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Quarter-to-quarter wobbles aside, it seems obvious that Du Pont has finally broken out of a decade in which its sales more than doubled-to $7.3 billion in 1975-but earnings rose hardly at all. One reason is that the recovery is increasing demand for Du Font's famous products, nylon, Dacron, Lucite, Freon, Teflon and thousands of others. Another reason is the policy of Irving S. Shapiro, who became chairman...
Shapiro took over a company that had been family managed since the days when it sold gunpowder to Thomas Jefferson and, in the new chairman's view, had been made complacent by its long record of innovations (the most famous: the invention of nylon by Du Pont Scientist Wallace Carothers in the 1930s). Says Shapiro: "There was a smugness, a feeling that we're just a little better than anyone else. It took some bitter experience to cleanse the system...
...bitter experience came with the recession. Sales of synthetic textile fibers, which account for more than a third of Du Pont's volume, soared well into the recession year of 1974, spurred by a shortage mentality created by the Arab oil embargo. A Du Pont joke at the time was that if this is what recessions are like, bring on more. But then the buying stopped, and Du Pont and other manufacturers realized that they had built heavy overcapacity and were vulnerable to sharp price cutting. Result: Du Pont's earnings fell 33% in 1975. This problem...
Securing Supplies. Shapiro restricted research and development spending, concentrating on coming out with few products annually (half a dozen v. 25) and marketing them more heavily. A Du Pont trade show in Manhattan last week displayed numerous ways that manufacturers could use polyester fibers other than in conventional double-knit materials, which appear to be falling out of favor with consumers who have shifted back to cotton and wool. Shapiro has also moved to assure that Du Pont, a major seller of raw materials, has adequate supplies for its own operations. The company has entered into a venture with ARCO...
Perhaps more to the point, Du Font's department managers are being leaned on to produce profits. The near autonomy of yesteryear has been abolished through ever increasing central control. Says Shapiro: "No question, we're mean, tough s.o.b.s." The result: the giant of the Brandywine is paying less attention to laurels and more to cold cash...