DOW’S LIVERIS URGES “MAKE IT IN AMERICA”
By Stas Margaronis, Rebuild The United States
In his book MAKE IT INAMERICA, Andrew Liveris, chairman and CEO of Dow Chemical Company, calls for theUnited Statesto re-invent its economy by restoring its once strong manufacturing base
Speaking at the American Hellenic Council annual dinner inLos Angeles, Liveris warned that the lack of a strong manufacturing base in theUnited Statesis dooming decent-paying jobs and future economic growth. He noted that for all the business administration graduates coming out ofU.S.universities only a small percentage of students graduate with engineering degrees. The result is that theUnited Statesis increasingly dependant on foreign suppliers. He also urged fellow Greek-Americans, inspired byGreece’s historical achievements, to rally around a manufacturing revival for theUnited States
Liveris proposes a hands-on engineering and manufacturing vision for rebuilding theU.S.economy, directed toward next generation manufacturing. He cites the importance of renewable energy, including building new wind turbines, solar-powered electricity and components such as the batteries that Dow Chemical can provide.
The importance of government support in terms of subsidies, tax incentives, infrastructure spending and a re-engineered education system will be key factors in an economic turn-around. The conventional wisdom that government is not an important ally in stimulating economic development gets no credence.
The loss of manufacturing in theUnited Stateshas long been rationalized in theUnited Statessince service industry jobs replaced manufacturing jobs in the 1980s. Liveris challenges this notion by pointing out that manufacturing jobs pay more, have a superior multiplier effect in creating support jobs compared to service jobs and that manufacturing acts as a self-generator for new manufacturing as well as research and development. Liveris also challenges the conventional business view that Americans cannot compete because they require higher wages than Chinese workers. Improved productivity can compensate for higher wages.
Public perceptions have been misled by “crisis deniers” such as former Clinton Administration Labor Secretary Robert Reich, a respected economic analyst, who insist that there is no problem because U.S.output is at an all time high. Liveris says economic analysts have manipulated the economic data to obscure the facts that manufacturing and manufacturing jobs have been at a steady decline relative to the U.S.workforce and U.S.consumption. Yes, the United Statesproduces more than it did in 1950 because the population was 152 million then and 310 million today. The truth is that over the last ten years 42,000 factories have been shut down and between 2000 and 2007, the growth rate in U.S.manufacturing in the United Statesdeclined by 85%.
And that was before the 2008 crisis began!
The divide between the United Statesand other countries is made clear in a chart comparing renewable energy policies for China, Germany, Spainand the United States:
* TheUnited Stateshas no carbon reduction policy, no renewable electricity requirement and no national energy efficiency plan. China,GermanyandSpainhave carbon reduction plans and renewable energy requirements.Chinahas an energy efficiency plan as doGermanyandSpainas required by the European Union.
* In terms of financing theUnited Stateshas no national feed-in tariff policy, requiring utilities to pay a company or individual for producing new renewable energy. Meanwhile,China,GermanyandChinaall have feed-in tariffs.
As a result, Liveris cites how Chinahas challenged and is surpassing the United Statesin renewable energy spending, thanks in part, to government subsidies. In 2004, Chinaspent $2.5 billion on renewable energy, but by 2009 Chinahad invested $34.6 billion, “almost twice the amount the United Statesspent.” By 2020 China is poised to generate 150 gigawatts of renewable energy which would account for 30% of China’s power supply and total four times what the United States deploys today.
Liveris cites a dysfunctional federal regulatory and tax environment which lacks a clear focus on creating manufacturing jobs or even understanding why manufacturing is important.
It is essential that schools and universities become more focused on producing students with engineering capabilities. This means classes must be focused on science, technology, engineering and math (known as STEM in education circles).
Dow Chemical is a key supplier in many renewable energy products including advanced batteries that are needed to store solar and wind energy to provide more efficient power generation. Dow could lose those jobs and sales if theUnited Statesdoesn’t act to support their own domestic manufacturers.
Renewable energy has a big future, he says, because of the threat of global warming and because renewable energy has a fixed cost compared to oil and gas which are subject to price fluctuations based on supply. Establishing renewable energy as a fixed cost makes it a hugely valuable generator of growth and jobs as well as a weapon against global warming.
Delays in mobilizing a manufacturing agenda are reaching a point of no return where economic recovery is less and less likely. Americans must support a manufacturing mobilization where government partners with business.
Courageously, Liveris breaks ranks with much of Corporate America by stating that economic and manufacturing revitalization can only begin when “the business community stops seeing Washington automatically, in almost every case, as the enemy.”
This is a call to action that needs to be heard.