How did you prioritize where tofocus your time with regard to issues associated with the onset of the pandemic?
Dow had a pandemic plan in place. I personally was living in Asia during SARS. We effectively executed that plan within a matter of days. The tougher part was
keeping up with customers and suppliers. There was a period of time when no orders were coming in. We were trying to get visibility on how long we could run at reduced operating rates. We had to put protocols in place around managing employee safety like contact tracing, etc. Our incidence rates have been much lower than in the general population. We learned a lot about what our organization was capable of. For example, our finance and accounting team was able to close the first quarter books on time without any major hiccups while working remotely.
How did the pandemic effect the various industries you are exposed to as a board member?
There were certain things that cut across every industry i.e. employee safety, work practices, communication etc. In healthcare, we were still growing 5-7%, expanding margins and generating cash. We had to explore how we might participate in the changes that were taking place i.e. testing, vaccines, supply chains, etc. In automotive, we had to supply our customers with millions of parts per day, from 350 facilities around the world, on time. As demand was down, we had concerns about our liquidity and raised $2 billion in debt and equity. Young: How are you managing the increased pace of change that is occuring?
In a capital-intensive industry like chemicals, the ability to pivot and adapt is more difficult than in other industries. There are two big changes that I see on the horizon. There is a pull-back from a 30 year run of globalization and relaxed trade policies. We are seeing that all around the world. Climate change and regulatory policy is the other major change and it is not going to be cheap to make the required transitions. The electrical grid in the United States cannot handle the mass transfer to electric from fossil fuels fast enough. If the United States and EU sign the Paris agreement without China and India, it puts the West in danger of becoming uncompetitive without really solving the climate issue.
Whats the impact of the current political climate on the chemical industry?
In some ways, the outcome of the elections is good because there will be limited sweeping change. Certain policy changes, such withdrawal from the Paris accords, spearheaded are likely to be undone by the new administration. The industry has already been moving towards stricter regulatory compliance as it has been the
norm in Western Europe for some time.
Do you think the change in administration will temper the desire for national self-sufficiency?
I think you will see vaccine production move to the United States. We are trying to reverse 30 years of globalization and that is not going to happen over night. The simplistic view that manufacturing moved to China so jobs moved to China does not account for the automation that has actually replaced many of those industries. If you actually tour a Chinese factory, they have very advanced robotic technology involved in production. There are actually sustainability pressures to shorten supply chains as the carbon footprint associated with shipping dwarfs the footprint associated with manufacturing.