NEWS

DuPont Co. to leave downtown Wilmington

Maureen Milford, and Jonathan Starkey
The News Journal

In what marks the closing of a proud chapter for Wilmington, the venerable DuPont Co. will move its corporate headquarters to the suburbs after serving as the heart of downtown for 107 years.

The science company stunned Delaware on Monday morning by announcing it expects to relocate approximately 800 to 1,000 employees from its Rodney Square location to Chestnut Run Plaza near Greenville by July 1.

In turn, DuPont's performance chemicals business, which is scheduled to be spun off by mid-2015, will move 800 to 1,000 employees to the DuPont Building, according to company spokesman Dan Turner.

The new $7 billion business, called the Chemours Co., will take ownership of the building, Turner said. No decisions have been made on whether the building will be renamed, he said.

DuPont will continue to own and operate the hotel and theater businesses, which are both located at the DuPont Building, Turner said Monday.

For many, the relocation announcement was cause for concern. Government, business and neighborhood leaders said they were worried about Chemours long-term commitment to the city.

They question whether Chemours will occupy the DuPont Building only as a temporary measure while its executives look for a more permanent home. Government officials vowed to actively work to keep the new company and its jobs in Wilmington.

Alan Levin, director of the Delaware Economic Development Office, said state officials are working to keep the chemical company in the city. Chemours will have additional options in Delaware, Pennsylvania and New Jersey, he said.

"They've made it clear to us that they will be looking for where they want to set up shop," Levin said Monday. "Our feeling is they're in the right place. Delaware is where they should be. That's their legacy and we obviously are not going to take that for granted."

DuPont’s decision in 1904 to build a new headquarters in Wilmington to house 500 office workers, singlehandedly changed the city’s economic underpinnings from heavy industry to office work, according to historian Carol E. Hoffecker.

While the announcement came as a shock, the move by DuPont culminates a more than 20-year downsizing of the once-giant chemical company's presence in downtown Wilmington. Once a sprawling corporate campus of several buildings near Rodney Square, the company began shedding structures in the late 1990s. By the beginning of the last decade, it was down to the DuPont Building, its original headquarters.

"I spent a lot of years in those buildings," said H. Rodney Sharp III, a du Pont family member. "I think it is the end of an era."

For decades, many have speculated the company could abandon downtown Wilmington. But the company stuck to its historic headquarters, with DuPont officials saying they valued the building as a "front door" to DuPont.

As an indication of the community's deep emotional attachment to the century-old headquarters, DuPont Chief Executive Ellen Kullman spoke with du Pont family members on Sunday and Monday. Kullman positioned the move as DuPont moving near to where it began in 1802 on the banks of the Brandywine, according to a family member.

"It is sad," said Gerret van S. Copeland, a du Pont family member, whose father was the last du Pont to head the chemical company from 1962 to 1967. "But this is life. The world goes on. You do what you have to do in business."

Copeland said he believes his father would have green-lighted the measure.

For many Delawareans, the loss of DuPont – once one of the largest companies in the world – is a major loss for the city both economically and symbolically.

"I think people really were proud of saying, 'This is the home of DuPont.' And when they said 'home,' they meant right there in downtown Wilmington," said Delaware historian Susan Mulchahey Chase.

Benefits of consolidation

DuPont says the move to Chestnut Run on Del. 141, a campus it has owned since 1952, is about combining operations into a single location.

"Looking ahead, we concluded that a single location for our headquarters offices will help facilitate the close collaboration essential to our success and to the growth of DuPont," Kullman said.

"A consolidated headquarters at Chestnut Run where most of DuPont's businesses are headquartered will make it possible to draw on people and knowledge across the company even more dynamically, on a daily basis," Kullman said.

DuPont headquarters will move from the DuPont Building in downtown Wilmington to the Chestnut Run campus near Greenville.

DuPont operations to be relocated from downtown to Greenville will include the executive offices, the legal department and some finance functions, among others, Turner said.

In 2007, DuPont revealed a five-year real estate plan to make Chestnut Run Plaza its largest Delaware employment center. Former Wilmington Mayor Jim Baker said the company had spoken to the city's administration about moving jobs out of the city just before he left office two years ago.

"The footprint of DuPont in downtown Wilmington has been diminishing for years. The growth has been at Chestnut Run," said Mike Bowman, president of the Delaware Technology Park in Newark, who ran DuPont's advanced material systems business before leaving the company in 1997.

"The ability of DuPont to focus in a consolidated way is a good thing. The ability to keep the new entity in Wilmington is also a good thing. The new company is separating to grow, not shrink and I think that could help Delaware."

DuPont has also been under pressure from activist shareholder Nelson Peltz and his Trian Fund Management L.P. to improve the company's financial performance. Trian is one of DuPont's largest shareholders. It's believed Peltz could make a bid for a few DuPont board seats next year.

Peltz has been pushing to break up DuPont by splitting it into two separate companies.

Since Trian acquired its stake in DuPont, the company has introduced several initiatives to boost shareholder value, including slashing $1 billion in corporate costs by 2019.

"We've got to rethink who we are as a corporate center and we have to make sure we're not holding on to history and that we're modernizing it," Kullman said in a talk at the Council on Foreign Relations in New York City on Thursday.

"I very much believe you have to honor the history, but you've got to always look forward," Kullman said. "We're very much not thinking there's things that are sacred cows and things that can't change."

In September, Trian took aim at the Hotel du Pont in the DuPont Building, the 1,251-seat, DuPont Theatre in the hotel and the DuPont Country Club off Rockland Road.

Trian in a letter to the board of directors listed the trio as some of the reasons DuPont's conglomerate structure "is destroying shareholder value." It cited the hospitality unit as partly responsible for an estimated $2 billion to $4 billion in excess corporate costs.

Government officials worried

Now, the challenge for government officials is to keep Chemours in Wilmington.

Gov. Jack Markell, who got a heads-up Sunday when he received a 4 p.m. call from Kullman, said the state will continue to talk to the new leadership of Chemours about "how Delaware is a great location from which it can write a new story of growth and innovation in the chemical industry."

"DuPont has been a major employer in Delaware for 200 years and we hope it grows from its Chestnut Run headquarters for another 200," Markell said in a written statement Monday.

"The Chemours business is building on DuPont's legacy of invention and it is well-positioned to do that from its new headquarters downtown."

Chemours will be a global leader in titanium dioxide, fluoroproducts and chemical solutions, which are considered high performance products, DuPont said. Fluoropolymers, for example, have a unique set of characteristics that allows them to, in most of their applications, perform in ways that no other material can, Turner said.

Chemours will have approximately 9,100 employees and 37 production facilities in 12 countries.

DuPont opened its headquarters in the DuPont Building in downtown Wilmington off Rodney Square in 1907. The original 11-story high-rise was the city’s tallest office tower when it opened.

In a joint statement, Mayor Dennis Williams and City Council President Theo Gregory said DuPont has had "a long and productive relationship" with the city. DuPont's decision to reorganize is one that can positively affect the future growth of the company and "therefore have positive benefits for Wilmington, New Castle County and the region," Williams and Gregory said.

"We view their announcement today as part of the evolution of the company. We are eager to ensure that the move of the Chemours Company employees to Wilmington is a permanent decision and that these employees become a permanent part of the local workforce," they said.

Councilwoman Loretta Walsh, who is chairwoman of the council's community and economic development committee, said the 800 to 1,000 Chemours employees should buffer the effect of DuPont's move on local wage tax revenue.

"They're swapping 800 employees for basically 800 employees. They're still going to be paying taxes on the building," she said. "If it truly is a swap, or what appears to be a swap, then we should be able to ride this wave OK."

Budget figures show that DuPont's corporate headquarters has the sixth-highest taxable assessment value in the city at $51.3 million, and the company is among the city's 11 largest real estate taxpayers.

DuPont was also the third-largest wage tax withholder from 2011 to 2013. Wage and property taxes are the two single largest sources of revenue for the city budget, with the two streams making up 68 percent of revenues.

Whether the city adjusts its budget as a result of DuPont's headquarters relocation will depend on the average pay of jobs Chemours will bring in, former Mayor Baker said. If Chemours brings less in wage tax, the city will likely have to cut spending, Baker said.

The DuPont Building between 1930 and 1950.

Rich history

For many, DuPont's decision to relocate is as much symbolic as it is business.

DuPont's presence in downtown Wilmington is difficult to overstate.

"DuPont is synonymous with Wilmington, Delaware," Walsh said.

The company's decision in 1904 to build a new headquarters in the city to house 500 office workers, singlehandedly changed Wilmington's economic underpinnings from heavy industry to office work, according to historian Carol E. Hoffecker, author of "Corporate Capital: Wilmington in the Twentieth Century."

The three du Pont cousins, who were transforming the family's gunpowder business on the Brandywine into a global powerhouse, needed office space in an urban setting, Hoffecker has said.

T. Coleman du Pont favored New York City, but he was overridden by cousins Pierre S. du Pont and Alfred I. du Pont, who wanted to stay close to the company's roots on the Brandywine.

When the building opened in 1907, DuPont became the "new big boy industry in town," Hoffecker has said. Without DuPont, Wilmington today would have gone the route of other old industrial cities along the Delaware River, she said.

"Wilmington would have been lucky if it turned out like Chester [Pennsylvania]," Hoffecker said in 2007.

The construction of the building also shifted the center of downtown from lower Market Street to the area around Rodney Square, she has said. The original 11-story high-rise was the city's tallest office tower when it opened.

Still, the structure that hugged the corner of North Market and 10th streets was a fraction of the building today with its 13.5-acres of floor space. The building now occupies a full block between North Market, 10th, Orange and 11th streets.

Through five expansions over a quarter century, it grew to include a hotel, ballroom, restaurants, a 1,256-seat theater, shops and a one-and-a-half-story boardroom. By the late 1930s, the company began adding a 12th and 13th floor.

Through five expansions over a quarter-century, the DuPont Building, has grown to include a hotel, ballroom, restaurants, a 1,256-seat theater, shops and a one-and-a-half-story boardroom.

Sad news

Unlike other corporate headquarters, the DuPont Building had a public role in the city with its hotel and theater.

Because countless people attended weddings, proms, anniversaries, speeches and business meetings at the hotel, residents developed a particular attachment to it.

The Rotary Club of Wilmington, for example, has held every meeting at the hotel for 100 years, Chase said.

"Am I sad to hear this," said Wilmington attorney Victor Battaglia, a former city official. "I hate to see it for Wilmington."

Despite DuPont's suggestion that its move was strictly for business reasons, some longtime city residents argue that other factors may have played a role in the decision.

Tom Baker, president of the Triangle Neighborhood Association and a former DuPont accountant, said Wilmington's longtime struggle with violent crime could have made employees increasingly wary of working in the city.

Recently, the city's crime problem was put under a harsh spotlight when Newsweek labeled Wilmington "Murder Town USA." Add to that Wilmington's nearing of its homicide record.

It's also been a struggle for local businesses to get access to Mayor Williams to better understand the policies affecting their operations, Tom Baker said. He said he's unsure if DuPont's executives got that same treatment.

"I took it as a vote of no confidence on the city and this administration," Tom Baker said about the move.

Former Mayor Jim Baker said he's anticipated the move for some time, but he didn't think the timing of the relocation announcement was the best. He said many in the public will immediately blame the relocation on Wilmington's recent wave of violent crime.

"People will associate with that more than the fact that it's been planned," he said.

Staff writer Yann Ranaivo contributed to this story.

Contact Maureen Milford at 302-324-2881 or mmilford@delawareonline.com. Contact Jonathan Starkey at 983-6756, on Twitter @jwstarkey or at jstarkey@delawareonline.com.