DuPont’s layoffs of 1,700 employees in Delaware ahead of its merger with Dow Chemical are a negative credit event for its home state, Moody’s Investors Service said.
The job cuts, announced late last month, will reduce DuPont’s Delaware workforce by a “significant” 24%, according to Moody’s. Among those being laid off are 200 researchers at the company’s Experimental Station in a Wilmington suburb.
“This event is credit negative for New Castle County (Aaa stable), the City of Wilmington (Aa2 stable), and the State of Delaware (Aaa stable),” Moody’s said in a research note.
Wilmington, the state’s largest city, could see its finances impacted because it is dependent on employment and income taxes, Moody’s said, noting that the city levies a 1.25% wage tax, a net profits tax, and a per-employee head tax.
If 24% of the 440 Wilmington residents who work for DuPont are laid off, that means a potential loss of $156,000 in wage tax revenue. If all 440 are laid off, that figure rises to $650,000.
The effects of the layoffs on the state as whole “will be more muted due to the state’s more diverse finances and tax base,” Moody’s said.
DuPont employs approximately 7,000 people in Delaware out of a global workforce of 53,000. Gov. Jack Markell has called the layoffs “deeply disappointing, especially to the thousands of Delawareans who helped this company grow and succeed for generations.”
The new $130 billion DowDuPont plans to combine products from both companies in the areas of agriculture, commodity chemicals and specialty products to create three new businesses. Although DuPont will eliminate more than one in four of its positions in Delaware, the company is not expected to shutter any of its local facilities.