DuPont de Nemours Inc. (DuPont) has a legacy that goes back to the 1800s. It is one of the oldest companies in the United States, which does not come without some forethought. Lately, it seems DuPont has its eyes on the future. The company purchased Rogers Corporation, an electronics-materials company and is planning the sale or divestiture of its mobility and materials segment. Clearly, DuPont is posturing itself for the next generation of growth.
Additionally, DuPont is divesting a signification portion of its underperforming segments, realigning its reporting into three operating segments, which include mobility and materials to replace transportation and industrial; electronics and industrial, which will become electronics and imaging; and safety and construction becoming water and protection. Its nutrition and bioscience segment has been spun off into a separate operating entity in 2021.
Moreover, DuPont plans to sell its thermoplastics and other materials business, moving away from stagnating and possibly publicly unpopular manufacturing operations. The company’s move into high growth manufacturing, such as electronic vehicles and 5G communications technology, demonstrates a willingness to get with the times.
Pivot to win it
Undeniably, the COVID-19 (coronavirus) pandemic has caused companies to either adapt or experience extinction. It is not just titans of industry such as DuPont in the Manufacturing sector, but other companies such as Zillow Group Inc. (Zillow) in the Real Estate sector too. However, Zillow’s apparent failure in the automated home flipping business illustrates challenges posed to DuPont, despite the businesses being wholeheartedly different.
Zillow announced it would be halting its automated home buying business, primarily due to supply chain constraints. Furthermore, according to DuPont, these very same constraints are motivating the company to move away from stagnating materials manufacturing and into high growth segments such as electronic vehicles and 5G communications.
Make no mistake, DuPont expects supply chain issues to persist until at least 2022. Yet, rather than be at the mercy of the market, DuPont is aiming to sell or divest the operating segment most afflicted by the supply chain slowdown, which is materials and mobility. Namely, the segment has demonstrated marked weakness as order of materials supplied to automakers have declined amid the global semiconductor and microchip shortage.
However, the company is also aiming to bolster its own semiconductor production support via the realignment of the electronics and industrial operating segment. The dedication of manufacturing capacity towards semiconductor and semiconductor machine production should help insulate the company from price swings and availability of semiconductors.
The time is now
It seems that rather than wait for conditions to improve, DuPont is ready and willing to respond to the market challenges of the post-pandemic world and seize growth by the horns. Or, perhaps more appropriate, Dupont is ready to seize the electric car by the battery and respond to the adversity of the market today with plans of growth for tomorrow.
