Tuesday, September 13, 2011

GIVE US MOAR: Dow's Andrew Liveris in the NYT

Thanks to Alex Tullo's post, we have an interesting set of comments from Dow (and its CEO, Andrew Liveris) in the New York Times on how he sees the future (emphases CJ's):
“An advanced manufacturing policy is what this country must have,” says Andrew N. Liveris, the chairman and chief executive of Dow Chemical, arguing, in effect, that manufacturing needs government support to expand its dwindling share of the nation’s economy. That is particularly so when demand for new products like solar shingles and batteries is not yet enough to justify the investment. (Three solar companies recently filed for bankruptcy.) Mr. Liveris, 57, himself a chemical engineer and co-chairman of President Obama’s newly formed Advanced Manufacturing Partnership, a group of outside advisers, would even “pick winners” — that is, select some manufacturers for continuing support. “I would not let free markets rule without also addressing what I want manufacturing to be 20 or 30 years from now,” he says. 
As multinationals place factories abroad, they are putting research centers near them, with as-yet-undetermined consequences. At the very least, this trend challenges the view that the United States has the best scientists and research centers and is thus the research-and-development pacesetter.
From China, Dow Chemical now exports products invented at its research center near Shanghai. “Overseas,” Mr. Liveris said, “I get tax incentives, and I get incentives to go to certain locations where they offer us utilities, infrastructure and land. I get access to human capital. I get all sorts of support to help train that human capital.”
Against that backdrop, he and a few other top executives of multinationals exhort the Obama administration and Congress to grant incentives and subsidies intended to halt the 60-year decline in manufacturing’s contribution to national income. Mr. Liveris recently published a book on the subject. He says vigorous government support, like the subsidies that Dow receives for its solar roof shingle operation and the electric battery factory, might eventually halt manufacturing’s slide. But he adds that his company and others will not embark on a reverse migration, a significant “in-shoring” of what has already moved abroad. Too many consumers are concentrated today in Asia and Europe.
“We put things overseas,” Mr. Liveris says, “because markets were growing there and we wanted to be close to them, and that will never change.”
What do I read from this? Well, today, I'm a cynic. I hear 3 things:
Maybe my mood will change tomorrow. 

17 comments:

  1. I love the term human capital.

    It makes me feel all warm and fuzzy inside.

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  2. Well, incentives would certainly be a carrot based approach. Is there no merit to the stick? (ie. tariffs)

    As an example, what would happen if there was a significant subsidy to solar/battery manufacture in the US, and a significant tariff on imported units? Wouldn't that increase local demand and exports at the same time?

    Honest question, I'm no economist.

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  3. Perhaps Drs. Dennis Chamot and Marinda Li Wu can explain how working together with industry will help stem the tide of outsourcing. Me, I don't see much hope there.

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  4. I feel like we've spent the last 30 years trying to incentivize large corporations to stay in the US. It doesn't seem to be working. Taxes are at an all-time low and they still want lower. Perhaps we should try something different.

    My preference would be to make more incentives for small businesses in the US, but with strings attached, like no outsourcing. I'm no economist so I don't know what exactly we should do but perhaps if we started talking about it...?

    I'm also with Pamplemousse, perhaps we should start using some sticks instead of offering more carrots?

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  5. GE paid no corporate taxes, but they're outsourcing like crazy.

    Perhaps Jeff Immelt and Andrew Liveris should hold a meeting the next time they're at the White House to get their story straight.

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  6. Tariffs piss off your trade partners, and they may slap some on you too. No one wants a trade war. American businesses don't want to be victims of tariffs in Asian markets. With that being said, tariffs could still be imposed in response to unfair trade practices.

    You can justify tariffs if you're a small, developing country that wants to protect vulnerable populations or economic sectors. Harder to justify when you're the mighty USA.

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  7. http://www.pg.com/en_US/news_views/blog_posts/2011/sep/mcdonald_confidence.shtml

    http://news.cincinnati.com/article/20110908/BIZ01/309080009/McDonald-We-need-leadership?odyssey=mod|newswell|text|FRONTPAGE|s

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  8. "Mr. Liveris, 57, himself a chemical engineer and co-chairman of President Obama’s newly formed Advanced Manufacturing Partnership, a group of outside advisers, would even “pick winners” — that is, select some manufacturers for continuing support."

    Advancing from socialism to complete communism. Grrrrrrrrrreat...

    “I would not let free markets rule without also addressing what I want manufacturing to be 20 or 30 years from now,” he says.

    Free markets will still win. All the manufacturing will be in China or South Africa.

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  9. 1) Herblock cartoon: Sign in front of factory belching smoke - "We believe that environmental regulations are best handled at the state level." Suit to gov't - "Do you want our jobs or not?"

    Same song, different millenium.

    To L, et al:

    2) If businesses want jobs and training to be subsidized, then the money has to come from somewhere. If it's not corporate taxes, then it has to be income, sales, and other local and federal taxes. If you cut spending, chances are you have to cut the things that get governments elected or ejected (schools, roads, garbage) and individuals have to buy what was provided, (perhaps more cheaply, but, probably not). You can raise taxes, which will probably hose the poor differentially. You can cut services, which eventually make anyone who can want to leave, always a winning option if you want a trained workforce. Isn't that the problem (or used to be, anyway) the problem with good people from other countries?

    3) China and India have been accused or using trade and patent policies as instruments of state. If you send your constructive capacities to them, do you not think that they will be used against you at some point (either duplicated and made irrelevant or nationalized)? If the governments of China and India are more committed to free trade and expression, then what makes you think that the level of services your nonexistent taxes compel (and the lack of environmental protections you desire) will be acceptable to the people in those nations? Unless you own governments, either the governments will blackmail you or the people will get tired of being used for your benefit.

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  10. "Chemical plant and system operators

    A construction project is in progress outside a chemical plant in Texas. Chemical plant and system operators held 45,100 jobs in 2008 and earned a median salary of $52,480. The projected change for these jobs between 2008 and 2018 is a decrease of 20.6 percent.
    Pat Sullivan / AP"

    Source: http://www.washingtonpost.com/business/economy/vanishing-jobs/2011/09/12/gIQAPGITPK_gallery.html#photo=6

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  11. All I'm saying is that we have to get out of the race to the bottom. This is not a race we can or want to win. Should we all just get paid less & less with crappy (or no) benefits and dirty air/water?

    We desperately need to think differently. I think we need to stop chasing after old business & the big ones who just keep moving in the race to the bottom. What should we chase? We should look for new technologies and processes, ones that can only be done here. Perhaps with the money we save giving tax breaks to corporations that move offshore anyway we can do some investing here.

    Does anyone else think the lack of manufacturing in the US is a national security issue? If something like WWII came along again, would we have to make our equipment in China?

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  12. I forget who pointed out that the one manufacturing sector that the US gov't had done serious industrial policy on was defense-related. Even then, there's been some pretty serious consolidation.

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  13. Anon 7:38.
    "Free markets will still win."

    I'm really not seeing a free market here, on any side. Let's read the first like of the wikipedia page, shall we?

    "A free market is a market free from state intervention."

    And contrast this against Chemjobber's pull-quote.

    "From China, Dow Chemical now exports products invented at its research center near Shanghai. “Overseas,” Mr. Liveris said, “I get tax incentives, and I get incentives to go to certain locations where they offer us utilities, infrastructure and land. I get access to human capital. I get all sorts of support to help train that human capital.”"

    How is it a 'free' market if the businesses are getting subsidies and other forms of government aid by the barrel? Hell, tariffs probably would piss people off, but at least they'd create something close to a level playing field. There's no sense worrying about remaining competitive in China if you can't sell your products at home.

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  14. The consumers have freedom to chose their goods from the world. US consumers pick cheap shit from Walmart, who then pressures its suppliers who then MUST source from China to stay in business.

    Want a 6-figure job in a pharmaceutical company? Stop buying $4 generics at Walmart.

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  15. "I forget who pointed out that the one manufacturing sector that the US gov't had done serious industrial policy on was defense-related. Even then, there's been some pretty serious consolidation. "

    Not to mention leaving NASA US astronauts stranded on the international space station. US thought they could buy a plane ticket back from Russia. So they decommisioned ALL of the US space shuttles PRIOR to getting everyone home. Russia says oops, our space shuttle does not work. Who doesn't think of these things in advance? Does Obama really think "private" industry can spring up from no where and pick up immediately where NASA left off??? More likely space exploration will be outsourced to the cheapest bidder just like everything else.

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  16. The astronauts can get off of the space station (there's a Soyuz escape capsule that can get them all off). As far as the ISS, I'm not sure we're getting the bang for our buck out of that. It's very expensive to maintain.

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  17. would you want to have to rely on the aim of the escape capsules? I could not imagine what it would be like to suffocate drifting off into deep space if the escape vesicle is not aimed properly.

    Decommisioning the space shuttles for museums so soon was a bad decision.

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