For the significant local work force, and for area farmers and other customers, this chemical chain reaction calls for swift, substantive review by the government.
State and regional officials must work hard to ensure that the announced $130 billion DuPont and Dow Chemical merger affects the companies' combined New Jersey, Delaware and Pennsylvania work force as little as possible.
The combination of the two chemical giants already has ears buzzing at the Federal Trade Commission, so regulatory approval is not a lock. The FTC showed unusual spine last week by filing a lawsuit against the merger of Staples and Office Max/Office Depot. But objections to retail mergers are usually resolved when the firms agree to divest themselves of some stores. The Dow-DuPont marriage is so much more complex that the agency needs to examine it on several fronts.
In addition to process workers and white collar employees, the merger could affect area farmers if both companies' distinct agricultural products businesses become a single behemoth. This could raise the prices of fertilizer, insecticide and disease-resistant seed products.
The company plans to keep dual headquarters in Wilmington (DuPont) and in Midland, Mich., (Dow). So-called "mergers of equals" rarely mean 50-50, and one region is likely to be dominant. Note that "Dow" comes first in the proposed "Dow-DuPont" name. And, officials say, after the merger, they plan to spin off the new company into three separate businesses: materials science, pesticides and seeds, and specialty products.
This trifecta could mean opportunity for our region, depending on how independent each branch would be. It's never too soon for elected leaders, economic development offices and unions to point out to DuPont and Dow executives how many of these workers already toil at local offices and plants, and how much of a hassle massive relocations can be.
But the fact is, activist shareholders seeking bigger returns pushed this deal. When corporate boards then recommend this kind of merger because it "maximizes shareholder value," the translation is usually "Cut jobs!" Even before the announcement, according to philly.com, DuPont planned to shed 5,400 positions, 10 percent of its worldwide payroll.
It's important for South Jersey politicians to get a handle on what the merger means for the Chemours plant at Deepwater in Pennsville Township. Chemours was spun off from DuPont's performance chemicals division in July. It was already slated to cut 5 percent of its worldwide work force. About 800 people currently work for Chemours, DuPont or their contractors at the Chambers Works site.
South Jersey too often is on the wrong side of corporate downsizing. Sony Music and Sunoco didn't go out of business, but they consolidated operations and shuttered their Gloucester County plants. Ardagh Group idled 290 by closing a Salem City glassmaking plant last year, the only one of its 16 North American facilities to cease operating. This time, officials need to ask "Why us?" -- and find some good solutions -- before Dow-Dupont actually eliminates any more positions.
Send a letter to the editor of South Jersey Times at sjletters@njadvancemedia.com
