NEW YORK (Bloomberg) -- DuPont Co. said it will cut about 28 percent of its workforce in its home state of Delaware in early 2016 as the chemical company proceeds with a merger with Michigan's Dow Chemical Co.
“The effect in Delaware will be significant, reflecting the urgent need to restructure our cost base and, as part of that effort, reduce our corporate overhead costs so that we can remain competitive,” DuPont CEO Ed Breen said in a letter to employees. The cuts will affect 1,700 employees out of 6,100 in the state.
It is not clear yet whether the deal will lead to any job cuts or plant closures at the companies' automotive units, though the combined entity expects to save about $3 billion within two years of merging.
DuPont's automotive unit ranks No. 64 on Automotive News' list of the top 100 global suppliers, with an estimated $3 billion in worldwide sales to automakers in 2014. DuPont company provides an array of polymers, chemicals, composites and bio-based fuels for automakers and suppliers. It also produces heat- and chemical-resistant specialty resins.
Dow Automotive ranks No. 72 on the Automotive News list, with $2.8 billion in sales to automakers last year. It provides adhesives, foams and industrial fluids to automakers.
In addition to their direct work with automakers, both companies have deeper impacts on all levels of the supply chain.
The stakes are high for Michigan, too. Dow employs about 6,000 people in the state and is the largest employer and dominant economic force in its hometown of Midland. It has not announced any job-cutting plans since the merger announcement. In May, Dow said it would cut about 3 percent (1,500 to 1,750 positions) of its global workforce as it prepared to break off a significant part of its chlorine operations.
The DuPont job cuts announced Tuesday are part the plan to reduce the workforce of 63,000 by 10 percent and trim costs by $700 million, Dan Turner, a spokesman at the Wilmington, Del.-based company, said in a telephone interview. That strategy was outlined on Dec. 11, the day that the companies disclosed the merger. Dow and DuPont, two historic giants of U.S. industry, will join as equals in an all-stock deal that’s the first step in an effort to create three new businesses.
The jobs cuts are “deeply disappointing, especially to the thousands of Delawareans who helped this company grow and succeed for generations,” Delaware Gov. Jack Markell said in a statement.
DuPont’s Breen said the company was required to notify the state by Dec. 31 on the job cuts. “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,” he said.
After the merger, the specialty products business will remain in Wilmington, Breen said. The new $130 billion DowDuPont plans to combine products from both companies in the areas of agriculture, commodity chemicals and specialty products to create the new businesses.