Tuesday, December 29, 2015

BREAKING: DuPont to cut 1,700 jobs in January

From both C&EN's Alex Tullo and DelawareOnline's Scott Goss (text below is from Scott Goss):
DuPont will eliminate about 1,700 job in Delaware in early 2016, the company announced Tuesday. 
CEO Ed Breen announced the layoffs in a memo sent to DuPont’s roughly 6,100 Delaware employees on Tuesday. 
The job cuts include employees who were told earlier this month that their jobs were being cut, along with several hundred who will received notification in January.
The workers will depart the company by the end of March. 
Breen said he chose to announce the full impact now – before those remaining employees receive a pink slip – because DuPont is required to detail the layoffs in a state filing due by Dec. 31. 
“Especially given that we are in the middle of the holidays, we would have preferred to wait until individual notifications were complete before reporting the full local impact,” Breen wrote in the memo. “… I wanted you to hear the difficult news – directly from me …”
Best wishes to those affected.

UPDATE: From Philly.com's Joseph N. DiStefano, an e-mail from a CR&D scientist (thanks, Anon318p). Mr. DiStefano's annotations are italicized:
We will hear what happens to all of Central Research and Development [CR&D], on January 4th. Three options: 
1. Laid off --  ~80% of CR&D will get this. Of the 250 principal investigators [PIs, with PhDs] plus associate investigators [AIs, with BSci, MSci degrees], about 17 PIs plus 34 AIs will be left.
(But of that 80%, some will stay with DuPont in other jobs, another company source says. That leaves option 2:) 
2. Pulled into a business... (But) the businesses are laying off staff.
(And then there's option 3, for the minority who keep their jobs in the renamed Central R&D unit): 
3. Be part of "Science & Innovation," the new CR&D.  
Five of the seven CR&D managers have been let go. 60% of the patent group in CR&D, IB and other businesses have been cut... 90% of Pioneer (crop seed R&D) was laid off, 200 people -- a week before Christmas -- what a great holiday present!  The other 10% were told to move to Iowa or else they would not have jobs. 
We have been told not to work in our labs. We have been told just to make certain all of our chemicals are labeled (for disposal).  
And we have been told that we have a day to collect our personal belongings and get out [off site permanently by Jan 5th].  
So I am here "working" most of this week  -- removing my personnel effects... Jan 4th (I will) learn my fate... Looking at academic positions, consulting... 
There will be a lot of good people looking for jobs. 
My heart goes out to those folks that are at mid-career and do not have the "cushion" of retirement. 
I found one AI almost crying in the hallway last week.  
It will be terrible to be here on Jan 4th. 
NO ONE would have predicted what is happening now at DuPont just a couple of months ago! 
Ed Breen and Nelson Peltz can take credit for destroying one of  the best industrial research organizations in the world. 
I will agree that there were issues. But you fix things, not destroy them. That is what real leaders do. 
Dupont does a terrible job marketing. It is the interface between marketing and technology development that had been broken. -- So you destroy the technology organization? Not!   
If you have a leaky roof -- do you burn down the house? 
It is just so surreal!!
Holy cow.  

53 comments:

  1. Wonderful welcome back from your holiday vacation present!

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  2. I know it's just a stock photo that's used on all communications from Breen, but the big smiling face on the employee communication seems a little insensitive and out of touch.

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    1. Bob, in November 2014 Dupont issued an email to employees regarding the four fatalities at Laporte, TX. In that communication the standard stock photo of a smiling Ellen Kullman was replaced with one of her frowning and looking sad. I about wanted to puke. Communications from upper management should just come with no friggin picture at all, their attempt at intimacy or whatever they are trying to pull is "insensitive and out of touch" regardless of the circumstance.

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    2. Oh I don't disagree with this at all. A frowning face would be equally bad. Especially in situations like this no picture is the way to go.

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  3. Is there anyway we can tell if management plans to outsource R and D to CRO's in China and India or should I assume that this is the case?

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  4. I wonder how many scientist positions are being eliminated in this first crop.

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  5. I am not the anonymous scientist in this post, but I am a CR&D scientist and can confirm the content: http://mobile.philly.com/beta?wss=/philly/blogs/inq-phillydeals&id=363736541

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    1. I am the Philadelphia Inquirer reporter who posted that item at Philly.com. Please send me any additional detail at JoeD@phillynews.com thanks. Confidentiality respected.

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  6. Dupont has committed suicide (assisted suicide). I hope the stockholders are happy. They might as well burn their stock now.

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  7. You left out this commentary from DiStefano:

    "DuPont earned $3.5 billion in profits on $35 billion in sales last year, but the company has been pressed by investors, led by hedge fund manager Nelson Peltz, to cut overhead and boost productivity."

    No matter how profitable a business is, greedy investors who understand nothing about the inner workings will always want more. Kill the goose that lays the golden eggs for a quick buck. That's what this is about, better profits in 2016 and 2017, and it's a pretty reliable way to accomplish that. 2027? These guys will have sold their shares by then, so they don't care.

    Maybe I'm naive, but is there no way for a company to buy out its investors until the majority stake is its own? I know corporations can be part publicly held, but do they have to start off that way? There has to be a way for a business that relies on R&D to create long term value to insulate itself from shenanigans like this.

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    1. The irony is that this won't boost productivity, but decrease it.

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    2. Cutting overhead will boost profitability (for a short time), and that's what Peltz and his ilk really want.

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    3. "but is there no way for a company to buy out its investors until the majority stake is its own?"

      No problem, it just needs to find the capital to buy 51% of the shares. Also nothing stopping the employees from stepping in to buy a majority of the company and "run it the way should be run"....Good luck organizing a bunch of scientists, each of whom knows "how the company should be run" to do that....

      Don't hate on the majority of investors expecting q/q returns on their 401K/IRA. Mutual funds and ETFs sell what people what to buy, and most people what more money faster. Long run investing is fine, but most people don't what it exactly for how it was defined by JM Keynes.

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    4. bt, I'm not really convinced that's true. The gains from this will accrue to Peltz et al., not some schmoe (like me) holding the S&P 500, asking for 5% + dividends y/y.

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    5. I reserve the right to hate on anyone I want. Anyone who thinks quarter to quarter is a fool, but unfortunately telling a story that fools will believe is a very important job for publicly held companies - called investor relations.

      Short term investing adds no value to society. It's a shame that our retirement accounts rely on it in the first place. It's one thing to put up money so a company with good ideas can get off the ground and return the capital some years down the line. It's completely another to make a living speculating on the work of much more creative people than yourself.

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    6. BT: "Have You No Sense of Decency?" :)

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    7. "The gains from this will accrue to Peltz et al., not some schmoe (like me) holding the S&P 500, asking for 5% + dividends y/y"

      Some of the gains will accrue to you as DD is part of the S&P. While it's kind and patient (and likely even wise) of you to only seek a modest return over a long period of time, that's not why Vanguard etc. send out colourful statements every month with pretty graphs.

      I'm not sure what the 'long term' is: is it 5 years? 10? 200? Overall I think investors taking management to task to keep their operations as profitable as possible is a good thing, both for the investors who make money and the workers who keep getting paid. ONe can decry "short term investors" as much as you like but they have to keep making gains for many years if they want to keep getting paid. After awhile, enough short terms has to be become the 'long term".

      "It's one thing to put up money so a company with good ideas can get off the ground and return the capital some years down the line. It's completely another to make a living speculating on the work of much more creative people than yourself."

      And the difference is what? In both cases one is gauging the possibility of success of a given asset. I assume the difference is the nebulous distinction between 'long term' and 'short term'? For me, as a rule of thumb, if I misjudge a trade it then becomes an "investment"....reality is there is no difference: every trade is binary, with an entrance and an exit.

      "Have You No Sense of Decency?"

      I'm kind to dogs and children like me, but if I give someone my $ I want them to give me more back and I get really mad if they piss it away with stupid expenditures and dumb projects (that's why shorting btechs is sooooo good).

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    8. It seems to me "the long term" is measured in tens of years. I won't need this money (God willin') for 30 more years. Of course, other people holding DDP may want their money sooner, i.e. Peltz et al.

      Also, Vanguard sends out quarterly statements and the graphs aren't very interesting.

      I see a lot of future value (shareholder and societal) being destroyed by this move. Perhaps we should set up another bet, like our S&P one.

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    9. If you knew what research would work (in this case, meaning "generate salable and profitable products") ahead of time, then 1) it wouldn't be called "research" (probably it'd be called "obvious") and 2) someone would have done it already and would be showing you whether it makes money or not. If R+D isn't making money, then it may be making the wrong choices, but unless you can develop products without doing it all, complaining that R+D is a cost center and cutting it without any idea what's wrong (what bad decisions it's making, and why it does so) is stupid if you want the company to improve.

      It would also be nice to evaluate acquisitions - the other way of achieving R+D's part in the company - on the same basis. If you keep making bad acquisitions to get products and fail (*cough*pharma*cough*), why do you keep getting money to do more of it?

      Companies are supposed to make money by doing or making useful things (the role of an economic system in society is distribute goods efficiently, not its own aggrandizement, just as bureaucracies are there to support a mission, not themselves) - once they stop doing useful things to make more money as their sole mission, they aren't any better and serve no more purpose than any other kleptocratic institution. (Their job becomes to move money around, at best to be a middleman between entities that do useful things, and at worst trying to prevent other people from doing useful things or buying them or to interfere in such.)

      I don't know enough to know if this is the logical end of capitalism, the consequence of bad designed government interacting with the economy, or the "droit de seigneur" of the very rich in the current system, but spinning the gold from 200 years of work into straw seems like a good way to get streets running hip deep in blood (the usual product of revolution). If you have a reasonable and useful system, this seems like a bad way to maintain it (but consistent with lots of other things we're doing, alas).

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    10. "Perhaps we should set up another bet, like our S&P one"

      Name your terms. Perhaps over under on X market cap (+y dividends paid out) on combined entities on Z date?

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    11. The old version of stock ownership (for peons and non-peons) seemed to be "We want to get the money you make from the work you do." - sort of like having an employee. The more recent version (for non-peons) seems to be "We bought you. I've got buyers for both kidneys, the liver, the heart, and at least one lung and cornea. Hope you don't mind." The peons, of course, get what's left, assuming they can find buyers for the remaining body parts before the body rots (or have the technology to make zombies).

      I guess owning stock as a peon (or being employed by a company who has outstanding stock) is like the modern version of "We get the mine, and you get the shaft."

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    12. "We bought you. I've got buyers for both kidneys, the liver, the heart, and at least one lung and cornea. Hope you don't mind."

      This is not too far from the truth, though a successful investor will take the profits for the whole intact entity if these are likely to be higher. And yes, there is some research that gets done that is just stupid---THLD wasting tens of millions of dollars and years on its pointless TH302 is a recent example.

      To be c

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    13. "THLD wasting tens of millions of dollars and years on its pointless TH302" Easy to say in retrospect, now that the drug failed, lots of risk there, Gordon. Shorting is easy when most of the companies will fail, but certainly not due to any lack of creativity on their part, and certainly no help from you.

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    14. "Easy to say in retrospect" Was pretty easy, and profitable, to say prospectively as well....the science just made no sense.

      Ditto for ONTY, VICL, HEPH, SNSS, ZIOP (back when they were wasting time on palifosfamide) and sooooo many others. Companies can be as creative as they like in their research, but when they propagate foolish errors in science to continue getting a paycheck, well, I'm happy to take their money. Big companies do this too: BMY blew 2.5B on INHX for < 6 months on a drug that was clearly flawed (I was short INHX before it got bought, but luckily covered.....) and LLY is wasting hundreds of millions on an antibody that doesn't do anything for Alzheimer's.

      Shorting stocks helps keep companies honest. A company management whining about short sellers invariable has something to hide (think Enron, Valeant---though note I'm currently long VRX from after october crash). My favorite take on this is: http://www.forbes.com/sites/davidsable/2015/07/06/no-crying-in-biotech-managing-short-sellers-from-strength/ Good companies don't need to worry about short sellers (except when rule 10b-21, which is just illegal).

      To be clear, there are many biotechs doing great work but, again, the science tends to make sense prospectively as well (NBIX, RLYP)

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    15. Shorting (not naked shorting) is a lovely way to make money out of other people's stupidity or dishonesty. In biotech, though, there seems to be an inexhaustable supply of both stupidity and dishonesty.

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    16. "I'm kind to dogs and children like me, but if I give someone my $ I want them to give me more back and I get really mad if they piss it away with stupid expenditures and dumb projects (that's why shorting btechs is sooooo good)."

      Any fool can burn down a barn. Shorting biotechs is easy because success rates are low, period. If you're picking losers, you're going to be right 90% of the time.

      Picking the winners is another story entirely, and that's the job of the people inside each of these companies. There are many ways to make a living, and only one of these ways brings benefit to society as a whole.

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    17. I should add, Hap is right that there is no shortage of stupidity and dishonesty in the face of low biotech success rates (call it "irrational exuberance") which is what makes shorting biotechs possible. Without someone willing to take the long side of the deal, there would be no market.

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    18. Having worked for Dow in the 1980s and DuPont in the 1990s, here is my perspective:
      There is the sentiment out there that most R & D is wasteful, which is why it must be cut, cut, cut, especially during spasms of ‘rightsizing’. However, in the business units that I worked in at both companies, this couldn’t be further from the truth. At Dow, in the Designed Latex and Resins lab, 90% of the research was either developing new lines of products, supporting existing lines, modifying an existing product at a customer’s request, responding to customer complaints, or supporting the manufacturing sites. The other 10% was doing more long term research on these polymers, but even that was applied.
      In the DuPont business unit I worked in, it was a similar breakdown of effort, but with more time and money spent on developing new product lines, in response to environmental regulations and to customer needs. In both labs, there was constant communication by the research staff with the marketing folks, the sales staff, patent lawyers, the pilot plant and the manufacturing sites. How can this be considered a waste of money?
      Which brings me to another group that is not being taken into account, and that is the customers of both DuPont and Dow. These companies need to have suppliers that can respond to their needs, both present and future, and on a reliable basis. A lot of that response comes from the R & D folks, the ones who actually develop products and support the customers who buy them. Having fewer R & D staff, or staff who don’t know who they will be working for, or even where they will be working, is not a recipe for customer satisfaction.
      The only entities that will benefit from this merger are the competitors of Dow and DuPont. They’ll have two fewer companies to worry about.

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    19. Well, there are stupid companies like Sirtis(and Glaxo who bought them); however, at the small Biotech I was at for about 6 months before I lost my job I thought the idea was pretty good. We simply could not solve all the problems that needed to be solved before the VC funding ran out.

      I would imagine a lot of drug development fails not because of stupidity and dishonesty, but because of unimaginable problems that appear later only after rigorous human trials are done. Biology is complicated.

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    20. No, I wasn't assuming that all small companies fail because they are evil or stupid, because big companies fail, too, for lots of reasons (many of which fit under "Biology is hard."). Shorting companies that don't appear to be trying honestly, though, at least might help to drive the money to better ones. If that's all that will be left to make drugs, then that would seem to be good.

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  8. This is sad and sickening. What is worse is that those laid off will find a really tough market out there in all areas. Best of luck to everyone!

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  9. More than current employees are likely to be hurt by this.

    I worked for Dupont for 14 years before getting laid off a number of years ago... In another 5 years I am supposed to start collecting small pension for the rest of my life that I was counting on and need ... Now I suspect that won't be the case, despite a CURRENTLY well funded pension fund.

    I never thought I would have to worry about it because I thought Dupont would always be there...

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  10. It's going to be interesting to see what happens at Dow when it joins with DuPont. There are no hints of this yet, but we can't be spared, either, especially those of us in Core R&D.

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  11. Song fragment - Sympathy for the Financier
    (apologies to Mick and Keith)

    I hung around Wilmington
    When I thought it was time a change
    Killed CR&D and hopes and dreams
    Lots of PIs screamed in vain

    Pleased to meet you, hope you know my name
    (It's Nelson Peltz, it's Nelson Peltz )
    And making money is
    The nature of my game

    So if you see me, increase productivity
    And cut costs with all haste
    Cause if I don't get a big ROI
    I'll lay your company to waste

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    1. As a PI in Dupont CR&D the song from that era that I can't get out of my head is "The End" by The Doors. When I'm really depressed it's the Nico cover.

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  12. Working at a well-known publicly traded company comes with prestige. The trade-off is risk.

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    1. I thought the risk was in working for a start-up, but if your worked for Dupont, Dow, or BASF and were competent, you were set? Some people only get the chemistry PhD because they want to mitigate the risk and work at a good job for a long time and move to a start-up once they get 10-15 years behind them if they felt like taking a risk. What's the point of living far away from your family for PhD and postdoc then, especially since those are risky, as if you don't get good papers, Dupont or Dow will not be willing to invite you for an interview.

      Now being an organometallic or polymer chemist in the USA is looking not at all that attractive. Better to have done a PhD in something more relevant to the computer industry. You're going to be moving from one crappy flyover state to another every five years and changing your kids' schools, worrying about medical insurance and reset salaries, until the industry implodes and all survivors end up in Boston, like you're some kind of medicinal chemist pauper*? I really don't know what to say to incoming students now, except that maybe if you want a good future your best bet is to do the PhD outside the country so that you are more employable (maybe learn another language) and try to be German so that you can get a job with BASF? I wouldn't bother with Dow if I was European either, despite their big research center in the Netherlands. Too risky. And you can't really tell them to shoot for an academic career as even if you are one of the best you often don't make it due to circumstances beyond your control.

      *joking

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    2. Good papers? I recall that one guy at Dow had a paper published that clearly had data problems. Photo-shopped if I remember correctly.

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    3. Best bet might be to do PhD at Cal Tech, which is short for the Calcutta Institute of Technology since everyone seems to be big on bringing in scientists from outside.

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    4. I think we've learned all we can out of the Rodriguez affair by now (including that if you're a journal editor who spends too much time on blogs, you get replaced). And he did have good papers when he was hired, plus came from a group known for turning out good industry scientists. I think I was the only one who closely looked through the NMRs there and put the evidence for what I thought were problems on the blog, which was later picked up by the Organometallics editor and resulted in a 'correction' with new spectra. It wasn't obvious if you were taking a quick look through the SI.

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    5. Anonymous 12:45 - No need for Cal Tech. The Mahatma Bamba Technological University of Management and Society will do. I heard their Master's of Quantum Electronic Media for Synthetic Chemistry is a really good program.

      Of course, if you are looking for a "best buy," I'd recommend Grand Cayman Islands University, Community Campus. Their unlicensed pharmacy technician program is second to none.

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  13. One of the latest hires of Dow has only 3 (three) papers.

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    1. Well, that could be bad, good, or anywhere in between, depending on the quality of papers, length of time to get those papers, and number of authors. If it were the right fit, I'd hire someone with 3 good first author papers in a 5-6 year span over someone who was third author on a lot more than that. Back when I was in industry, excellent scientist + good fit with the team was way more important than number of papers. In fact, I can't remember ever discussing # of publications during hiring, although we definately vetted people pretty intensively for quality of research and recommendations from advisors and peers.

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    2. "Good fit with the team". This is a good way to keep overachievers out and bring friends in who are nice to drink with but won't be innovative.

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    3. In industry, its all about likability....and brown nosing the right people.

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    4. If your three papers are a Jackass, Andjewandte and a Chemical Misscommunication or really good Organometallics then that's alright. I'd also be worried about fit actually. Heyzeus. You often enough get these passive aggressive and narcissistic types in academia who come in and ruin the will of all the other lab members to come to the lab and do work.

      Usually they are called the professor. Owwww.... snap! Damn, I took away the joke of the next commenter below me. No seriously, a lot of it has to do with people being in their 20s in a high-stress environment and emotionally immature. They often stop being jerks when they actually get a good job, get married, stop reading Nietzsche, etc...

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    5. "In industry, its all about likability....and brown nosing the right people."

      Yup, that's a lot of it. So, how is that different from academe OR ANY OTHER INDUSTRY?

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    6. @uncle sam- No Organometallics "joke"? How about "Negrometallics" to go with all your "Jew"-stuff?

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    7. Another faux outrage specialist who can't speak German so doesn't get the joke of substituting the 'g' with 'dj' And then makes up an offensive racist name for Organometallics in their retort. In truth, I consider Organometallics a very good journal in the field where half the papers are top class and not a glamour mag like the others; that's why I don't really make fun of it. Of course, I'd rather publish in the others...

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    8. Jokes are things that make people laugh. Ever heard one?January 7, 2016 at 7:20 PM

      Speaking German as an excuse to work the word "Jew" into everything? Njewow ijew've hjeweard everyjew.

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    9. The other thing about living in the US sucking these days, besides Dupont laying off research scientists and Dow planning to do so, is the bullshit political correctness culture where someone who doesn't know Greek, Latin, German, (or even English to a good degree) is upset over non-issues and then starts twitter mobs. As in this case with Harvard:

      thefederalist.com/2015/12/10/4-things-dropping-master-tells-us-about-harvard-university/

      I mean, they even got to the rap artists. The last people you would think would fall victim to this, but PC on steroids is a powerful thing. Now we always have to say 'bling' instead of 'j*welry' because of these idiots.

      Yeah... it's going to be a while before I come back to the States for longer than a couple weeks a year.

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    10. I think this particular thread has reached the end of its usefulness.

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  14. If only more people had chemistry degrees these layoffs would not have happened. Clearly Dupont management couldn't find people with necessary skills for todays economy, so they had to lay off many. If more people had chemistry degrees, then their skill sets would have saved everyone. Every STEM degree creates more jobs. The huge skills gap forced management to cut jobs. Must bring in more labor from outside to stop the layoffs. Only their skills can save us now. If only Peltz had more time he could go roll up his sleaves and go into the lab to get the necessary breakthroughs required for innovative products.

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