Wednesday, July 6, 2011


Author and CEO Andrew Liveris stresses the need for our
government to come to the aid of US manufacturing.

“If you picked (this book) up thinking this was another long complaint by another CEO who wants nothing more than for government to back off... then I’m afraid you’ll be disappointed.” So begins  Andrew Liveris, CEO of Dow Chemical Corporation,  in his treatise on the importance of US manufacturing and the role government should play in its revival, entitled, “ Make It In America: The Case for Re-Inventing the Economy.”

As CEO of one of the largest corporations in the world, Liveris uses his book as a platform for re-defining the roles of government and business in addressing the needs of the US economy. He believes that in certain key areas, “…we actually need more government, not less,” striking  a chord for government to become more involved as a mutual partner in the effort to strengthen our economy in the wake of a rising global competitiveness.

He does bring the usual complaints against government: too much regulation, a burdensome and a costly corporate tax rate that encourages companies to locate off shore. But he rejects the idea that governments should butt out and let markets alone set the course for our economy. By their very nature, markets aren’t always wise in building solid economic foundations. According to Liveris, “…thorough, long-range, strategic thinking…is the responsibility of government. Only governments can create the kind of framework that will move markets to respond.”

He makes a strong case for the importance of manufacturing to our society and why there needs to be a healthy presence of manufacturing in our country. Service jobs alone can’t deliver the volume of jobs necessary to keep Americans employed. Liveris notes that in the 1950’s manufacturing made up 28% of GDP; today that number is just 11.5%, with over 42,000 factories having closed their doors in the last 10 years.

The toll on employment doesn’t stop with the loss of manufacturing jobs only. Rather, Liveris reports to a ripple effect, quoting an analysis from the Manufacturing Institute: “…every dollar in final sales of manufactured products supports $1.40 in output from other sectors of the economy.” These are reportedly high paying jobs that we lose every time we move a plant offshore.

Liveris presents convincing examples of how governments in other countries are supporting their industries in ways that are anathema to American capitalist sensibilities. The German government vigorously pursued a private sector initiative in renewable energy, passing the Renewable Energies Act in 2000. According to Liveris this created a “feed-in tariff,” which paid individuals and corporations four times the market rate for selling renewable energy back into the grid. The results created an entire industry with over one million jobs and an export business in renewables that accounts for more than half of the installed solar panels in the world.

China also entered the renewable energy race by mandating that 70 percent of all the equipment used in Chinese wind energy projects come from domestic manufacturing. That government sponsorship was eventually lifted as foreign countries cried foul accusing the Chinese of over protecting their market. But by the then their domestic industry was firmly established and it was Chinese manufacturing companies who reaped the benefits of their governments’ actions. The Chinese government also provided an upfront subsidy of $3 per watt for solar projects.

Amazon’s extremely successful Kindle was a product of research and development conducted by the company and its partners in Silicon Valley. According to Liveris, the key to the products feasibility was the special ink process made by only one company, E Ink, in Massachusetts. Yet, when it came to producing the unit, there was no viable place to do so in America. Taiwan got the call and Prime View was selected as the manufacturer. The company decided it could shorten the time to produce the Kindle if it had the special ink process at its facility. So it purchased E Ink virtually taking over all production of a product that could have (and should have) been made in America.

The choice for Liveris is simple: we either choose to get into the game and counter foreign government intervention in their respective markets or be sentenced to following our own rules, “no matter how outmoded and outmatched those rules may be.”

Liveris’ book is intriguing and daring in that it doesn’t fall back on the same worn out arguments about big bad government and an accepted view of the demise of American Manufacturing. He speaks as a businessman in favor of entrepreneurship and in the power of capitalism to foster our way of life.

“But I do not agree with those in the business community,” he concludes, “who think that our future success depends on government shriveling up and dying on the vine.”

Joe Cappello is Director of Global Marketing for Rotor Clip Company, Inc.

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