Cook-Hauptman Associates, Inc.




HISTORY OF Du PONT'S NYLON FIBERS



(

First
Century
(1802-1902)

Modern
Beginnings
(1902-1928)

Inventing
Nylon
(1928-1937)

Commercializing
Nylon
(1937-1942)

Nylon
Emerges
(1942-1960)

Nylon
Growth
(1960-1980)

Nylon
Maturity
(1980-199-)

Century-
at-a-glance
(1930-2030)

)
 

  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."

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 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.

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.

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.

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).

 

  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.

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.

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.

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.

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.

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.

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.

 

  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.

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.

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.

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.

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.

 

  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.

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®.

 

  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.

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).

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.

 

  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 uses grew at about 7.5% per annum, while carpet and industrial uses grew at over 12%.

This sustained growth was made possible 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 hallow 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.

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.

 

  NYLON MATURITY (1980-1994)

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.

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.

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.

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.

In the spring of 1994, Du Pont made the strategic decision to stay in the nylon business.





 

A CENTURY OF NYLON INNOVATION (1930-2030)

  Time scale 1935           40            50 60         70 80         90 2000          10  20          30
  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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