Dow CEO Talks Manufacturing On CNN
Sep20

Dow CEO Talks Manufacturing On CNN

Dow CEO Andrew N. Liveris appeared on a CNN special Sunday night hosted by Fareed Zakara titled “Restoring the American Dream, Getting Back to Work.” The segment with Liveris can be found here. As previously noted by The Chemical Notebook, and in C&EN, Liveris wrote a book on rejuvenating American manufacturing called Make It In America: The Case for Re-Inventing the Economy" . (My review was blurbed in the editorial review section of the Amazon listing!) I transcribed some of the interesting quotes from the CNN piece: Zakaria: The manufacturing jobs of the future are high-tech and high paying, but isn’t it impossible to lure those jobs to America since our labor is more expensive than other countries’? Absolutely not, says Liveris, labor accounts for only 8% of his total costs. Liveris: I do not make a decision on where to site my factories based on labor costs. I make it based on—totally--around the policies to encourage me to invest there and the human capital to support. And that’s why, at the end of the day, we still have a chance in this country. It should be noted that chemical operations are capital intensive, not labor intensive.  Here’s a link to some data from the Census Bureau’s 2002 Economic Survey. For chemicals, the value of shipments per paid employee is more than twice the average for the entire manufacturing sector. And the chemical industry’s average ratio of shipments to payrolls stood at 10.33. Only the petroleum and coal (35.00) and the beverage and tobacco (15.27) industries have higher ratios. At chemical plants, you see a lot of plumbing and reaction vessels, but not many people. The human activity typically occurs a) in the control room, (b) at the loading and packaging area, and c) at the guard shack. So when Liveris says the cost of labor isn’t a big factor in his decision making, we can’t necessarily assume that this applies to other manufacturers, making other kinds of products. Liveris made another point in the interview, one he makes often, which I think if very important to C&EN readers. This is that research and development will follow manufacturing overseas. Liveris: When you make stuff, you don’t realize that when you move the making somewhere else, then the people who know how to make it have the intellectual knowhow to make the next one. Zakaria: But now they are in China. Liveris: They’re in China. So you have lost the supply chain as well, and your creativity has created huge jobs elsewhere of the continuous kind. It’s not just the job of the first Kindle, it is the job of...

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Dow CEO Talks Manufacturing On CNN
Sep20

Dow CEO Talks Manufacturing On CNN

Dow CEO Andrew N. Liveris appeared on a CNN special Sunday night hosted by Fareed Zakara titled “Restoring the American Dream, Getting Back to Work.” The segment with Liveris can be found here. As previously noted by The Chemical Notebook, and in C&EN, Liveris wrote a book on rejuvenating American manufacturing called Make It In America: The Case for Re-Inventing the Economy" . (My review was blurbed in the editorial review section of the Amazon listing!) I transcribed some of the interesting quotes from the CNN piece: Zakaria: The manufacturing jobs of the future are high-tech and high paying, but isn’t it impossible to lure those jobs to America since our labor is more expensive than other countries’? Absolutely not, says Liveris, labor accounts for only 8% of his total costs. Liveris: I do not make a decision on where to site my factories based on labor costs. I make it based on—totally--around the policies to encourage me to invest there and the human capital to support. And that’s why, at the end of the day, we still have a chance in this country. It should be noted that chemical operations are capital intensive, not labor intensive.  Here’s a link to some data from the Census Bureau’s 2002 Economic Survey. For chemicals, the value of shipments per paid employee is more than twice the average for the entire manufacturing sector. And the chemical industry’s average ratio of shipments to payrolls stood at 10.33. Only the petroleum and coal (35.00) and the beverage and tobacco (15.27) industries have higher ratios. At chemical plants, you see a lot of plumbing and reaction vessels, but not many people. The human activity typically occurs a) in the control room, (b) at the loading and packaging area, and c) at the guard shack. So when Liveris says the cost of labor isn’t a big factor in his decision making, we can’t necessarily assume that this applies to other manufacturers, making other kinds of products. Liveris made another point in the interview, one he makes often, which I think is very important to C&EN readers. This is that research and development will follow manufacturing overseas. Liveris: When you make stuff, you don’t realize that when you move the making somewhere else, then the people who know how to make it have the intellectual knowhow to make the next one. Zakaria: But now they are in China. Liveris: They’re in China. So you have lost the supply chain as well, and your creativity has created huge jobs elsewhere of the continuous kind. It’s not just the job of the first Kindle, it is the job of...

Read More