22 August 2005

Facing pressure, DuPont gambles

As nylon fades, DuPont stakes ists future on SORONA, made with biology, not chemistry

For DuPont Co. executives, the little plastic dinosaurs added up to one big insult. Shell Oil Co. handed them out during a trade show where it announced that it would make a plastic better than nylon, DuPont’s signature invention. It was 1995, when DuPont was the world leader in nylon but was quickly losing profits to cheaper foreign manufacturers.

The dinosaurs were emblazoned with the word “Nylonasaurus.” The message was clear: Nylon was dead.

“It was like poking a stick in your eye,” said Ray Miller, a DuPont manager who has worked in the nylon unit.
DuPont responded by pioneering a way to make a plastic, known as Sorona, from plants. Meanwhile, Shell plunged ahead with its own plans to make the plastic the traditional way – using oil-based chemicals.

It’s too early to tell which company will dominate the market for the new plastic. The outcome may depend as much on marketing or the price of oil as on DuPont’s scientific prowess.

But these days, it isn’t just big oil companies muscling in on DuPont’s territory as a plastics maker. As scientists explore new ways to make chemicals using biology, big agribusiness firms and tiny biotech startups also pose a threat.

The days are over when DuPont and a privileged league of firms like IBM, General Electric and AT&T dominated industrial research, churning out blockbuster technologies like self-cleaning ovens or touch-tone phone service for an eager public. New technologies and global competition have multiplied the number of rivals. Only a combination of cutting-edge innovation, careful timing, skillful marketing and an astute choice of partnerships will ensure success.

“You’re looking at the birth of a new industry,” said James Barber, chief executive of Metabolix, a Cambridge, Mass.-based startup developing one of the new plastics. “Everyone’s trying to make their judgments about what it will look like as an adult.”

Oil still potent

While DuPont is increasingly looking to make chemicals from plants, its immediate competition comes from companies such as Shell, which makes chemicals from oil and natural gas. Spooked by Shell’s 1995 announcement, DuPont first attempted to partner with the oil giant. When Shell refused, DuPont redoubled efforts on its biological approach. By tinkering with its genetics, DuPont scientists sought to design a bacterium that would consume corn and secrete the main ingredient in Sorona. The company foresaw a future in which bacteria could make an assortment of chemicals used in plastics, electronics and other products.

But DuPont also had a backup plan. It designed a factory to make the ingredient, known as PDO, using an oil-based chemical.
In 1999, however, DuPont scuttled plans for that factory, betting that its plant-based method would compete with any oil-based method – and would be cheaper in the long run, as oil became more scarce.

That same year, Shell opened a plant in Louisiana that made 175 million pounds per year of PDO from a different petrochemical.

DuPont couldn’t allow Shell to beat it to market and build relationships with manufacturers interested in the new fiber. It could have hurt DuPont’s prospects for years.

So, in 2000, just to be in the game, DuPont developed a fiber using an expensive oil-based version of PDO purchased from another chemical firm. Small quantities of the fiber have found its way into bathing suits and other apparel sold in Asia and the United States.

Meanwhile, Shell opened a plant in Montreal in December that makes larger quantities of its oil-based fiber – more than 200 million pounds a year of it. Shell’s fiber, dubbed Corterra, has been used in American carpeting as well as in European and Asian sportswear. Corterra uses more oil than corn-based Sorona. So oil prices may ultimately determine which company’s fiber dominates the market, admits Shell Chemicals executive Stanley Park. Oil prices surged over $66 a barrel last week, and many analysts warn that oil prices are on a long-term upward trend.

Oil prices aside, DuPont hopes its marketing experience will help Sorona overtake Shell’s product. The company is leaning on Sorona’s “green” image, producing reams of publicity with the logo “Clothing from a Cornfield.”
“We’ve got 60 years of fiber experience,” said David Anton, a scientist who helped develop Sorona. “Shell’s got what? Two?”

Shell, however, says its oil-based fiber also has environmental benefits. The factories that make it emit less pollution and require less energy than those that make nylon, Park said.

Competition broadens

As oil grows more scarce – and methods improve for turning plants into chemicals – DuPont faces daunting new competitors. They are the giant agribusinesses that already process plants into a variety of products such as corn syrup – found in sodas – and ethanol auto fuel.

With revenues more than double DuPont’s, Cargill Inc. is best known for processing grain and packing meat. But the quest for new markets for its farm products has led this Minnesota-based agribusiness giant into the frontiers of biotech wizardry.

Since 2002, a Cargill subsidiary has marketed NatureWorks, the first bio-based plastic widely available to the American consumer. Made from cornstarch, the biodegradable plastic is found in produce containers of Del Monte and Newmanxs Own Organics and in bottles for Biota water.

The same plastic also is used in Ingeo, a substitute for polyester used in pillows, bedding and some apparel. More than 7,000 supermarkets carry NatureWorks products and 7,300 retail outlets carry Ingeo products, Cargill said. Cargill won’t reveal sales of the plastic, but Snehal Desai, a vice president at Cargill subsidiary NatureWorks LLC, said NatureWorks sales have increased by an average of two-thirds over each of the past four years.

Cargill has made up for the higher cost of NatureWorks by emphasizing the plastic’s biodegradability. But Cargill executives were surprised last year when surging oil prices, combined with manufacturing improvements, made NatureWorks plastic cost-competitive with its closest oil-based competitor, polyethylene terephthalate, or PET, Desai said. “We knew we were going to be competitive,” Desai said. “We’ve just reached that point quicker.”

Other major companies have started making the same bio-based plastic, known as polylactic acid, or PLA. A Japanese car made by Toyota Motor Corp. contains PLA plastic manufactured at Toyotaxs own pilot plant.

So far, Cargill’s PLA plastic doesn’t compete with DuPont-made plastics or with DuPont’s new Sorona fiber. But Cargill’s scientists are developing a new bio-based chemical that could provide a new route to make paints, plastics and adhesives. The new chemical, 3-hydroxypropionic acid, could even be chemically transformed into PDO, the main ingredient in DuPont’s Sorona.

With advances in biotechnology, any chemical made from the carbon in oil could someday be made from the carbon found in plants, said James Stoppert, director of industrial bioproducts at Cargill. Carbon-based chemicals make up two-thirds of the $1.5 trillion chemicals market. “There’s plenty of room for new technologies,” Stoppert said.

DuPont still innovative?

Ironically, however, many of these new technologies arenext coming from traditional chemical companies. Once hailed as leaders in innovation, chemical makers have been buffeted by foreign competition for their commodity products. Many have slashed research budgets and shipped production overseas to reduce costs.

“There’s not a lot of primary research going on in those companies anymore,” said June Whispelway, director of the Society for Biological Engineering, which promotes biology in the chemical industry.

Instead, much of the innovation in bio-based chemicals comes from tiny biotech firms led by entrepreneurial scientists. For the big firms, capitalizing on the next great discovery in industrial biotechnology may require buying or funding the right startup.

Oliver Peoples, co-founder of biotech startup Metabolix, has designed bacteria that can produce fully formed plastic pellets, rather than just plastic components, as in the case of DuPont’s Sorona. He’s also developing genetically modified grass, which will grow biodegradable plastic inside its stalk. Peoples has received financial backing from agricultural processor Archer Daniels Midland and oil giant BP. But he’s had no luck in partnering with chemical firms. “The U.S. chemical industry won’t invest in anything,” he charges. “All that wealth and jobs is moving to Asia. Traditional plastic companies aren’t innovative. They’re bookkeepers.”

DuPont, however, has tried to set itself apart from other chemical firms. Having dropped any reference to “chemistry” in its motto in 1981, it took on the broader motto “The Miracles of Science” in 1999. Tom Connelly, DuPont’s chief technology officer, notes that Sorona resulted from the collaboration of biologists, chemists, engineers and fiber marketers. It’s also the product of a long-term collaboration with a biotech startup, Genencor International of Palo Alto, Calif.

“We’re really living integrated science,” Connelly said.

Source: delawareonline.com Aug 15, 2005.

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