Corporations: The Master Technicians

(See Cover) Along the banks of the meandering Brandywine River, set on a bluff that overlooks nearby Wilmington, stands a cluster of buildings whose occupants are true men of mystery. Many of them work in perpetual semidarkness and others in rooms that seem as barren as the face of Mars. Some spend their days poring over books and others sit for hours staring through picture windows at the 115 acres of their campus-like enclave. The aura of the place is one of uncertainty, as if no one quite knows what will happen next. No one does know. That is what makes the Experimental Station of E. I. du Pont de Nemours one of the world’s most exciting places in which to work.

Du Pont has become the world’s largest chemical company by creating an atmosphere in which surprises are especially likely to occur. In the Experimental Station and dozens of other Du Pont laboratories across the U.S., scientists are exploring the mysteries that teased Aristotle, baffled Francis Bacon and inspired the ancient alchemists to try, as John Milton put it, “to turn metals of drossiest ore to perfect gold.” The alchemists never succeeded in making gold, but Du Font’s button-down chemists are doing something nearly as good. By rearranging the molecules of thin air, plain water, grimy coal and crude oil, they are not only transforming and enriching the fabric of daily life but laying the foundations for new industries. Lately they have been so successful that Du Pont, the oldest big name in U.S. business, is entering a new era of change and discovery that has stirred up competitors and delighted Wall Street.

Windfall. Last week Du Pont created a stock market flurry by freeing itself of a possession that has proved a distinctly mixed blessing. Meeting in the company’s 13-story, Victorian-style headquarters in Wilmington, the directors decided to distribute the final one-third of Du Pont’s 63 million shares of General Motors stock among its own shareholders early next year. The directors thus complied with a 1957 U.S. Supreme Court ruling that held that Du Font’s ownership of G.M. stock violated the anti-trust laws. Getting rid of the shares under a court order, Du Pont has already given its stockholders .86 share of G.M. for every share of Du Pont held, is due to divest itself by February of all its G.M. stock, most of which it bought as an investment between 1917 and 1935 for $130 million (present worth: $6 billion).

The prospect of pocketing another one-half G.M. share attracted so many buyers to Du Pont that the company’s stock made one of its sharpest single-week gains in recent years before giving way to profit taking. The happy windfall for shareholders will deprive Du Pont of a rich lode of dividends that in the past has provided one-third of its earnings. For almost any other company, this loss of earning power would have been a severe blow. But Du Pont’s profits from chemicals alone have been rising so rapidly that its profit margin is among the dozen highest in the nation’s 500 biggest companies. Not counting its G.M. dividends, Du Pont earned $325 million last year on sales of $2.6 billion. Most important, Du Pont is so busy challenging the market with new products and ideas that the upward trend is almost certain to continue. Recently the company has: — > Invaded the $5 billion-a-year footwear business with Corfam, a leather substitute that looks, feels and “breathes” like leather and could cut into the natural leather market the way nylon slashed into silk.

> Developed an antiflu pill named Symmetrel (the company calls it “the first oral antiviral drug”), which is agitating the highly profitable pharmaceutical industry and could, with the Food and Drug Administration’s expected approval, provide a whole new field for Du Pont.

> Received its first eight patents on a new photographic process that produces positive images on film without a negative—an innovation potentially as important as the Polaroid process —and announced plans to introduce a Du Pont color film for home movies. > Brought out an unusually versatile plastic, Surlyn, which scientists can make either hard or soft, transparent or opaque, thick or thin simply by jiggering its ion content; it will be used in such varied products as packaging film, pipes, costume jewelry. >Embarked on an expansion project to enlarge its eight big textile plants and to launch a full-scale assault on foreign markets, where Du Pont is building seven new factories to take advantage of profits and growth rates generally twice as high as those in the U.S.

Operating from a provincial company town in the nation’s second smallest state, Du Pont has not only brought all this—and much else—to pass, but yearly piles more millions onto one of the greatest and most enduring U.S. family fortunes—a fortune that now amounts to $3 billion, give or take a few hundred million. Of the 1,500 living Du Ponts, 27 occupy executive positions in the company and more than 150 have sizable stakes in it. The Du Ponts turn out so many goods in so many places that their influence is even greater than their income. In 129 plants stretching across 28 states and 16 foreign countries, they make no fewer than 20,000 separate items.

Watch Those Eggs. The man appointed by fate, birth and the close councils of the family to lead Du Pont is a shy introvert named Lammot du Pont Copeland. A great-great-grandson of Founder Eleuthere Irenee du Pont, Copeland, 59, shows many of the family characteristics. He lives in a baronial style that has almost disappeared from the U.S., yet works in an unpretentious office whose door bears neither his name nor title. From his late mother and her three brothers—Pierre, Irenee and Lammot du Pont—he inherited not only a prominent nose and poor hearing (he sometimes turns off his hearing aid when bored) but most of his 195,737 shares of Du Pont and 249,694 shares of Christiana Securities, the family-run holding company that in turn has 29% of Du Pont stock. These two investments alone are worth $114 million to Copeland, who made a paper profit of $3,500,000 in one week recently when Du Pont stock jumped 18 points (it is now selling at 231¾).

Besides being the largest single owner of Du Pont and one of the richest men in America, Copeland is also a chemist and a financial expert who believes in Andrew Carnegie’s dictum: “Put all your eggs in one basket, and watch them.” Fiercely loyal to the closely woven clan and its company, Copeland believes, in the best big-business tradition, that Du Pont has a duty to do a great deal more than make money for its 240,000 stockholders. As he sees it, the firm that his family founded needs to set the pace for others in opening new frontiers of knowledge. “It’s fascinating,” he says, “to speculate on the impact the things you make have on society.”

Subtly or dramatically, Du Pont has made a considerable impact on the nation’s language and life. Besides nylon, Dacron and cellophane, the firm has contributed a whole lexicon of names, many of which sound like something right out of science fiction. While a man dons his suit of orlon and his socks of Spandex in the morning, his wife may be wriggling into a Lycra girdle, an Antron slip, Cantrece hose—or the Warner “body stocking,” a new fashion rage made of Du Font’s stretch nylon.

The family’s clothes are probably dry-cleaned with Du Pont Perclene, waterproofed with Zelan, bleached with Oxone. Their food comes in packages that are glued together with Elvacet and wrapped in Mylar, stored in a refrigerator cooled by Freon and cooked on a greaseless griddle coated with Teflon. Their car may be finished with Lucite, their furniture lacquered with

Duco, their house color-coated and waterproofed with Tedlar, their crab grass killed with Oust.

Struggling to Crack. Copeland is guiding his company into the creation of yet newer products under the spur of the sharpest and most sophisticated competition in the chemical industry’s history. The glamorous growth of the industry—it has expanded 126% in the last decade and is growing more than twice as fast as all U.S. industry—has lured so many newcomers into the field that nearly half the nation’s 500 biggest manufacturing companies now make chemicals, including such unlikely firms as General Foods and National Distillers. Though Du Pont is far ahead of its closest competitors, Union Carbide (1963 sales: $805 million) and Monsanto ($586 million), the $35 billion-a-year business is so broad and crowded that Du Pont accounts for only 7½% of it. The company might like to have a larger share, but U.S. trustbusters, who have made Du Pont a prime target for half a century, have ruled out practically any expansion through merger.

Demand for chemicals is towering because the chemical business supplies so much to the entire U.S. economy; it is the only industry in the U.S. that sells to all of the nation’s 79 basic industries. Hardly aware of it, the average American this year will “consume” 57 Ibs. of ammonia, 59 Ibs. of caustic soda, 77 Ibs. of chlorine and 194 Ibs. of sulphuric acid. Every important invention of the modern era—from nuclear energy and jet planes to drip-dry and color TV—is dependent on the modern chemical industry.

Freedom to Explore. Though the U.S. has had a chemical industry ever since John Winthrop’s firm started turning out saltpeter 15 years after the Pilgrims landed at Plymouth Rock, half of today’s chemical products have been developed since 1950. With so many new firms in the field, all struggling to crack or duplicate their competitors’ secret formulas, no company can count on holding on very long to exclusive markets for the products that it invents. Du Pont had nylon all to itself for 14 years, but its period of exclusivity shrank to ten years for Dacron, four years for orlon—and is diminishing fast.

To keep pace, Du Pont’s scientists have made themselves into the industry’s master technicians. The Du Pont clan has never forgotten that the key to its 162-year success has been its high respect for scientific competence and its ability to create the atmosphere for discovery. Says President Copeland: “We have never treated scientists as crazy, long-haired guys in the back room.” On the contrary, five of the company’s eight vice presidents and six of its twelve general managers hold doctorates in science and engineering.

The company’s 4,000 scientists are given broad freedom to explore the bluest yonders of research, have a budget of $58 million a year for “pioneering” research alone. Top technicians enjoy as much prestige as managers do, but none of the administrative burdens: some of them are not given any company assignments at all, but experiment with anything that interests them. Says Du Pont Engineer Nathaniel Wyeth, brother of Painter Andrew Wyeth: “I spend 30% of my time not in a lab but in my office, often just thinking.”

The company’s scientists win 600 to 700 patents a year and turn over all their patent rights to the company, as is standard practice throughout industry. But Du Pont encourages its scientists by letting them share in the profits of their inventiveness. Through a special bonus system, more generous than in most other companies, it yearly pays upwards of $50,000 each to several scientists, and over the years it has made millionaires of many of them.

From the company’s viewpoint, the trick is not so much to invent something as to find practical uses for it. When Du Pont developed its new plastic, Surlyn, one customer cracked: “You’ve got the world’s greatest answer. Now start looking for questions.” Whenever one of its scientists does find a genie in a bottle, the company is quick to commit everything to exploit it: more scientists, plants, funds—and, importantly, more time and patience—than any other company.

Like the Daily Double. These elements have been enough to bring Du Pont many a windfall. They came together, for example, in a narrow darkroom in the industrial area of Parlin, N.J., where Physicist R. Kingsley Blake produced Du Pont’s new no-negative photographic film. Blake started out by simply trying to untangle a peculiar phenomenon that he had been observing for a few months: faint positive images that unaccountably appeared on sheets of film. He was sure that the reaction was caused by any one of countless chemicals in his photo lab—but which one? Working day and night under the red darkroom lights, he dabbled with hundreds of dyes and compounds. Finally, on Dec. 7, 1961, he reached up among the rows of bottles and picked a rarely used mixture called mercaptan l-phenyl-5-mercaptotetrazole. When he swabbed the mixture on the film and then developed it, recalls Blake, “it was like going to the race track and hitting the daily double.” The payoff: a major advance in photography.

Blake’s chief immediately got on the phone to Wilmington and won approval for a new, expanded lab budget. Five researchers explored more than 6,000 detailed technical references before concluding that “Blake’s Effect” really meant a fresh and important development: a film that directly produces a positive image, doing away with the traditional steps of making a negative and printing a positive. When the specially coated film is exposed to light, certain parts of its emulsion are broken down in a process so mysterious that scientists themselves are a bit baffled. The film can then be developed much more simply and rapidly than ordinary film through immersion in a hypo solution, which dissolves some of the exposed parts to produce a positive; on the other hand, nothing is dissolved when ordinary film is developed, and its exposed parts become black to form a negative.

The film is not yet as fast as conventional film, and Du Pont will sell it initially to industry for use in making mats and plates for printing, and for reproducing engineering drawings. But the company does not rule out the creation of a huge market among amateur photographers. Says Research Chemist Dean R. White: “If we can lick the speed problem, we will be able to treat a paper base with this emulsion and produce a direct print on paper. Then we would be competitive with Polaroid.”

Testing Prisoners. Like other explorers, Du Pont’s chemists often discover not what they had set out to find but something far more intriguing. One notable case is the company’s new anti-virus drug, Symmetrel, which derives from a compound of organic chemicals that has a uniquely diamond-shaped molecular structure and is called adamantane. First formulated by a pair of Yugoslav scientists in 1941, adaman-tane had long been a laboratory curiosity around the world—because of its unusual structure—when Du Pont asked its men to search out uses for it.

Looking for a veterinary medicine that might work against viruses in animals, Du Pont scientists in the late 1950s tested some 20,000 compounds. One of the compounds based on the adamantane molecule showed promise, not only for animals but also for humans. In 1959 two Du Pont chemists rejiggered the molecular structure of adamantane a bit and developed a new compound, known as EXP-105-1. Scientists then began running tests on 6,000 mice a week, spraying their noses to fill their lungs with fatal doses of viruses. The compound raised the mice’s resistance.

In 1962 the scientists got permission from the Food and Drug Administration to test the drug on humans, found after tests on volunteers (including 850 inmates at a prison in Holmesburg, Pa.) that those who took pills made of the compound were much less likely than others to succumb to Asian flu. Conclusion: the drug does not kill the virus but inhibits its multiplication by preventing it from entering the cells of the body. Since scientists until recently considered an anti-virus drug a medical impossibility, the new Du Pont drug has revolutionary possibilities and may lead Du Pont into an area it has never before tried. Copeland, for one, has special reason to be pleased: 20 years ago he proposed in writing that Du Pont turn its enormous research potential to the drug business. “The pharmaceutical companies have been queuing up at our door seeking rights to manufacture or sell Symmetrel,” says he, “but we’re going to market it ourselves.”

Shoes for Orphans. Copeland has even higher hopes for Corfam. The product of 30 years of research and $30 million, it is different from any previous synthetic—the first leather substitute that is truly waterproof, shape-retaining, scuff-resistant, porous and long-lasting. Since leather is a remarkably complex material much like human skin, creating the substitute has taken longer and cost more than Du Pont expected when it set out on its search. Corfam is a complicated combination of several synthetics with seemingly opposite properties: tight on the outside, loose on the inside and porous throughout.

The scientists at Du Pont’s Experimental Station first found a way to duplicate leather’s “breathability” by impregnating plastic material with threadlike fibers—and then dissolving the fibers. Then, as is its habit, Du Pont generated an internal competition by pitting two of its departments against each other in a battle that raged for two years amid warlike secrecy. In 1955 the fabrics and finishes department devised a mixture of tough polyurethane and resilient polyester fibers that most suitably duplicated leather’s qualities. Du Pont’s top-strategy Executive Committee gave the go-ahead for what was to be named Corfam.

Du Pont showed as much savvy in testing and introducing Corfam as it did in developing it. First it piqued the curiosity of shoe manufacturers by sending them sample batches to make into test shoes. Du Pont inspectors went along and swept up the scraps to prevent them from falling into the hands of industrial spies. Then, to catch and correct such bugs as cracking and stiffness, the firm gave away thousands of shoes to people who would give them a hard-wearing test, notably orphans in institutions, mailmen and its own salesmen and executives—including Copeland, who still wears Corfam shoes.

The company decided to create an aura of luxury around the new synthetic by initially making it scarce and as costly as top-quality leather; prices for most of the shoes now range from $20 up, but Corfam may also appear in less expensive shoes in the spring. The public’s response, despite the high prices and limited styles so far, has surprised even Du Pont. Corfam shoes are being turned out by 45 major shoemakers, and stores are heavily reordering. Already 700,000 customers have bought the shoes; Du Pont hopes that Corfam in 20 years will win 25% of the U.S. shoe market, which now amounts to 610 million pairs a year.

Mass production began this month at a new plant in Old Hickory, Tenn., and Du Pont is also building a factory in Belgium to produce Corfam for the European market. Barbed-wire fences and 24-hour guards at Old Hickory testify to Du Pont’s unwillingness to share its hard-won secrets with a dozen competitors that are trying to crack the synthetic-leather market. Not even the shoemakers have been allowed inside the production area, and a sign at Old Hickory announces: “Our competitor is a nice fellow—smart too—so let him figure his own way.” One reason for Du Pont’s anxiety: computers that it rented from the Pentagon to calculate potential markets and profits fed back the prediction that world demand for shoes will exceed the supply of hides by as much as 45% by 1984.

Packaging Revolution. This continuous search for products—and the tendency of one link in the chain of discovery to lead inexorably to another —runs through Du Pont’s entire history and legend. Founded in 1802 by Eleuthere Irenee Du Pont, a French immigrant who had studied gunpowder-making under Lavoisier, the father of modern chemistry, the company got its start by selling explosives to a young U.S. that needed them to clear the West and defend itself. It grew huge a century later by supplying 40% of the powder used by the Allies in World War I.

In the 1920s the company moved to less martial fields by buying the French-owned rights to a transparent cellulose thought to be of small value because it broke up in water; Du Pont found a way to waterproof it, called it Cellophane and revolutionized packaging. Du Font’s growing group of scientists followed up with a series of breakthroughs: the first commercial U.S. synthetic rubber, the first nitrogen synthetic fertilizer, and the first synthetic fiber —nylon, which now comes in 450 varieties and rings up some $500 million in yearly sales for the company.

One Way to Skin a Rabbit. Almost alone among the chiefs of billion-dollar corporations, most of whom come from middle-class backgrounds, the man who has inherited this tradition was born to great wealth. Mother Copeland was a millionairess, father was a high officer of Du Pont for 40 years, and Lammot Copeland’s playmates were mostly his moneyed cousins. From the start, he showed a flair for discovering short cuts. At ten, he entered a family contest in biology in which the little Du Ponts competed to be the first to find and assemble from the Delaware countryside the bones to form the complete skeleton of an animal. Young Copeland did it the easy way: he quietly caught a rabbit and cooked it in a pot of lye.

Fighting down a temporary temptation to become a doctor, Copeland took a degree in industrial chemistry at Harvard (’28), then made a modest debut in the family company. He started as an expediter for small orders, but was laid off when the Depression struck. Back in the company after only four months, he began to rise with predictable speed: board member at the age of 37, then corporate secretary, chairman of the finance committee, vice president. In 1962 Crawford Greenewalt—whose wife is a Du Pont and a first cousin of Copeland’s—moved to the chairmanship after 14 years as president. He advised the board that the best man to succeed him would be Copeland. Somewhat like Britain’s Conservative Party, Du Pont’s 30 directors seek instinctively to pick the man who can best unify them. They place a greater premium on group management than most companies do, and were impressed by Copeland’s ability to lead top managers to a group decision. They took Greenewalt’s advice.

In a fine distinction, Copeland is known to old family friends as “Motsy” and to top business aides as “Mots.” He is far from being as aggressive, outgoing and articulate as most modern executives—but, then, his role as steward of the family company does not require those qualities of him. An inside man, Copeland seldom deals with anyone below general manager, rarely meets customers or suppliers, has little contact with the chiefs of other big companies, has never spoken with President Johnson or any Administration officials. He spends full time on top policy, helping to decide which men to promote to high jobs, figuring how much to spend on each of Du Pont’s major products and keeping a hard watch on the finances.

Pistols in the Basement. Like many an ancient riche, Copeland works at underplaying his wealth in public. He leaves his Cadillac at home and each morning drives himself eight miles to work in a Corvair. But his private pleasures are elegantly expensive: salmon fishing in Scotland, cattle breeding on his 3,000-acre farm in Maryland, duck-shooting parties on the Chesapeake (he keeps his eye sharp on a pistol range in his basement). Copeland is also a gourmet and oenological expert who belongs to Le Tastevin, an exclusive society devoted to fine wines, and he employs a French chef who came to him from Lord Astor. He and his wife Pamela—their three children are grown—live in a 20-room, antique-filled Georgian mansion whose 300 acres are tended by 14 gardeners and protected, naturally, by Du Pont fungicide.

Copeland’s hilltop estate is only one of the largest in the woodland Delaware area known as the “Du Pont Chateau Country,” where the family’s estates lock one into another to form a magnificent preserve for shooting and fox hunting. Proud of their French Huguenot ancestry, the Du Fonts have given their places such names as Montchanin, Granogue, Chevannes, Nemours, Louviers and Bois des Fosses. The houses contain the big-game trophies bagged by the family on African safaris, the pictures of such Du Pont yachts as the American Eagle (a 1964 America’s Cup contender) and cups won by the family’s thoroughbreds, including Mrs. Richard du Font’s Kelso.

For all of these distractions, the family’s control of the business has been remarkably enlightened. Even the critics of its nepotism concede that the family shunts its mediocre members into powerless “drag” jobs. The Du Ponts motivate their hired managers to fierce loyalty by giving them uncommon amounts of power and money. To achieve the outlook and flexibility of a small company, they have broken up their firm into a dozen operating departments that are only loosely supervised from above. A department general manager is like a captain on a ship, free to chart his own course so long as he meets schedules and wins battles, and he has a broader field of command and a plumper paycheck than most company presidents—often $250,000. Half of the general managers control sales of more than $100 million annually, and the one who runs the biggest department—textile fibers—is responsible for close to $1 billion.

On the lower executive echelons, Du Pont also offers fairly handsome salaries, bonuses, and such benefits as the company-run country club for all employees (highest fee: $125 a year). By the time he is 40, the rising Du Pont executive may earn well over $25,000, enough to move to the farther-out suburbs, where the pond in the backyard is preferred to the swimming pool. To those at home base, in fact, Du Pont is more than a place of work; it is a way of life in the most thoroughgoing company town in the U.S. The Du Ponts own Wilmington’s biggest bank, its only playhouse and its two daily newspapers —and what they do not control in Delaware they decidedly influence.

Copeland himself last year earned $349,846 in salary and bonus—a sum that pales in comparison with the $3,400,000 he collected in dividends on his Du Pont and Christiana shares. But the statistic that he watches most closely is Du Pont’s profit as a percentage of invested capital. The company always aims for a 10% return on investment, usually comes close to achieving it. This year the figure has risen somewhat above the 8.6% of 1963, but the gain is not enough to satisfy Copeland, despite Du Pont’s rising sales. Says he: “When you get to the point where sales are rated above profits, that’s not business—that’s bureaucracy.” To help reach its profit goal, Du Pont is capable of counting its pennies very closely: a few years back, it even adopted a cost-squeezing suggestion to remove the lemon wedges from the shrimp cocktails served at the company-owned Hotel Du Pont. Saving: $200 a year.

Extending Life. Its search for higher profits has led Du Pont to look with new interest on the consumer field, to which it now sells only 5% of its products directly. The company is speeding up development of consumer products, such as its recently introduced electric toothbrush, and would like to expand into the homebuilding field with plastic piping and other products. But Du Font’s strength for the foreseeable future will continue to be as a wholesaler to U.S. industries of the secrets it unlocks in the laboratory.

Just what wonders Du Pont will uncork next is hard to forecast, if only because the company’s compass is so wide. Du Pont’s chemists—like their colleagues throughout the chemical industry—never stop asking questions: How can electricity be transmitted without causing heat, what makes plants flower when and how they do, what are some new commercial possibilities of magnetism? Along the way, the perpetual search produces so many new products and processes that Du Pont is hard-pressed to find names for all of them, has called upon a computer to assemble 153,000 possible two-and three-syllable “nonsense” words that mean nothing in English. A while ago the company gave one product a name that means enema in Swedish, but human employees discovered the computer’s whimsy and the name was changed.

What the chemists foresee is more and faster technological development. The conquest of space has opened up huge new possibilities for the industry, which is already deeply involved in creating the technology that will push that conquest further. In the not very distant future, the chemists expect to produce clothes that last a lifetime, auto oil that never needs to be changed, paints that never chip or wear, fertilizer that stays potent for several years. Their labs are already at work on chemicals that enable crops to resist frost and drought, preservatives that keep food fresh for years without chilling, plastics tougher than steel, atomic automobiles, pills that prevent all infectious diseases and other pills that hold back old age by slowing the degenerative processes of the human body.

Where Ponce de Leon failed, the chemists may succeed. What they are doing is enough to give pause to the philosophers and make theologians nervous: some chemists are experimenting with compounds to change the human temperament, making the phlegmatic man more personable, and others are progressing rapidly toward discovery of the chemical bases of life as a prelude to reproducing living organisms in the test tube. Having started out to duplicate the products of raw nature, the chemists have gone nature one better. They are reversing and revising the natural processes, turning out products that have existed nowhere before except in man’s fertile imagination.