13 January 2004 18:10 [Source: ICIS news]
When the sale of fibres business Invista was announced late last year, chairman and chief executive officer, Chad Holliday, let it be known in no uncertain terms that a lot needed to change if the company was to achieve its growth targets. Specifically, he pointed to the shifting centre of gravity of the company away from the US and western Europe towards markets in China, central and eastern Europe and countries in Latin America like Brazil. The reality for DuPont (and for most other chemical producers for that matter) is that competitive intensity had increased and major customers, even for this increasingly science based company, had shifted away from its traditional heartlands.
The upshot of shifting markets and tougher competition is immediate focus on reduced costs through standardisation and more competitive sourcing. Holiday told financial analysts at the beginning of December 2003 when discussing the Invista sale, for instance, that he was particularly pleased with the DuPont’s sourcing activities and performance in China. The country is becoming not simply a market for products from companies like the US giant but a competitive source of important raw materials.
Management appointments just announced highlight the direction DuPont is taking. At least five new senior management positions have been created and appointments made. Meanwhile, the responsibilities of president of DuPont, Europe, Middle East & Africa, Mathieu Vrijsen, will be focused increasingly on central and eastern Europe. Group vice president – Asia Pacific is a new post as is president greater China. (Significantly, the sourcing and logistics function will now report to the Asia-Pacific head.)
The job of president DuPont India/Pakistan is new as is president DuPont Latin America. DuPont Latin America is a new regional group for the company that includes South America, Central America and Mexico.
These leaders are accountable for overall growth in the regions they represent. Five platforms - electronics & communications; agriculture & nutrition; safety & protection; performance materials; and coatings & colour technologies - underpin the organisational structure. But within that structure emphasis is being put on streamlined functions and standardised systems. The idea is either by platform, region or manufacturing cluster to free up general managers to focus on growth.
DuPont corporate cost control goals are for fixed cost reductions of $250m (Euro195m) this year and $500m in 2005. The company aims to drive variable costs down by as much as $100m this year and $200m in 2005 by cutting the number of product lines, looking closely at its asset base and by re-focusing its ‘six sigma’ quality efforts on projects to lift margins. Coupled with measures to offset the negative impacts arising from the separation of Invista the company is looking for cost improvement totalling $450m this year and $900m next.
DuPont's drive for new growth runs parallel to this tighter focus on cost. It is likely to be achieved by improving the marketing and sales capability across the company as much as by seeking a greater presence in higher growth parts of the world and driving research and development (R&D) harder. A post of chief marketing & sales officer is new and leads the marketing and sales efforts across the businesses worldwide.
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