THE FIRST CENTURY (1802-1902)
In 1802, a young French
immigrant and his wife together with their two children settled down on the banks of
the Brandywine River in a beautiful valley between Washington and Philadelphia. After
having been terrorized in Paris by their own revolution gone awry, they sought a new
life of freedom and peace in this land of opportunity. This adopted land was consumed
with hunting, settling, clearing, and mining. And yet, there was no good, cheap
domestic source of reliable and safe blasting or gun powder. Consequently, this young
French entrepreneur had a vision to become America's premier producer of gun powder.
His carefully selected valley was ideal: plentiful waterpower, affordable land,
populated enough to hire, but not so much as to risk catastrophy, close to the
government seat, and a smattering of French settlers just to feel a bit like "home."
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Within months, Eleuthère Irénée du Pont had
transformed a burned out, abandoned cotton mill into a complex of Eleuthère
isolated powder making shops. By early 1804, he was turning out the highest quality
powder in America. Eleuthère du Pont can attribute the initial success of his
venture to his training in explosives manufacture in France (under the renowned
chemist, Lavoisier, who was superintendent of the French government's gunpowder plant),
financing from his father's contacts, and the good fortune to be in production at
the time of Jefferson's 1807 embargo of trade with Europe, the only other source
of quality powders. Entrepreneuring basics were not different then from now.
And so, by 1811, the Du Pont mills were the largest mills in America.
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Time and again, Du Pont's growth during this first century was
punctuated by external events like the War of 1812 (1812-15), the Mexican War
(1846-48), railroad building (65,000 miles in the 1880s) and, particularly, the
Civil War (1860-1865). For each of these occasions, Du Pont scaled up and delivered
quality products for which it was becoming synonymous. It should be appreciated
that these scale up efforts were not without their jeopardy. Despite Du Pont's
obsessiveness about safety, on March 29, 1884, a tragic explosion killed its
president, Lammont du Pont, and 5 other men. They, together with a few others,
were testing the scaling up of nitroglycerin production.
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Throughout this era, Du Pont did not spawn most of its innovative
products; they were transferred from Italy, Sweden, Switzerland, Belgium, and
California. However, Du Pont experienced substantially greater financial success
than any of those product inventions, and did so because of Du Pont's many
innovations in process technology, methods, and practices. To this day, process
innovation and its attendant professional management is Du Pont's primary source
of wealth creation.
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However, during the last decade of Du Pont's first century,
Du Pont began to display all the signs of "the slow rot of inefficiency."
Competitors from Europe had a monopoly in a new and distinctly superior smokeless
gun powder. Consequently, Du Pont was forced to reduce prices, and, for the first
time, and make a drastic cuts in the work week as well as the number of employees.
Even in Du Pont's vaunted process technologies, the Brandywine mills resisted
innovation and investment, and they, too, fell even further behind. The Company
might very well have gone bankrupt during this decade were it not for the heroic
efforts of young Alfred du Pont. He led the production of prodigious amounts of
brown prismatic powder for the Spanish-American War (1898-99).
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THE MODERN BEGINNINGS (1902-1928)
In 1902, the family patriarchs who ran this sprawling, but
declining, empire voted to sell Du Pont, because they were too tired to lead
and too reluctant, some say jealous, to turn over the reins to Alfred.
Resourceful Alfred, realizing he would not prevail among the elders, recruited
his cousin, Coleman, away from financing street cars in St. Louis. Shrewd
Coleman sensed that he might be able to pull off a tender offer for the
Company. To do so, Coleman would have to attract yet another cousin, Pierre.
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The prospect of Coleman presiding over Du Pont, Pierre in charge of
finance, and Alfred running production, was just enough to get Henry, an influential
member of the Board, to convince the other patriarchs to accept the young du Ponts'
offer. So, in a matter of 6 days and for just $2,100 in legal fees, the three cousins,
whose average age was 35, got 75% of America's largest explosives and munitions
company. All they did was promise to carry on the du Pont family tradition and
pay off a subordinated debt of $12 million dollars. With this most dramatic of
leveraged buy-outs, the Modern Era began.
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Heady with their success and taken with the power of virtually
printing their own money, Coleman set about with Pierre to buy nearly all the
explosives and munitions businesses in the country. By 1904, they owned 70% of
the market, more than triple their share just two years earlier. Quite a turnaround
from the resignation of their elders! This accomplishment, however, caught the
attention of the Justice Department's Sherman Anti-Trust enforcers. The 1913
settlement, thanks to Alfred's personal character and credability, only required
the establishment of two strong competitors, Atlas Powder and Hercules Powder.
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The acquisition spree of the cousins contained the seeds of Du Pont's
later businesses. Some of Du Pont's acquisitions had small sidelines which were
commercializing some of the byproducts of explosives manufacturing. Nitrocellulose,
for example, was not only used in the manufacture of explosives, but also as a filament,
a coating, and a solid. Others had less directly related sidelines, such as, artificial
leather, pyroxylin plastics, metal adhering lacquers, and a variety of organic paints
and chemicals, each of which would play an important role in the future of Du Pont.
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World War I focused Du Pont's attention on munitions and brought
enormous growth and profits. Sales grew from $25 million to $131 million to
$318 million in the years 1914, 15, and 16. Profits for those years made almost
entirely from foreign countries were a remarkable $5 million, $57 million, and
$82 million, respectively. Knowing that this spectacular performance would end
with the War, the Executive Committee set the Company on a strategy of
diversification. Luckily, as part of that diversification, they invested $50
million into a fledgling automobile company known as General Motors. For their
own business, the Executive Committee made perhaps an equally good decision;
though they may never have made it had they known how difficult it was going
to be.
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The Executive Committee decided to go into organic chemicals
beginning with dyestuffs. Dyestuffs must have seemed like de jevu. Just as
in the early 1800s with gunpowder, the United States had no domestic supply of this
essential ingredient of progress. Europe, specifically England and Germany, supplied
America's mass producers of textiles, home furnishings, packages, and color prints.
Du Pont tried to buy some dyestuffs companies for their technology, but eventually
had to do something they hadn't done for over a century. Now Du Pont had to build
the business from within, and this took considerable resources and time.
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By 1928, Du Pont had little to show for the $40 million it had
sunk into the development of dyestuffs technology. Fortunately, the General Motors
investment generated enough cash to make this possible without a financial collapse.
Du Pont was attempting to learn in a few years what took the Germans over six and a
half decades. On the marketing side, Du Pont was helped, by its acquisition of
the British company, Levinstein, Ltd., and by the U. S. dyestuffs tariffs enacted
in 1921-22. The potent legacy of Du Pont's investment in dyestuffs was the world's
best organic chemistry research and development organization, at one time employing
20% of the nation's Ph Ds in Chemistry. This provided Du Pont with a competitive
edge that endured for at least a half century.
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INVENTING NYLON (1928-1937)
Starting in 1909, Du Pont started broad-based research into
nitrocellulose. About that time, Irénée du Pont, great grandson
of the founder, had his Experimental Station gather information on the
manufacture of artificial silk, artificial leather, and celluloid. The stage for
a great consumer-oriented company would first have to wait for the end of the First
World War, but would soon be graced with a monumental technical performance.
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In 1920, the French sold Du Pont the technology for making
artificial silk. Later that year, the Du Pont Fibersilk Company was formed
and soon began the manufacture of an artificial silk, later to be known as
rayon. With that start in synthetic materials, the stage was being set for
the invention of nylon, or, at least, the props had arrived.
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In 1924, Charles Stine as the new director of the Chemical
Department, made his characteristic mark on its direction. He elevated the
role of "theory" in the laboratory, organized the common scientific bases of
Du Pont's products, dropped empirical chemical control from his charter, and,
yet, insisted on the indispensability of an intimate touch with the various
industrial products. He revitalized the department, so that by the late 1920s,
he asked for and got the Executive Committee to fund "general investigations" of
a scientific nature. Now, with the Committee's commitment, Stine set out to get the
commitment of the best talent in the Land.
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For Du Pont, the inventing of nylon begins in 1928 with Stine's
wooing of Dr. Wallace Hume Carothers from a teaching and research position at
Harvard. He only agreed to join Du Pont on the promise that he would be allowed
a completely free hand to do fundamental research in the pursuit of pure science
for knowledge's sake. In 1930, within what must have been the most productive
month on record, Carothers' group of eight, six of whom had PhDs, had produced the
first samples of Neoprene and the first laboratory synthetic fiber. A later
variant of that synthetic fiber still had a couple of textile deficiencies.
It would melt under a pressing iron and would dissolve in dry cleaning solvents.
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The Great Depression and Stine's promotion to the Executive Committee
put pressure on Carothers' fundamental research to "pay more of its way." This caused
Carothers considerable anxiety, and even led him to inquire about returning to Harvard.
Then on May 24, 1934, on the suggestion of Carothers, one of his assistants drew
a sample of synthetic fiber which overcame the melting problem of earlier attempts.
This fiber, remarkably like silk, was nylon! Ultimately, a "cousin" of this fiber
(known technically as nylon 6,6) became Du Pont's must celebrated product. It was
first prepared on February 28, 1935 during the process of trying all 81 possible
variants of nylon.
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COMMERCIALIZING NYLON (1937-1942)
From these beginnings, the commercialization of nylon
proceeded from feasibility to practicability to repeatability,
each phase taking roughly 18 months. Early on it was decided to tackle the
challenge of substituting nylon for silk in woman's full fashioned hosiery without
having to raise the price. Not until the end of 1937 were the first stockings knit.
The Experimental Station worked on eliminating breaks due to bubbles in and fouling
of the extrusion holes. The bubbles are no longer a problem, but the fouling of
the extrusion holes persists to this day. In January, 1938, the Executive Committee
authorized a pilot plant of roughly one-tenth of expected production. The pilot
plant in Seaford, Delaware subsequently got a series of expansions up to its
current million pound a day capacity. A second plant dedicated to nylon production
was started in, Martinsville, Virginia in 1940. Du Pont's experience with
cellulose based products, Rayon and acetate, was vital to the rapid
commercialization of nylon.
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Nylon was an instant market and financial success when it
became available in May of 1940. Production of $9 million sold out with a 33%
profit. In the year before World War II, 1941, profits were $7 million on sales
of $25 million. Du Pont made the nylon for over 60 million pairs of sheer women's
hosiery, more than the number of women in the United States at that time!
Meanwhile, Du Pont's Pioneering Research began the development of products
destined to become Orlon®, Cordura® and Dacron®.
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NYLON EMERGES (1942-1959)
Nylon uses started appearing as soon as this synthetic fiber was
available. Civilian uses, just before the Second World War, had extended to
toothbrushes, fishing lines, neckties, sewing thread, jewelry bead cord, football
pants, and foundation garments. During World War II, all nylon production
was earmarked for the war effort. The military used it in 3.8 million
parachutes, a half a million airplane tires, and for an uncounted number of glider
tow ropes, flak vests, and blood plasma filters.
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After the World War nylon uses vastly expanded and ended up split
somewhat evenly, by revenues, into three categories: textiles, carpets, and industrial.
The nylon textile uses expanded into dressware, blouses, shirts, suit linings, and
shells. Nylon carpets made their first appearance in the late 1940s. During the 1950s,
nylon texturing and carpet tufting advances facilitated the rapid development of this
market. Industrial nylon (that class of products requiring high strength and
durability, such as tire cord and flak vests) also made its commercial debut in the
late 1940s. Examples of such uses are in nylon cord (as tire reinforcement and ropes),
bulletproofing, luggage, and sporting gear. These new uses justified Du Pont's
investment in additional plant capacity. Nylon was produced in new plants in
Chattanooga, Tennessee (1948) and in Camden, South Carolina (1950).
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About this time, sensing that the demand for nylon could be
overwhelming, and perhaps volatile, Du Pont licensed nylon to Chemstrand in 1951
by building them a 50 million pound per year plant for $110 million. The prospect of
anti-trust litigation figured heavily into that decision, as did the prospect of having
idle plants in the event that demand dropped off or a superior material appeared. The
increasingly competitive environment, partly of Du Pont's own doing, was the impetus
for a most ambitious technical initiative, called "Blue Sky Technical Nylon Technology
Task Force." This multifunctional (Engineering and Technology) initiative begun in 1955
was chartered to reduce the capital and labor production costs by 50% and 75%,
respectively. It succeeded, although not to that extent, and secured a foundation
for growth. Its leader, Edward R. Kane, later became president of Du Pont.
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NYLON GROWTH (1960-1980)
Overall, the worldwide nylon market enjoyed a 10.5% compounded
annual growth throughout this twenty year period going from 1 billion pounds to
7.5 billion pounds annually. Textile consumption grew at about 7.5% per annum, while
carpet and industrial consumption grew at over 12%. The radical shift to continuous
processing of nylon was delivering quality and profitability beyond all
expectations. And it continues to do so for longer than could have been predicted.
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Nylon's growth was also sustained by an unrelenting
progression of product extensions and process refinements. Fiber cross
sections were manipulated to give optical and tactile effects. Antistatic
treatments were developed in the 1970s. Faster spinning of yarns reached a
point where they travel through the factory over 180 miles per hour (almost
a football field's length per second). In carpets, the biggest innovation was
the bulked continuous filament (carpets made from a single strand of yarn
across its length). This was followed by hollow fibers coupled with
unprecedented dye, luster, and bulk uniformity. Extensive work on molecular
orientation led to expanded strength, shrinkage, and fatigue resistance for
industrial fibers.
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Despite this growth and progress, the 1970s were the first
difficult times for nylon. The oil shortages of 1973 and 1979 hit nylon hard.
After years of producing half of Du Pont's profits, nylon made no profit in 1975.
New products took prodigious time and resources to develop: Kevlar® took 15
years and $500 million; Reemay®, Typar® and Tyvek took roughly 15 years
and about $100 million, each. Corfam®, a leather substitute, failed at a
cost of over $70 million. Consequently, in 1975 some nylon areas were directed
to be cash generators and Fiber's research was cut accordingly.
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Just as an aside, during this time (and on until 1992), nylon
was organizationally grouped with "Fibers." "Fibers," for
the technically interested, included those materials which shared a common
chemistry (aramid based polymers) and common uses (as threads, sheets, or solids).
Strictly speaking, Kevlar®, Reemay®, Typar®, and Tyvek® are only
"relatives" of nylons.
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NYLON MATURITY (1980- )
The current mature era of nylon is marked by a focus on finance.
After the second oil shortage, Du Pont acquired Conoco (as Continental Oil) for
$7.6 billion in 1981. This was done to insure a source of petroleum based feedstock,
and coincidentally, is an earnings hedge. During the 1980s, the amount of capital
made available for upgrading Du Pont's nylon plants was around 30% less than
comparable companies such as 3M, Monsanto, Proctor and Gamble, and Kodak. The capital
starvation got so severe that power outages threatened production because critical
improvements to the plants' on-site power conversion units were not funded.
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Labor, too, was cut back. Technical professionals were reduced by 50%
during the 1980s. During the 1990s, both technical professionals and factory personnel
were cut back 25%. Only competitors who were exiting the nylon business experienced
comparable cuts. Understandably, anxiety was high and morale was low.
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Meanwhile, competitors were installing the latest plants with, of
course, the improved economics technological progress brings. Furthermore, these new
plants represented additional capacity at just the time that polypropylene was becoming
a substitute for some of the high volume applications of nylon, such as, commercial
and outdoor carpet.
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Another pressure on the Nylon business for Du Pont was the market for
"specific solutions." This led to a proliferation of product variations, and may have
been better handled by the newer plants of competitors. Du Pont's mass production
factories were not designed for high flexibility, and could not economically keep
pace with the variety proliferation. More pressure came from customers who were
backward integrating. That is to say that some mills were buying not nylon
bobbins (as the 10 pound spools of thread are called), but rather nylon flakes and
these aggressive mills were doing their own melting, extruding, and spinning of
nylon. And of course, these mills were not paying Du Pont the last 10% that
those processes had customarily commanded. Further, what mills learned about nylon,
with most fundamental patents long expired, may be enticing some of them to further
backward integrate.
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In the spring of 1994, Du Pont made the strategic decision to
stay in the nylon business. You could say that Du Pont has superbly positioned
nylon to enter a dramatic new phase of renewal, the era of "Lean Production."
Nylon (6,6 Du Pont's mainstay) is being integrated with its cousins Nylon (6), polyesters,
and both are benefitting from cross-fertilizing their process know-how with each other and
with the latest developments in biosciences. This blending of polymers also enables dramatic
downstream, low investment, spinning technology possible. All these foregoing developments
heralds in a new century of lower cost, waste free, energy efficient nylon!
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A CENTURY OF NYLON INNOVATION (1930-2030)
Time scale |
1935
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40 50
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60 70
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80 90
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2000 10
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20 30
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PARADIGM |
ENTREPRENEURIAL |
MASS PRODUCTION |
LEAN PRODUCTION |
Mandate |
Invent |
Develop |
Scale |
Refine |
Integrate |
Reconfigure |
Locus |
Mind |
Laboratory |
Semi-works |
Factory |
Field |
Market |
Key skill |
Creativity |
Science |
Engineering |
Technology |
Applications |
Usage |
Knowledge |
Outliers |
Poly-chem |
ChE/ME |
EE/CS |
IndE |
Psychology |
Source |
Inventors |
Academe |
Profession |
Producers |
Assemblers |
Retailers |
Structure |
Individual |
Entrepreneurial |
Expeditious |
Centralized |
Distributed |
Networked |
Progress |
Breakthroughs |
Continual |
Monumental |
Incremental |
Game-change |
Step-change |
Benefitter |
Participants |
Product |
Process |
Business |
Industry |
Consumer |
Key attribute |
Substitutability |
Produceability |
Uniformity |
Quality |
Responsiveness |
Delight |
Key measure |
Morale |
Potential |
Volume/Yield |
Cost |
Margin/scope |
Programmability |
Time scale |
1935 |
40
50 |
60 70
|
80 90
|
2000 10
|
20 30
|
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