Painful "Adjustment" at Du Pont

In uncommon measure, E.I. du Pont de Nemours & Co. owes its long reign as the world's largest chemical company to its prowess at scientific research. With endless inventiveness and one of the largest corporate research budgets ($110 million a year), Du Pont's 4,000 scientists annually discover some 1,000 completely new compounds of matter, nurse these and other laboratory-born ideas into commercial usefulness at the remarkable rate of one a month.

Whole new technologies such as nylon, the first all-synthetic fiber, and neoprene, the first U.S. commercial synthetic rubber, have sprung from Du Pont's cornucopian test tubes. Last year 175 manufacturers built the tops of 12 million pairs of shoes with Du Pont's three-year-old synthetic Corfam, which is supposed to look, feel and "breathe" like natural leather. Early this year, after twelve years and $8,000,000 in research, the company invaded the rich pharmaceutical field by marketing an antiflu drug named Symmetrel, which can be taken orally as either a pill or syrup. Only two weeks ago, the company introduced a recording tape aimed at the multimillion-dollar computer, television-broadcast and instrument markets. Called Crolyn, the patented tape uses chromium dioxide as its magnetic medium in place of conventional iron oxide. Du Pont says that the chromium dioxide tape not only holds twice as much information per inch as ordinary tape but reproduces high-frequency signals with greater fidelity.

In the Breadbasket. Despite such painstaking achievements--and ironically, partly because of them--Du Pont this year is suffering from what President Lammot du Pont Copeland (TIME cover, Nov. 27, 1964) delicately calls "a difficult adjustment period." After reaching a record $3.19 billion in 1966, the company's sales in the first quarter of this year fell to $755 million, 4% below their year-earlier level. Profits plunged 24% to $78 million, and the company expects no better results from the April-June quarter. "When autos, electrical appliances, steel and home furnishings are down, it hits us right in the breadbasket," says Treasurer H. Wallace Evans.

Du Pont's troubles center in the field it dominates: man-made fibers. As the leading U.S. maker of nylon, Dacron, Orion and several other synthetics, Du Pont depends on textile companies for a third of its sales volume. But the textile industry skidded into a sharp slump this year because of excess inventory, rising imports and falling prices. And that downturn caught chemical companies in the midst of a major expansion of fiber-making plants. One result is that the wholesale price of Dacron has dropped 40% in the past year. The problem, says Copeland, "can well be with us for at least another year."

As if that were not enough, the company expects the just-negotiated Kennedy Round tariff cuts to squeeze its earnings further. Many U.S. chemicals have long been protected by unusually high import duties, and in order to win European agreement for freer trade in such fields as farm produce, tobacco and aluminum, U.S. negotiators agreed to hefty reductions in chemical levies. With those blows, plus a 30% loss in earnings after the Government forced the company to disgorge its 63 million-share holding of General Motors, the price of Du Pont stock has fallen almost 50% from its 1964 high of $293.75. Last week, after losing another $2.50, it closed at $153.25. Even so, Du Pont remains the highest-priced stock in the Dow-Jones industrial average of 30 blue-chip companies. Its plunge has therefore pulled down that bellwether index four times as much as would a similar rate of decline in a stock priced at a more typical $50 a share.

Another Nylon? To rebound, Du Pont still puts its faith in its prolific test tube. Among other promising ventures, it has recently developed a cheap but strong plastic heat exchanger, a line of nylon shutters and plastic vanity tops, and a compound called Zeset that keeps wool sweaters shrinkproof and enables felt hats to retain their shape and stiffness. For the future, Du Pont researchers envision such wonders as ski jackets that grow thicker and warmer when the temperature drops, curtains that change color or covering power when the sun hits, a fiber product that will remove salt or waste from water. Of course, as Treasurer Evans says, "we can't expect another nylon." Or could it happen? The company is already building a plant to manufacture a mystery fabric to be introduced next year. So far, Du Pont will say only that it involves "an entirely new yarn" with "higher esthetics and performance than anything now known."

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