 1 December. This will be a major goal of the expected improvements.
DuPont is a changed and changing company focused much more post-Invista on its science base and on its brands. And the course being set now will make the company very much a materials and technology supplier to the world.
Holliday talks of DuPont centre of gravity shifting with the customer base. Certainly, the company is taking action now to address key issues like structurally higher natural gas costs in North America and the rapid (faster than most appreciate) move of key manufacturing markets to places like China and India. DuPont cannot but play the game and make more of an effort to operate cost effectively in low-cost countries to capture growth.
At the same time it can be expected to apply smart manufacturing and operational techniques across the board but specifically in North America and Western Europe. Its plants will be streamlined and capacity focused to improve variable margins. Support functions will be clustered more directly around the company’s major technology platforms.
It is not yet known what the impact on jobs will be but this is a big $900m (Euro750m) cost saving exercise. DuPont has outlined its 6% a year top line growth target before but confirmed on 1 December that it expects that to be driven by above average market share capture, 1% from acquisitions and 2% to 3% from new products.
Financial analysts and others are particularly keen now to see some metric by which they can assess the potential impact of the DuPont research and development (R&D) pipeline on the business. This is work in progress at the company which, Holliday says, will make public a commercial tracking indicator by major categories early next year.
DuPont is taking the opportunity offered by the Invista separation to change a lot but it will be fascinating to see how the company handles this big step change of linking research more effectively to the market place. It will mean a lot to a company that has moved away from commodities and slimmed down from the $40bn (Euro33.4bn) enterprise it once was to one with a turnover a little more than half this amount.
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