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Joe Chang on Dow-DuPont & American Innovation Jobs
Posted on December 11th, 2015 by Christina Valimaki in Chemical R&D
I called up Joe Chang of ICIS News today for a chat on the idea of a Dow DuPont Merger, and here’s what he had to say.
CV: What does such a merger say about the American Chemical Industry’s competitiveness today?
JC: The fact that two companies of this size would merge, and then potentially split into three, says that the macroeconomic environment is tough overall right now – we are just in a slower growth environment. Companies are finding it more difficult to grow, they are looking for the revenue and cost synergies that could materialize from a deal like this.
CV: What is the likelihood that there could be revenue dis-synergies, since the two giants are customers of each other’s in some business lines?
JC: Dow is so much more concentrated on the commodities side than DuPont, but on the performance side, they share major end markets in automotive, infrastructure and consumer products that provide opportunities for synergies. Yet the execution risk in such a large merger is significant, from integrating cultures and processes. The biggest advantage here could be cutting out portions of the corporate structure and attaining cost reductions that way.
CV: When we talk about cost reductions as a rationale for the merger, what should the innovation talent, the R&D chemists and chemical engineers in these mega players of American manufacturing, be thinking about their career trajectories in chemical product innovation?
JC: Chemical companies, these two in particular, are research driven. They both have such a heavy focus on innovation. They are both highly invested in innovation as a strategy, but also the process of R&D. Then with a merger, it becomes a question of meshing those two highly cultivated R&D processes, merging the cultures. Can that work? Innovation investment will continue, and they could deal with the R&D integration by breaking out the R&D functions around the Agriculture, Commodity chemicals, and Specialty Chemicals business lines.
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