A View from Detroit: Energy and Manufacturing

By October 31, 2006Energy

Just an outstanding speech by Andrew Liveris, CEO of Dow Chemical, at the Detroit Economic Club Monday. Liveris outlined the energy challenges facing U.S. manufacturing — a recurrent theme here at the NAM — and especially the effect of higher energy costs on chemical manufacturers.

PDF file of his speech is here. AP coverage here. And the Detroit Free Press does a fine job of summarizing his message here.

The United States is losing major business investments and high-paying manufacturing jobs because it does not have an adequate energy policy to address rising natural gas prices, said Dow Chemical Co. CEO Andrew Liveris in a speech Monday to the Detroit Economic Club.

The United States has vast amounts of natural gas along its coasts, but environmental laws prevent drilling. Liveris, head of the $46-billion Midland-based global company, said he would like to build more chemical plants in the United States, but the country’s environmental laws and lack of a coherent energy policy are discouraging.

“Faced with the choice of investing here in the United States, with the certainty of higher and more volatile natural gas prices, how can I recommend to my board and to my shareholders to invest here?” Liveris asked.

NAM’s President, John Engler, is speaking this morning in Atlanta to the Fabtech/American Welding Society national conference/convention. He’ll spend much of the speech focusing on manufacturing’s energy needs. Manufacturing consumes one-third of all electricity in the country, and as the economy grows, the demand will grow. Liveris’ comments are timely…and important. Thankfully, they seem to be drawing attention.

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  • I love this stuff. If one suggests to corporate leaders that they should reduce their current energy waste, they swear that “we are already as efficient as we can be.” Before resorting to that conclusion, I recommend a self-test. Your facilities ARE efficient if:

    1. All your past efficiency initiatives remain fully implemented.

    2. Technology and regulation have remained completely static since you became fully efficient. In addition, we haven’t learned any new best practices.

    3. All staff with institutional knowledge of your past efficiency improvements remain on the payroll; they haven’t been lost through attrition or whatever.

    4. Your plant assets have not been depreciated through use– they’re still sitting in the packing grease in which they were delivered.

    5. Fuel prices have stayed the same since you became “100 percent efficient.” Look at those energy audits. That five-year payback may now be a two year payback.

    When it comes to energy, like anything else, price times QUANTITY equals expense.