DuPont to Cut 2,500 Jobs and 4,000 Contractor Positions

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Researched by Industrial Info Resources (Sugar Land, Texas)--On December 4, DuPont (NYSE:DD) (Wilmington, Delaware) announced plans to restructure the organization in order to reduce capital expenditure and increase cash flow. In a news release discussing the intended restructuring, DuPont stated, "A steep global decline in construction and motor vehicle sales and consumer spending has resulted in declining industrial production, intensified by inventory reductions across most supply chains. These conditions have precipitated a sharp downturn in demand during the fourth quarter." Central to DuPont's restructuring plan is the elimination of about 2,500 jobs, most of which will be in sectors related to construction and automobile-manufacturing in the U.S. and Western Europe. Additionally, about 4,000 contractor positions will be cut by the end of the year.

In a conference call regarding the company's restructuring, Chief Financial Officer Jeffrey Keefer said, ""The restructure actions are primarily targeted to enhance our competitive position in motor vehicle and construction-related businesses but also include repositioning actions relating to underperforming businesses." In regard to the job reductions, Keefer would not comment on which particular sites would be affected.

DuPont President and future CEO Ellen Kullman detailed the company's strategy regarding its workforce. "The first thing we did was to take advantage of the flexibility we've built into our workforce over the past several years," she said. "Our workforce design has been the most critical and highly skilled positions staffed with DuPont employees, and we use contractors for important, but less critical operations, so in a downturn we can retain highly skilled employees by temporarily displacing contractors and then moving them back as operations return to high gear. By the end of December, about 4,000 contractors will have been released from service with more displacements likely to take place in 2009. Of those 4,000, one-third have been replaced with DuPonters, and the remainder will not be backfilled."

The restructuring will result in a pretax charge of approximately $500 million in 4Q08. DuPont estimates that this charge will result in an earnings increase of $130 million in 2009 and $250 million annually thereafter. The restructuring costs will add to the fourth-quarter losses that DuPont is expecting. The company expects a pre-restructuring loss of $.20 to $.30 per share; the restructuring costs will result in an additional charge of $.40 per share, contrasting sharply with the company's previous fourth-quarter guidance, which estimated earnings of $.20 to $.25 per share.

DuPont emphasizes that the current sacrifices are necessary for future success. "In the short term," said Keefer, "our plans will maximize cash and in the long term correctly align resources, new technologies, products and capacity of our business for future market opportunities."

DuPont is certainly keeping an eye to the future. In October, the company broke ground for a first-of-its-kind cellulosic ethanol production facility with partner University of Tennessee. The pilot plant will use switchgrass and other non-food forms of biomass to create ethanol. For additional information, view news articles from October 2008 - DuPont to Research Truly Alternative Fuels at $140 Million Switchgrass Ethanol Plant and "Grassoline" Cellulosic Ethanol Plant Breaks Ground Today in Tennessee. Industrial Info has been covering the project since September 2007. Information on this and other projects can be found in Industrial Info's North American Industrial Database.

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