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Dow’s Liveris Calls For Manufacturing Renewal

Dow CEO Andrew N. Liveris has an Op-Ed out in the USA Today on a topic that is dear to my heart: reversing the decline in the American manufacturing sector.

This is a theme that Liveris often brings up in his speeches. “Manufacturing employs nearly 13 million people in the U.S. and 6 million in related fields. No other sector performs more R&D, drives more innovation, exports as much, or contributes more to our nation’s economy,” he wrote in the Op-Ed.

I couldn’t agree more. Whenever I see a factory razed and replaced with a Target store, I think of consumers’ money escaping the local economy and stopping briefly in Minneapolis en route to China. I could never accept the view that an economy based on consumerism and services is as strong as one based on manufacturing and production.

Luckily, people seem to care more about manufacturing now than they did a decade ago. “Without manufacturers, who’s going to use all the services?” I overheard someone say last month at Pittsburgh Chemical Day. At that event, Greg Babe, CEO of Bayer Corp., had a message similar to Liveris’ about American manufacturing in his keynote address.

My favorite of Liveris’ lines was this: “We should look beyond today’s recession and recognize that stimulus should favor investment over transfer payments.”

Liveris’ recommendations weren’t earth shattering, we have heard them all before. America needs better infrastructure, more R&D, better science and math education, a level playing field in international trade, an alternative energy strategy, fewer lawsuits, and lower corporate taxes.

But these are points good enough to mention another time, especially with the gravitas of the CEO of the Dow Chemical Company behind them.

I have one small amplification. Will someone please add economics to the often repeated litany of subjects in which American students need to be better versed? If Americans had a better understanding of economics, perhaps fewer of them would blow all their discretionary income on interest payments at Rent-A-Center, and instead, have the money to invest in American companies or even start their own businesses. Economics, on the other hand, is pretty popular among college students.

On the energy and R&D front, Liveris’ example of smart R&D spending was his Dow-Kokam battery joint venture, which got $161 million from DOE to build a plant in Michigan. Unless consumers actually buy hybrid and electric cars—in large numbers and at a profit to automakers–such government largess will eventually be judged as just another transfer payment.

On the other hand, no one will buy cars that don’t exist because there’s no local factory to build the batteries. Government money might be needed to get the supply chain going. This may turn out to be the smartest kind of spending in the stimulus package. The United States has a massive advantage on the world stage: a government that can raise money more cheaply than anyone else can. By selling bonds and deploying the capital in ways that make the U.S. economy more competitive, the U.S. is, in a roundabout way, taking capital from Saudi Arabia and China now and using it to beat Saudi Arabia and China later.

There’s nothing wrong with that.

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