Farm powerhouses DuPont Pioneer and Monsanto Co. are seeking to pull out of agreements with the state that would require them to create about 350 jobs.
Citing the downturn in the farm economy, the companies will forgo nearly $21 million in state tax incentives to avoid the job-creation goals.
St. Louis-based Monsanto said it will not to pursue a $90 million corn plant in Independence, a project that would have brought about 50 jobs to the northeast Iowa town.
Johnston-based Pioneer said it has built or is building three projects, with a $139 million capital investment. But it's uncertain it can meet the 305 job-creation requirements tied to the projects to receive about $13 million in state tax credits.
On Friday, Wilmington, Del.-based DuPont, the parent of Pioneer, said it would merge with Midland, Mich.-based Dow Chemical in a deal now valued around $115 billion.
The combined company plans to spin off three new businesses, including one that would combine Pioneer and Dow AgroSciences.
Additionally, DuPont announced Friday a $700 million cost-cutting and restructuring plan that would result in cutting about 5,400 members of the company's 54,000 global workforce.
DuPont declined to say how many cuts will take place in Iowa. Pioneer employs an estimated 3,400 Iowans, mostly in the Des Moines metro area. Many of the jobs are high-paying research and scientific positions.
"At this point in time, we're not sure how the merger will affect the local Pioneer presence in Johnston," said Jim Sanders, Johnston's city administrator. "We have talked with leaders, and they're not sure how it will affect local operations either."
Analysts have speculated that consolidation is inevitable in the agriculture industry as seed and chemical companies struggle with shrinking profits.
U.S. farm income is projected to decline 38 percent this year as growers are squeezed by low corn and soybean prices and high costs for seeds, fertilizer and other inputs.
Farm income in Iowa declined 39 percent last year to nearly $5.1 billion, data from the U.S. Department of Agriculture showed.
Chad Hart, an Iowa State University agricultural economist, said the industry is "under some significant financial pressure, just as crop farmers are."
“It’s not just Pioneer. It’s not just Monsanto. When we look across the board at Deere, Kinze — we’ve seen if you’re an ag input supplier, you’re tightening your belt right now just like farmers are," Hart said. "It’s not one company in particular. It’s the sector as a whole that’s making these moves."
Johnston Mayor Paula Dierenfeld expects Pioneer, founded in Johnston in 1926 by agricultural pioneer Henry A. Wallace, will remain a strong part of the community.
"Pioneer has very deep and strong roots in the Johnston community," she said. "They've gone through changes before. They've gone through difficult times before. It's a very resilient company."
Pioneer became a part of DuPont in 1999.
Dierenfeld expects whatever new company emerges from the DuPont-Dow combination will find Pioneer a significant asset.
"They're high-quality workers. They're smart and they work hard, and I think the new company will see the real value and the asset they have there," she said.
The Iowa Economic Development Authority board will consider requests from Pioneer and Monsanto to withdraw from their state contracts at a meeting Friday.
http://www.desmoinesregister.com/st...o-drop-pledges-create-350-iowa-jobs/77500518/
Citing the downturn in the farm economy, the companies will forgo nearly $21 million in state tax incentives to avoid the job-creation goals.
St. Louis-based Monsanto said it will not to pursue a $90 million corn plant in Independence, a project that would have brought about 50 jobs to the northeast Iowa town.
Johnston-based Pioneer said it has built or is building three projects, with a $139 million capital investment. But it's uncertain it can meet the 305 job-creation requirements tied to the projects to receive about $13 million in state tax credits.
On Friday, Wilmington, Del.-based DuPont, the parent of Pioneer, said it would merge with Midland, Mich.-based Dow Chemical in a deal now valued around $115 billion.
The combined company plans to spin off three new businesses, including one that would combine Pioneer and Dow AgroSciences.
Additionally, DuPont announced Friday a $700 million cost-cutting and restructuring plan that would result in cutting about 5,400 members of the company's 54,000 global workforce.
DuPont declined to say how many cuts will take place in Iowa. Pioneer employs an estimated 3,400 Iowans, mostly in the Des Moines metro area. Many of the jobs are high-paying research and scientific positions.
"At this point in time, we're not sure how the merger will affect the local Pioneer presence in Johnston," said Jim Sanders, Johnston's city administrator. "We have talked with leaders, and they're not sure how it will affect local operations either."
Analysts have speculated that consolidation is inevitable in the agriculture industry as seed and chemical companies struggle with shrinking profits.
U.S. farm income is projected to decline 38 percent this year as growers are squeezed by low corn and soybean prices and high costs for seeds, fertilizer and other inputs.
Farm income in Iowa declined 39 percent last year to nearly $5.1 billion, data from the U.S. Department of Agriculture showed.
Chad Hart, an Iowa State University agricultural economist, said the industry is "under some significant financial pressure, just as crop farmers are."
“It’s not just Pioneer. It’s not just Monsanto. When we look across the board at Deere, Kinze — we’ve seen if you’re an ag input supplier, you’re tightening your belt right now just like farmers are," Hart said. "It’s not one company in particular. It’s the sector as a whole that’s making these moves."
Johnston Mayor Paula Dierenfeld expects Pioneer, founded in Johnston in 1926 by agricultural pioneer Henry A. Wallace, will remain a strong part of the community.
"Pioneer has very deep and strong roots in the Johnston community," she said. "They've gone through changes before. They've gone through difficult times before. It's a very resilient company."
Pioneer became a part of DuPont in 1999.
Dierenfeld expects whatever new company emerges from the DuPont-Dow combination will find Pioneer a significant asset.
"They're high-quality workers. They're smart and they work hard, and I think the new company will see the real value and the asset they have there," she said.
The Iowa Economic Development Authority board will consider requests from Pioneer and Monsanto to withdraw from their state contracts at a meeting Friday.
http://www.desmoinesregister.com/st...o-drop-pledges-create-350-iowa-jobs/77500518/
