WILMINGTON, Del. -- DuPont's Jerald Blumberg is getting down to business.
After spending the better part of last year involved in the restructuring and reorganizing of DuPont's $6.2 billion fibers business, Blumberg, the senior vice president who oversees that segment, said the company is set to reestablish itself as the leading player in the highly competitive global fibers game.
"Quite honestly, 1993 was a less than stellar year for our business," said Blumberg in a recent interview at his office here. "But we've got a lot of good people in all three segments -- nylon, Dacron polyester and Lycra spandex -- so I think the moves that took place last year have helped us become more flexible and will allow us to compete more favorably."
Blumberg identified the key items on his agenda:
Improving partnerships with DuPont's customers.
Getting the company's nylon and Dacron businesses moving in a positive direction -- both domestically and abroad.
Building its Lycra business, which has been hit hard by the sagging European economy.
And, perhaps most important, creating a positive atmosphere among the 29,000 employees under his leadership.
As reported, DuPont's fibers business last year saw after-tax operating profits before non-recurring charges slide 11.1 percent, to $425 million from $478 million. After various restructuring charges, the fibers net was $169 million against $409 million in 1992. The most recent year included a third-quarter writedown of $266 million for asset writedowns, employee separation costs, facility shutdowns and other moves. Fiber sales for the year increased 1.9 percent, from $6.07 billion to $6.2 billion.
Analysts who follow DuPont said the company's future -- in the wake of the moves -- looks bright. They believe DuPont's cost-cutting will translate into a more efficient, more profitable fiber entity.
"They've done the things they had to do, so for 1994, my outlook is for fiber profits to be up modestly, to top at about $500 million," said Avi Nash, an analyst at Goldman Sachs. "I expect profits in Lycra to stabilize, partly because of increased worldwide demand, and also [because] there no longer is the year-over-year negative currency situation in Europe."Still, industrial nylon remains tough and polyester margins -- primarily due to the increased cost of raw materials -- will come down," added Nash. "In the meantime, capacity additions by DuPont's competitors are bound to increase competitive pressures."
"With the price of cotton going up, that will help the demand for polyester," added Ed Johnson, director of the Johnson Redbook Service. "While I don't have an exact handle on it yet, we feel DuPont's fibers business is bound to improve this year."
Blumberg, 54, who has been with DuPont for 33 years, took over the company's fibers business in January 1992, after two years as vice president of human resources.
Further detailing his goals and progress so far, Blumberg noted that the company took a major step toward improving responsiveness to customers last June. That was when DuPont combined all of its fibers operations into one business unit.
Previously, the fibers operations -- most notably nylon, which makes up about $4.2 billion in fiber sales -- were split among three units. Blumberg now oversees nylon intermediates, textile nylon, industrial fibers including nylon, and applications of Dacron and Lycra, as well as flooring systems.
"While we are not yet as market responsive as I'd like us to be, we will be more effective having nylon, Lycra and Dacron under one roof," Blumberg said. "Internally, we are in the midst of tweaking the organization and looking at other ways to get more responsive to the customer.
"It used to be that we would convince the market that it ought to like our products," Blumberg added. "What we are trying to do now is work with customers, and find how we can satisfy their needs."
While some of DuPont's customers said the company has made significant strides in becoming a better partner, not all of its customers are fully satisfied.
"If they don't start becoming more responsive, they'll start losing market share, and they've already lost some from us over the past few years," said Howard Ackerman, apparel general manager at Malden Mills. "I see a glimmer of progress, but no light at the end of tunnel yet. In the past, there was a time when we worked very closely together."When you are talking about DuPont, you are talking about the world leader in quality," Ackerman added. "They should be more pro-active."
Still, there are those who have seen a dramatic change.
"I think Blumberg has demonstrated a willingness to try and explore anything that is new and different from a partnership standpoint," said Alfred Greenblatt, president of the apparel and home fashions business unit of Guilford Mills.
Greenblatt said Blumberg addressed Guilford's employees during the company's recent sales convention in Greensboro, N.C. -- the first time any DuPont fibers executive did so.
"I have found him to be supportive," Greenblatt said. "He cares about this business."
While Blumberg aims to build stronger bonds with customers, he's also attempting to give a boost to a nylon business that has been struggling in a worldwide slump, particularly in textile nylon, and has instituted sharp employee cutbacks.
Since September, DuPont has slashed its global nylon work force by 2,900. DuPont's nylon operations currently employ approximately 21,000. That represents more than two-thirds of its work force in fibers.
DuPont entered the European nylon market last July 1, when it completed its acquisition of ICI's nylon operations. In the deal, DuPont turned over its U.S. acrylic polymer business, made an immediate cash payment of $150 million and will make $165 million in deferred payments through 2000. In return, DuPont got eight nylon intermediates, polymers and fibers sites throughout Europe.
More important, said Blumberg, the move gave DuPont an entree into the European fashion nylon business. "I'd do the ICI deal over again, but I'd like to have done it before the damn roof fell in in Europe," Blumberg said. "But it was the right strategic move for DuPont. We didn't have a position in the fashion markets in nylon in Europe, so we were always flying blind there."
Because the ICI nylon plants are smaller in size, Blumberg said, "We can be more flexible, and can be more responsive to market niches for textile nylon, such as hosiery and socks."
Blumberg said while there will still be some more downsizing in Europe, DuPont is poised for growth in that area.The latest move is a planned joint venture announced on Friday between DuPont South America and Fibra, a member of the Vicunha Group in Brazil, to serve the South American textile nylon market. Final agreement on that venture is expected by the middle of this year.
As for other areas of nylon growth, Blumberg said: "Asia is growing rapidly, and we have the potential for enhanced growth there, as well as Eastern and Western Europe. Still, if we can't satisfy the market demands and be responsive, we'll lose out.
"As for the U.S. market, there's as much nylon coming into the U.S. in the form of garments as DuPont makes, and there isn't any of our nylon in them as far as I know of," Blumberg said. DuPont's global look isn't relegated solely to nylon. As the domestic polyester arena gets more competitive -- among DuPont, Hoechst Celanese, Wellman, and now Nan Ya -- DuPont is looking at other areas in which to expand its business. One of them is the Asia Pacific region.
"We've been looking at opportunities there for a couple of years, but haven't found the right ones yet," Blumberg said. "We would like to become a player in the Asia Pacific, but the chances are we would do that with an alliance rather than on our own."
Blumberg said his "Dacron team," headed by Richard Angiullo, vice president and general manager, right now is investing heavily in the U.S. market. The company is pouring about $300 million into upgrades and capacity increases at its Kinston, N.C., plant.
In an effort to become a more efficient polyester producer, DuPont in October said it would shut down its Cooper River plant in Charleston, S.C., by mid-1994 and consolidate production between Kinston and Wilmington, N.C. The result is a net increase of 100 million pounds of capacity.
As for Lycra, Europe remains the big challenge, Blumberg said. In 1993, Europe, which uses about 50 percent of DuPont's Lycra production, suffered through a second straight horrendous year. While DuPont's other Lycra markets, including the U.S., picked up, it was the European business that dogged DuPont.Still, it is through global expansion that Blumberg sees success for Lycra. While no timetable has been set, Blumberg said expansion into China and India are in the works.
"It's imperative we learn to play there, especially in China," Blumberg said. "The question is when. We have to look at partnerships that have export quotients, but not to the U.S., rather to Japan and other Asian areas. We won't grow at the rate in developed countries as we have in the past, but there's still penetration to be achieved."
Blumberg cited men's wear, footwear, interliners and diapers as huge, virtually untapped markets for Lycra.
"Even though we are seeing increased competition in the domestic spandex area, I like our chances," he said. DuPont's chief competitors in spandex in the U.S. are Globe Manufacturing and Miles.
"The Lycra people [headed by Salim Ibrahim, vice president, Lycra] at DuPont are realizing it's one world in which we live," added Blumberg. "We run the Lycra business globally, but with regional heads. Our competitors try to compete on price, but we're looking to bring value to the customers."
This strategy includes programs aimed at creating better quality spandex and working with customers to develop new end uses.
Blumberg said he realizes that trade agreements, world economies and various other uncontrollable factors can throw a monkey wrench into all of his plans. Still, he said that he's confident DuPont's long-term plans for its fibers business will pay off.
"If I can look back and say we broke out of the lethargy, the ever-increasing cycles of downsizing, and to begin to grow again, provide opportunities for employees and to become better partners with customers," he said, "then I would consider my time here a success."
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