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DuPont plant awaits impact of Dow Chemical merger

DuPont’s Town of Tonawanda plant is waiting to see what effect a proposed mega-merger between DuPont and Dow Chemical, and planned job cuts at DuPont, will have on its local work force.

The combined company, known as DowDupont, would result from an all-stock merger of equals. Once the two are combined, they plan to split into three separate companies.

Separately, Delaware-based DuPont said it plans to cut its global work force of 54,000 employees by about 10 percent, and reduce expenses by more than $700 million.

What those far-reaching, corporate-level decisions will mean locally is not yet clear. DuPont’s Sheridan Drive plant has 533 employees, producing Tedlar, a thin film used in applications like solar panels and aircraft, and Corian, a material used in countertops. Its unionized employees are represented by the United Steelworkers of America.

Companywide, DuPont said it expects its sales growth in 2016 to be “challenging,” citing “global economic conditions in agriculture and emerging markets.”

DuPont said it plans to take a charge of $780 million, consisting of $650 million for employee separation costs, and $130 million for asset-related charges and contract terminations. DuPont said its plan “further simplifies the company’s structure into fewer, larger businesses with integrated functions, leading to sustainable cost reductions, faster decision making and closer connections to end markets.”

Dan Turner, a DuPont spokesman, said the company would not break down the job cuts by business, function or location.

“We are undertaking a selection process on the reductions and that will take some time. However, we will begin implementing the changes immediately, and expect most of these actions to be complete by the end of the first quarter in 2016,” Turner said.

Jim Briggs, an official with Cheektowaga-based Steelworkers District 4, said he did not yet know how the Tonawanda plant’s work force might be affected. But he doesn’t want to see DuPont target hourly employees for cost reductions, saying their work has built up the company to where it is today.

“Whether you’re DuPont or you’re Dow, the workers in the plants you need before or after the merger shouldn’t change,” Briggs said.

Until recently, DuPont had an even larger presence in the Buffalo Niagara region, with a chemical plant in Niagara Falls. That facility, which has about 200 employees, joined a company called Chemours that was spun off by DuPont. Just last week, Chemours said it will close the Niagara Falls plant by the end of 2016.

Briggs said the Steelwokers union continues to work with partners to try to find a buyer for that facility to keep it running.

The DuPont-Dow deal is expected to be completed in the second half of next year. The split into three separate companies is expected to take an additional 18 to 24 months.

For DuPont and Dow, joining together to break into three separate companies later would give them the ability to choose the best products in their research pipeline and shutter the rest, according to a note by Jeffrey Stafford, an analyst with Morningstar.

Job reductions are expected to result from the merger. Dow employs 53,000 people, roughly the same size work force as DuPont’s.

Despite the eventual breakup, the deal would undergo rigorous antitrust scrutiny for all three companies, particularly the agricultural chemicals company.

The two companies would be the second-largest chemical company in terms of revenue after BASF of Germany.

“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” Andrew N. Liveris, Dow’s chairman and chief executive, said in the statement.

Liveris would become executive chairman of the combined company, while Edward D. Breen, the chief executive of DuPont, would become chief executive of DowDuPont. The board of the new company would have 16 directors, evenly divided between current Dow and DuPont directors.

The companies have two of the best-known names in American corporate history. Dow was founded in 1897 as a bleach producer in Michigan. DuPont was founded in 1802 in Delaware by Eleuthere Irenee du Pont, a French political economist who had fled to the United States during the French Revolution.

Bloomberg News contributed to this report. email: