Processing Magazine

Dow CEO blames energy costs for job loss, may move more jobs overseas

October 30, 2006

According to the Associated Press, runaway energy prices are pushing manufacturing jobs in the chemical industry overseas, the head of the world''s second-largest chemical company says. Andrew Liveris, chairman and chief executive of Dow Chemical Co., says the U.S. needs a new energy policy that allows better access to natural gas reserves, greater use of coal and nuclear power and more conservation. Otherwise, Dow and other manufacturers will be forced to move even more jobs overseas, Liveris planned to tell the Detroit Economic Club on Monday. Liveris also blamed high corporate taxes, high health care and pension costs, government regulation and the civil justice system for the exodus of manufacturing jobs from the United States. But he focused on energy, which is particularly important to Dow. While all manufacturers need energy to run their plants, for Dow, hydrocarbons are also raw materials for the plastics and chemicals it produces. The increase in natural gas prices in the U.S. over the last several years has caused the company''s energy and raw materials costs to go from $8 billion in 2002 to more than $20 billion this year, Liveris said. Unlike oil, there is no global market for natural gas because it is transported primarily in pipelines that don''t cross oceans, so the price of gas depends on regional supply. Liveris said the changes don''t threaten Dow in the long-term, but they do threaten Dow''s U.S. jobs. Midland-based Dow has shut down more than 30 factories in North America over the last several years.