By JIM RUTLEDGE D.C. Correspondent WILMINGTON, Del. — DowDuPont has announced it has shut down and is selling off its two-year-old, $225 million high-tech ethanol plant in Iowa that has proven to be a boon for the local farming community. The move, the company said, is part of a new strategy to streamline the conglomerate ahead of finalizing its $130 billion merger of Dow Chemical and the DuPont Co. – a merger recently announced to take longer than previously promised. Chief Executive Ed Breen announced the plan Nov. 2 as part of an effort to meet its goal of shaving $3 billion in costs, which also includes cutting its global workforce by 5-7 percent on top of the 4,000 positions the company announced last year when the merger became public. Most of the jobs eliminated were divided between the two companies, 1,500 at Dow and 2,500 at DuPont, spread between research and development, and its finance and budget divisions. Breen announced months ago the combined companies were splitting its businesses into three new separate entities; Agriculture (pesticides and seeds from both Dow and DuPont); Material Science (most of the rest of the former Dow, and a few DuPont products) and Specialty Products (including DuPont’s electronics, food additives, construction and military and other businesses, plus a few other Dow units). Because of the shift in businesses, Breen’s new direction has resulted in the closing and selling off divisions. One of the first to go was the Nevada, Iowa, ethanol plant. In 2015, DuPont opened a new type of ethanol processing plant after years of research and spending millions of dollars developing the new technology. The process takes crop residue of cornstalks, leaves and cobs left in the field after harvest (instead of the usual kernels) and converts it into cellulosic ethanol. Environmentalists praised the effort and farmers saw a new source of revenue from cornfields. The plant produced 30 million gallons a year of cellulosic ethanol. Breen said DowDuPont decided to sell the plant because it is “just not going to be core to our future … As part of DowDuPont’s intent to create a leading Specialty Products company, we are making a strategic shift in how we participate in the cellulosic biofuels market,” he said last week. “While we still believe in the future of cellulosic biofuels, we have concluded it is in our long-term interest to find a strategic buyer for our technology including the Nevada biorefinery.” With the plant closing, 190 employees were laid off, with only a skeleton crew staying behind until a new buyer is found. The company is also in the process of shutting down and selling its polyethylene plastics plant in La Porte, Texas and its $500 million Kevlar bulletproof fibers plant in Cooper River, S.C. Breen said the target date of closing the DowDuPont transaction has been pushed to the first quarter of 2019 – six months later than first projected due to the complexity of the merging two multibillion-dollar companies. DowDuPont also announced third-quarter results ending Oct. 31, showing revenue jumped 7.6 percent to $18.3 billion as sales rose 4 percent and average prices climbed 3 percent on an adjusted basis. Pro forma net income of $232 million was down 53 percent from a year ago. Excluding items including $2 billion in restructuring charges, pro forma net income climbed 14 percent to $1.29 billion, or 55 cents a share. Almost all segments reported sales increases except agriculture, which has been weighed down by high pesticide inventories and slow corn seed sales in South America. The board of directors has declared a fourth-quarter dividend of 38 cents a share payable to shareholders of record on Nov. 15. |
