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DuPont Announces Polyester Enterprise Restructuring

By Virginia S. Borland, New York Correspondent

DuPont, Wilmington, Del., has announced further steps in its multi-part plan to compete more effectively in the global polyester marketplace.

In a recent telephone conference, the company announced actions it will take include curtailment of filament polyester production and the permanent shut down of older, non-competitive sites.

Businesses affected by these actions are DuPont Dacron®, DuPont Polyester Films and DuPont Polyester Resins & Intermediates.

It was also noted that DuPont is reducing polyester filament capacity at its Kingston and Wilmington, N.C., plants by approximately 10 percent and closing fully drawn yarn (FDY) production which has become obsolete, the company said.

The restructuring will result in the elimination of approximately 800 DuPont positions and 600 contractor positions globally, or about 14 percent of the global Polyester Enterprise work force. Approximately 80 percent of the eliminated positions will be in North America.

According to the company, estimated annual cost savings of pre-tax $90 million are expected to begin accruing in the fourth quarter of this year.

DuPont expects to take a second quarter non-recurring charge to earnings of $0.04 per share for employee separation costs. Charges related to asset write-offs are under review, but will likely total an additional $0.02 to $0.04 per share.

According to Harry Parker, vice president and general manager, DuPont Dacron: “The action we are taking is based on what we see in the market going forward. Recent restructuring has resulted in a 30-percent increase in productivity which enables us to compete in the global arena.”

Parker noted that recently announced joint ventures are one aspect of the DuPont Polyester Enterprise new business model. (See “News,” ATI, May 1999.)

In the area of technology, new products and new processes will be short term and developed to fit the needs of businesses.

“We’re looking at the bottom line and how we can be more competitive in the market today,” Parker said.

Craig Binetti, vice president and general manager, DuPont Polyester Resins & Intermediates, said that since 1998, when DuPont acquired ICI, the company has moved on an aggressive product development track, going from acquisition to transformation.

“This is not a sunset business,” Parker said. “It has growth opportunities.” Specialty products and branded products are two growth areas he cited.

Fiberfill, microdeniers and moisture transport are among the specialty products mentioned. Coolmax® is one of the branded products. Recently, DuPont introduced a microdenier Coolmax. (See “Quality Fabric of the Month,” ATI April 1999.)

Specialty and branded products are described as stand-alone products that are wholly DuPont owned, untouched by recent joint ventures.

Research and development strategies will focus on new technologies and raw materials buying for these areas, which are described as global. Joint ventures are considered to be regional in scope.

Another new business model for polyester that was announced recently is DuPont’s development of a partnership with Barmag AG, Germany.

According to the company, this partnership will bring high-speed filament spinning to market. It uses standard polyester polymer, but allows greater 30-percent higher spinning speeds compared to existing technology. Barmag will develop and manufacture the fiber equipment that incorporates the new process.

The Barmag partnership, which differs from joint ventures, deals with fiber technology development. The partnership will commercialize the technology with DuPont's joint venture partners in polyester-the Alpeck/Teijin joint venture in the United States and with Sabanci of Turkey in Europe, the Middle East and Africa.

July 1999