Indy passed over for ag HQ, but will play key role in DowDuPont

Dow Chemical Co. and DuPont will locate their combined agriculture headquarters in Wilmington, Del., while maintaining operations in Indianapolis.

The decision, revealed Friday, comes 10 weeks after the chemical giants announced they had agreed to a $130 billion merger of equals that will be called DowDuPont. The companies chose Wilmington, where DuPont is headquartered, over Indiana and Iowa, which aggressively pursued the ag headquarters.

DowDuPont will split itself into three companies following the merger, which is expected to close in the third quarter. The approximately $18 billion agriculture company could surpass St. Louis-based Monsanto Co. in size. DowDuPont also will spin off companies focused on material science and specialty products.

Dow and DuPont on Friday named Indianapolis and Johnston, Iowa, as "global business centers" for DowDuPont. The companies did not address staffing in Indianapolis. The city is home to Dow AgroSciences, which employs 1,400 people and specializes in crop protection and seed products. DuPont Pioneer develops plant genetics in Johnston.

Dow AgroSciences, which will be rebranded with a DuPont name, and DuPont Pioneer will keep their own leadership teams and continue to handle research and development, sales and marketing.

Why attracting the DowDuPont ag headquarters wouldn't be like landing a new Monsanto

"Being named a global business center for the new agriculture company enables us to maintain our focus on developing solutions for our customers," Dow AgroSciences CEO Tim Hassinger in a statement. "We look forward to continued collaboration with customers as we develop innovative technology they need to feed the growing world.”

DuPont CEO Edward D. Breen said in a statement the global business center designation "takes full advantage of the unique expertise and resources that exist in each location, enabling us to deliver the long-term opportunity for the leading global agriculture company we intend to create."

"Our deep presence in Iowa and Indiana will continue the close ties to our customer base and the broader agriculture community, while leveraging the existing corporate infrastructure and expertise we have in Delaware — DuPont’s home for more than 200 years," Breen added.

Indianapolis is well positioned to be a crop protection hub for DowDuPont. DowAgroSciences last year generated $6.4 billion in crop protection revenue, about 80 percent of its total sales. Crop protection is expected to account for half of the new ag company's revenue.

Although that might be a consolation prize, it's also a win of sorts that the crop protection work will remain in Indianapolis. Ted McKinney, the director of agribusiness development for the Indiana Economic Development Corp., said Dow and DuPont considered exiting the city.

"We're very excited about this announcement because one of the options was no presence in Indianapolis," McKinney said. "So we're elated and we believe that for the future, it bodes well for long-term growth."

McKinney said he could not comment on the short-term plans for Dow AgroSciences.

Dow and DuPont reiterated they are seeking $1.3 billion in synergies, which almost certainly means there will be layoffs in Indianapolis. DuPont already has said it will cut 1,700 jobs in Wilmington, and DuPont Pioneer has cut 175 workers in Johnston. The companies have not made any staffing announcements regarding Indianapolis.

While Indiana officials are happy to retain Dow AgroSciences, they also wanted the ag headquarters. Gov. Mike Pence, Indianapolis Mayor Joe Hogsett and other officials met with Dow and DuPont executives in recent weeks to pitch Indianapolis, hoping to land the bigger prize.

Their approach was quiet in contrast to Iowa, where state officials and even U.S. Sen. Chuck Grassley, R-Iowa, publicly lobbied for the ag headquarters. Iowa settled for a deal in which DowDuPont will receive $17 million in state and local incentives in exchange for retaining 2,600 jobs in Johnston.

Indiana did not offer retention incentives, instead focusing on performance-based incentives that DowDuPont would receive for investing in the state.

"Indianapolis and the state of Indiana were very aggressive, but much more subdued and quiet in the effort," McKinney said.

Although some observers suggested Indiana's contentious debate over LGBT rights could be a possible dealbreaker for Dow and DuPont, McKinney said it did not factor into discussions.

"It never came up," McKinney said. "In all the discussions, it never came up once."

Pence in a statement said the commitment by Dow and DuPont to Indianapolis means "Hoosiers can be assured our state will continue to play a leading role in the future of this exciting new company."

"Dow and DuPont have played integral roles in shaping the success of Indiana's economy, and we are proud that Indiana will play a key role in their new future," Pence said.

Hogsett said he is "grateful that the merger includes a continued, sustained presence in Indianapolis, and am optimistic about the further growth of DowDuPont in our community."

While the headquarters has received much of the attention surrounding the DowDuPont spinoff ag company, it will be relatively small compared to the operations that already exist in Indiana and Iowa. The headquarters in Wilmington will include a CEO and "key corporate support functions," according to Dow and DuPont.

Jonas Oxgaard, a senior chemicals analyst at Sanford C. Bernstein, estimated the ag headquarters would have brought about 100 new jobs to Indianapolis or Johnston.

"The total headcount wouldn't change dramatically," Oxgaard said.

The benefit to such a headquarters is the quality of those jobs, Oxgaard said.

"These are high-paying jobs — very solid white-collar jobs," Oxgaard said. "That's typically what you look for."

Wilmington also will be the headquarters of DowDuPont's specialty products company. The material sciences company will be based in Midland, Mich., the headquarters of Dow.

Even if Indianapolis had been named as the ag headquarters for DowDuPont, it wouldn't have happened immediately. DowDuPont doesn't plan to split into three companies until 2018. By then, McKinney said, there could be signs of new investment in DowDuPont's Indianapolis operations even without the headquarters.

"Over the long term," he said, "we anticipate and hope for significant growth at the Indianapolis site."

Call IndyStar reporter James Briggs at (317) 444-6307. Follow him on Twitter: @JamesEBriggs.