Executive Speeches

Prepared for delivery before
The Chief Executives' Club of Boston
Boston, Massachusetts
June 13, 2007

We face global challenges that will ultimately determine the livability of our planet in the 21st Century.  Some of these challenges are established mega trends that business can respond to both as an opportunity and as a solution.  Today, I want to look at three mega trends and give you an idea of how we're responding at DuPont through our capabilities as a science company.

The trends I'll discuss are:

• the drive for renewable energy and materials;
• the demand for greater safety and security; and
• the need for increased food production around the world.

There are two observations that I would like to make up front about these trends as a group.  The first is that the common denominator of all three is population growth.  In my lifetime, the world's human population has grown from about 2.5 billion to today's figure of more than 6.5 billion.  The world's population will increase to about 9 billion people by mid-century.  Population growth and associated dynamics are driving energy issues, food production issues, and security issues.

The majority of this population growth, however, will come in places that are currently not major markets for what we make and sell.  The United Nations estimates that of the more than 9 billion inhabitants of the planet in 2050, only 1.2 billion will come from the more developed regions with 7.9 billion  coming from the less developed areas.  Even if we exclude China from that figure, the estimate is that 6.5 billion people will be living in less developed regions.  I know this is not news to you, but it's such a clear pattern that for a company like DuPont that's focused on longer-term R&D and focused on being here in the future understanding this pattern and deploying our resources opposite it is very important.

My other observation is that these three mega trends are here to stay, and they are not reversible - in fact, they will almost certainly gain momentum.  While we can always experience unforeseen breakthroughs in technology and twists and turns in geopolitics may affect energy supply and demand, we would have a hard time envisioning circumstances under which the drive for renewable energy and materials would abate.  Even if you take the U.N. low ball estimate for world population growth, it still projects nearly 8 billion people by 2050.  They all have to eat, and we hope that the diets of people around the world will improve, making their lives longer and healthier.  And with regard to safety and security, the 21st Century, unfortunately, will likely be one in which safety and security issues will be a key factor in shaping our societies.  Demand on the world's resources is driving these trends, and for several years at DuPont, we have been shaping our programs to deal with them. 

The Drive for Renewable Energy and Materials

Let's consider the first mega trend: the drive for renewable energy and materials.  As developed economies in Europe and North America continue to grow and other economies modernize in countries such as China and India, the demand for hydrocarbon resources is increasing dramatically.  At the same time, hydrocarbon use, whether gasoline and diesel for transportation or coal for power plants, is contributing to climate change that scientists tell us is underway.  Likewise, the polymer revolution that DuPont helped lead beginning in the 1930s has grown into a materials category essential for modern life - and one which is still dependent on hydrocarbon feedstocks. 

We need to rethink the way we source and use energy and materials.  We need to work to lessen our dependence on petroleum and minimize the amount of carbon we put into the atmosphere.  The opportunities for response include renewable energy - such as photovoltaic, wind and biofuels - and renewable materials, such as biomaterials.  And these initiatives should be accompanied by material advances that can conserve energy so we use less of it in any form.

DuPont is working in each of those areas.  We are creating new solutions based on many offerings of renewable energy.  You may not think of DuPont as a leader in solar energy, but we have eight essential products that go into the manufacture of solar panels.  Photovoltaics represent a $15 billion market growing 30 percent per year; our product penetration is growing faster than the market.

But the type of renewable energy most often associated with DuPont is biofuels.  Here the opportunity is large, and it is growing rapidly but differently in each major region of the world.  Currently 13 billion gallons of biofuels are consumed globally with the United States and South & Central America consuming the most.  The projection for the future is 87 billion gallons consumed by 2020.  The main technical challenge will be to develop renewable fuels capacity that can adapt to the different crop inputs - from wheat in Europe to sugar cane in Brazil.

In the U.S., of course, the crop we most readily think of when we talk about biofuels is corn for ethanol.  DuPont has led the efforts on the Integrated Corn-Based Bio Refinery, coordinating the work of eight partners who are pooling their expertise across different areas of know-how.  With funding from the U.S. Department of Energy, DuPont and our partner POET are engaged in an all-out effort to move the technology quickly to commercialization. 

The Bio Refinery is key because it will produce cellulosic ethanol.  Many "food crops" such as corn, soybeans, and wheat have industrial and food applications.  This technology uses cobs, leaves and stalks to make the ethanol.  In so doing, cellulosics will increase the amount of fuel per acre and decrease the pressure to use crops that are also used for food. 

We have proprietary technology at two critical stages - in the process deriving the sugar from the biomass, and with  the microbe for converting the sugar to ethanol. We have been working on this technology since 2003.  We will have a pilot facility operating this year and a commercial plant in 2010. 

Biobutanol is another fuel alternative we will be introducing to the market later this year.  It can be blended with gasoline like ethanol, but it has certain advantages over ethanol, including higher energy content and therefore more miles to the gallon.  The technology we are developing with BP also has the flexibility to use various natural sugar sources as a feedstock.  And it is compatible with current fuel infrastructures for gasoline transport and distribution.  We're already developing the second-generation microbe, which will be more efficient and is targeted for full commercialization in 2010.

Of course as one of the world's largest seed companies, DuPont is well aware that the most powerful tool at our disposal for renewable fuels remains the genetics of the seeds we sell.  The best thing we can do is to continue to increase the productivity of crops, thereby making production of ethanol today and butanol in the future more efficient and taking pressure off the food value chain.

Even as we transition to renewable fuels, we cannot afford to diminish any of our emphasis on energy conservation.  Our building innovations business has been investing for many years to deliver energy-efficient products to builders. You are probably familiar with our Tyvek® HomeWrap®.  We have also developed a new Tyvek® AtticWrap™ and ThermaWrap™ which, when used together, can reduce home energy use by up to 15 percent with a five-year payback.

In addition to biofuels, cutting edge bio-based materials can replace nonrenewable materials without any compromise in performance.  We are finding that many renewables can outperform nonrenewable materials.  Just last week we dedicated a new plant in Loudon, Tennessee, with our partner Tate & Lyle.  This plant is the world's largest aerobic fermentation plant.  It makes a product from corn sugar that we call Bio-PDO™.  Much of the Bio-PDO™ will replace petroleum-derived intermediates in the manufacture of our DuPont ™ Sorona™ polymer which is used for carpet and apparel fibers.  Other renewable materials include our Hytrel® RS thermoplastic elastomers and a line of Sorona® engineering polymers we have in the pipeline.  Materials have been DuPont's traditional strength in research, technology, and manufacturing  and we see great potential for renewable materials in the future.

The Demand for Safety and Security

Let me turn to a second mega trend: the demand for greater safety and security.  As many of you may be aware, safety has been a core value of DuPont for 205 years.  In that time, we've learned a lot about what motivates people in terms of safety and security.  Study after study indicates that wherever you go in the world, the order of priority is pretty much the same:  safety and security for me and my family in our home, then for my workplace, and then for the world around me.

The 21st Century world is a dangerous place with both natural and man-made hazards.  But there is a lot we can do about it, and our analysis indicates people around the world want solutions that will help make their lives safer and more secure.  We have adapted a number of DuPont products to address this trend.  DuPont™ Kevlar® and Nomex® advanced fibers are obvious examples.  You all know Kevlar® as a main component in body armor, but did you know you can install a DuPont ™ StormRoom™ with Kevlar® in your house to protect your family from hurricanes and tornados?  

Another way we are helping to make the world safer is through our safety consulting business.  This year the Washington, D.C., Metro approved a five-year contract with DuPont Safety Resources to help create a safer worker environment for its employees and reduce workers compensation costs for the transit authority.  The Los Angeles County Metropolitan Transit Authority worked with us for several years and since 2000, bus accident claims rates are down 38 percent, new workers compensation claims are down more than 60 percent, lost work days are down 54 percent and total workers compensation costs are down 24 percent.

The Need for Increased Food Production

The third and last mega trend I want to discuss is the need for increased food production.  Consider some statistics - all related to population growth and improved diets.  In the last ten years, world population grew by 12 percent.  But pork and chicken consumption grew by 27 and 28 percent, respectively, as diets improved in countries such as China and demand rose for protein.  Corn production was up 22 percent and soybeans were up  40 percent reflecting the production of more hogs and chickens.  But all of this took place in a world where land available for agriculture grew a scant two percent. 

How's that possible?  Growing more food on the same or less acreage is what we call creating "virtual acres."  It's made possible by a host of different technologies coming together, including applying the very powerful tool of biotechnology to crop genetics.  We're developing insect-resistant hybrids to improve productivity, quality and yield.  We're also using biotechnology to accelerate breeding step changes and rate of genetic gain.

Some of our recently introduced products include Herculex® XTRA to protect corn from insect damage.   Soybean varieties are being developed to contribute to nutrition  and health.  Our TREUS™ low linolenic soybean oil has been adopted by Kellogg's, KFC and others.   We are especially excited about our Optimum™ GAT ™ trait which is on track to enable us to introduce herbicide-tolerant soybeans in 2009 and with corn, cotton and other crops to follow. 

Science as Part of the Solution

I've looked at three mega trends and discussed some of DuPont's responses that we feel are tied to our business growth.  Science offers us a solution set to deal with the challenges we face.  We have transformed our company into a 21st Century science company so we can position our company for a third century of growth for our shareholders and customers. 

But for science to work, it has to be accepted, understood and learned.  We are a society that depends on science and engineering, and yet many of our citizens have little knowledge of science and how it works in their lives.  That deficiency is illustrated and compounded by the fact that fewer and fewer young people are choosing to study and pursue careers in science and engineering.

So my appeal to you is to examine ways in which your influence can be brought to bear on maintaining our scientific capability and on delivering our scientific potential.  Boston is one of the scientific capitals of the world, so I know you understand exactly what I am talking about.

We as a society have to maintain our investment and leadership in science.  And as industry, we have to work in partnership with those who may have different perspectives on solutions.  That's why DuPont participates in coalitions like the United States Climate Action Partnership (USCAP) on climate change and partnerships like the one we have with Environmental Defense for nanotechnology.  It's also why we instituted programs like our DuPont Challenge science essay writing contest for students - 11,000 of whom submitted entries this past year. 

The vision of DuPont is to be the world's most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere.  We know we can respond to the mega trends and meet the challenges they present.  Science offers the potential to feed our growing populations, tap our vast renewable resources for energy and materials, and provide safer and more secure lives for people around the world.