FOCUS: TECHNOLOGY

Since its founding 77 years ago, Pioneer Hi-Bred International Inc.’s principal task has been finding better ways to feed the world.

Now, the mission for the world’s largest producer of hybrid corn and soybean seeds might be expanding as parent DuPont Co., the chemicals giant, increasingly turns its focus to biotechnology. Amid the shift, Pioneer’s close connections to farmers and its deep knowledge of plant genetics will likely prove invaluable in helping DuPont complete its transformation.

Leading the change at DuPont has been Chief Executive Charles Holliday, who is pushing the 200-year-old company’s scientists, famous for creating such household names as Stainmaster fabric protection, nylon and Mylar, to crank out new blockbuster products and revive flagging sales. Central to that plan is a new fabric called Sorona that uses a polymer that’s derived from corn instead of petroleum.

“A big part of growth going forward for DuPont will be the integration of chemistry and biology,” said Tom West, who is the vice president of business and community support and one of the few Pioneer executives who originally came from DuPont. “Pioneer has been a major trigger for bringing biology to DuPont.”

Last week, DuPont confirmed it was in talks with an unidentified third party to sell its textiles unit, a sale that could total $6 billion, according to analyst estimates. Though the sale has long been expected, its ramifications are profound for the Wilmington, Del.-based company.

DuPont’s textiles business is the world’s largest producer of that material, as well as the closely related fibers Lycra and polyester. Those materials have defined DuPont with consumers for the past half-century, though the company is increasingly facing competition in this arena from foreign producers.

Another downside is the petroleum that it takes to produce them. Holliday has set a goal for DuPont to have a quarter of the company’s sales come from renewable products by 2010, up from 14 percent today.

“We want to be to alternative energy what the refining industry is to oil,” West said.

In October, a consortium that includes DuPont won a $19 million grant from the U.S. Department of Energy to produce sugar from corn and use it to create ethanol and other chemicals. One of those chemicals is a key building block for Sorona. A decision on whether to produce Sorona commercially “is coming,” West said.

Sorona would give corn growers yet another outlet for their product, which could boost Pioneer’s seed sales and lead to higher profits. Ethanol has already boosted corn prices, West said.

“Pioneer enhances DuPont’s ability to do Sorona,” said Mark Gulley, an analyst at Banc of America Securities, who has a “buy” rating on DuPont shares.

Last year, DuPont posted a net loss of $1.1 billion, or $1.11 per share, largely because of a $3 billion write-down for goodwill related to its $10 billion purchase of Pioneer in 1999. It had net income of $4.34 billion, or $4.16 per share, in 2001. DuPont’s sales dropped 3.3 percent to $24.5 billion from $25.4 billion in 2001.

Despite DuPont’s sales decline, Pioneer has steamed ahead. DuPont doesn’t normally break-out Pioneer’s annual sales in its financial reports, but made an exception last year because the subsidiariy’s sales rose 5 percent to surpass $2 billion.

Henry Wallace, who would later be named U.S. Secretary of Agriculture and who would serve as vice president under Franklin D. Roosevelt, founded Pioneer in 1926.

Today, the company has about 5,400 employees at 120 locations in 70 countries. It is intensely close to farmers, sending bills directly to about 200,000 of them worldwide.

As part of it efforts to get even closer, it’s providing more and more training for its sales agents so that potential problems, such as crop diseases, can be diagnosed more quickly. So far, 80 percent of its 2,500 sales agents are considered certified crop advisers.

It has also started opening remote laboratories around the world, where farmers can have samples of their crops analyzed in a matter of days, rather than waiting weeks for the samples to be shipped through the mail. The remote labs involve little more than a computer with a data connection and a microscope, but they can lead to tremendous savings for farmers.

In one instance, a remote lab saved a farmer who owned a 5,000-acre farm $150,000 after an analysis determined that his field wasn’t infected with a disease, and therefore didn’t need to be sprayed with pesticide. The labs also help Pioneer compile information from the field about plants.

Pioneer will release as many as 40 new types of seeds this year. Those seeds are a result of testing roughly 2.5 million combinations of genetic traits in corn in hopes of creating varieties that are more resistant to drought, pesticides or disease.

It’s also teaming with rivals to create new products. Last week, DuPont said it agreed to license technology from Monsanto Co. to control a pest called the corn rootworm.

“Our goal is still to develop better products faster,” said Gary Thull, Pioneer’s educational services manager.

To further speed development of new seeds, Pioneer uses test fields in regions with different climates to extend its growing seasons. For example, the company has roughly 1,500 acres of land under cultivation in Hawaii, either on land it owns or through contracts with local farmers. The efforts have earned Pioneer scientists about 1,500 patents.

As Pioneer grows closer to DuPont, the two organizations are learning from each other. Pioneer’s marketing program and its successes at branding its products among customers are viewed as one area where DuPont can pick up some tips, West said.

Some of those lessons may already be being absorbed. DuPont, which doesn’t usually sell directly to consumers, has started printing its logo on brassieres that are made with its stretchy Tactel fiber.

It’s also working to put its mark on Levi Strauss and Co.’s new stainproof Dockers, which are made with Teflon, and on jeans that are made with Kevlar to make them more durable. Both Kevlar and Teflon are DuPont products.

The learning swings both ways, West explained. DuPont, founded in 1801 as a gunpowder manufacturer, is famous for its attention to safety. Agriculture is the second only to mining in terms of accidents among workers, West said. Since the acquisition, accidents at Pioneer have dropped dramatically.

For the future, DuPont said it is hoping to develop several products that involve corn in some way, either directly or indirectly. Some of the knowledge it needs to do that will come from Pioneer.

For example, company scientists are working on new varieties of corn that help people better absorb iron, reducing the need for iron supplements. Other products could include protein-based cosmetics and adhesives and finding ways to use biology to create sensors and electronic components.

“Pioneer has always had close contact with farmers,” said Bill Niebur, Pioneer’s vice president of research and product development. “What DuPont bought us was a much higher awareness of the consumer and a sensitivity to the marketplace.”