DuPont to cut 1,500 jobs in farm unit

Chemical maker DuPont Co. is cutting 1,500 jobs as it restructures its agriculture and nutrition division, putting the $100 million it expects to save into its seed business, where it is in an increasingly tough battle with rival Monsanto Co.

Monsanto has improved its dealer network, taking market share from DuPont’s Pioneer Hi-Bred seed division in the important corn seed market. It is expected to continue to do so. Pioneer, meanwhile, is fighting back by developing new strains of genetically engineered seeds and poses a long-term threat to Monsanto, said a recent report from analyst Kevin McCarthy with Bank of America in New York.

The changes announced by DuPont on Monday were expected to affect about 10 of the agriculture division’s 250 sites worldwide, but DuPont spokesman Doyle Karr said the company was not disclosing which sites would be affected.

“It’s a commitment that DuPont made earlier about realigning its resources toward high-growth opportunities, so ag and nutrition is looking at streamlining its low-return activities and low-growth areas and then investing those savings into high-growth areas,” Karr said.

When asked whether the changes were due to competition from Monsanto, Karr said they were “in response to opportunities we see in the seed business, and we certainly believe the increased investment will make us more competitive.”

“It’s a very competitive market, and we’re feeling good about the progress we’re making,” Karr added.

The agriculture division accounts for about 15,000 of DuPont’s 60,000 employees, Karr said.

The changes include the closing or streamlining of the manufacturing units, with most expected to be completed in 2007. DuPont expects to book a related $200-million pretax charge in the fourth quarter to cover the restructuring.

Pioneer and Monsanto each note that the use of biotech seeds is increasing and both companies should profit. However, Pioneer, which had sold Monsanto’s genetically modified seeds through its dealer network since the seeds were introduced in the 1980s, changed the arrangement in 2003 when it released its own strain of genetically engineered corn.

In response, St. Louis-based Monsanto has sought to improve its dealer network, forming a holding company called American Seeds Inc. in 2004 to acquire regional seed dealers.

The strategy appears to be working. Five years ago, Pioneer had 40% of the market for corn seeds and Monsanto had about 10%. Pioneer now has 30% and Monsanto has 29% and could pass Pioneer in a year or so, McCarthy’s report said.

Shares of Wilmington, Del.-based DuPont rose 52 cents, or 1.1%, to $47.42.