By Michael F. Carmichael
July 2, 2009
Nearly two years ago Beth Chappell announced that the Detroit Economic Club would host The National Summit, a “national conversation” designed to bring leaders of “business, labor, government and academia.” As DEC president, she anticipated some 5,000 people would participate in the conversation that would result in a national “to-do” list of the “top 10 issues in each of four subject areas: technology, energy, environment and manufacturing.” That was when the Dow Jones industrial average was above 12,000 and General Motors was still the world’s leading carmaker.
June 15, 2009
Still, at 9:13 a.m. on Monday, June 15, Chappell opened the Summit with nearly 1,700 attendees reciting the Pledge of Allegiance in the Renaissance ballroom of the Marriott hotel, surrounded by the four towers of a now-bankrupt General Motors, on a day when the DJ average would close at 8,612. Noting that the Economic Club was celebrating its founding 75 years ago, she said that the “to-do” list is now a “must-do” list in order to accomplish its goal of using the Summit as a way to build a brighter future for tomorrow for Detroit, Michigan and the nation.
Ford Motor Co. executive chairman William Clay Ford Jr. was a co-chair of the Summit. In his opening remarks Ford pointed out that “Detroit is on the front line of global competition-¦ and also on the fault line of the economic earthquake that rocked our nation. But,” Ford continued, “we want to be very clear: this is not an automotive summit, this is not a Detroit summit, it is a national summit.” Chiding “people in this country who aren’t concerned about our manufacturing base,” Ford went on to say, “they believe we live in a borderless world of unlimited choices and zero consequences. According to this thinking, where a business is located is irrelevant and the fate of any one enterprise, or even an entire industry, is unimportant in the big picture-¦. and there will be no harm done.”
However, Ford pointed out, “In the real world, there is real harm done. Factories are closed, jobs are lost, tax revenues that support universities, hospitals, social services and local schools are reduced. Over time, as the strength of its economy is eroded, the quality of life in a city, a state, or an entire nation is diminished.” One potential impact of the state of the economy, Ford explained, is that “We now have an opportunity to preserve the environment and our manufacturing base by applying breakthrough technologies to create energy-efficient products and processes.”
Ford then issued a call to action to the audience. “Right now we don’t have time to waste. We have to decide what we are going to do next - and we have to do it fast. The power of the National Summit will come from the collective thoughts of everyone in this room.”
Dow chairman and CEO Andrew Liveris, an Australian citizen who currently lives in Michigan, served as the other co-chair of the Summit. He said, “We have forgotten that the life force and strength of this country was built by American industry. We became enamored with making money from money -¦ and we forgot that making things - real, tangible things - still matters.”
He continued with an explanation of why the Summit had chosen its four focus areas, or building blocks: “A competitive, prosperous America - however you define it - includes a competitive manufacturing base. A competitive and prosperous America includes a more competitive educational system. It includes a technology and R&D sector that is second-to-none. It includes integrated environmental policies that encourage sustainability, that protect our earth and that safeguard our neighbors. And, as I’ve said many times, it includes an energy policy that delivers a stable and secure supply for us to grow on.” Liveris then pointed out that, in a precursor to another recurring theme of the Summit, “innovation and solutions occur at the intersections of those four building blocks.”
Expanding on the need for a national energy policy, Liveris said that “a sane national energy policy has been an oxymoron for too long.” Calling for stable domestic oil and gas supplies, Liveris said that we should consider all forms of alternative energy production because “there is no clear winner yet.”
Liveris then talked about America’s need to remain competitive and innovative in a global economy. Citing King Abdullah University of Science and Technology, located in a new community on the Red Sea near Jeddah, Saudi Arabia, as but one of many places where global competitiveness - led by the world’s leading universities - is a primary topic of instruction, Liveris stressed the need to “invest in education. We cannot afford to be leap-frogged. We need to skip ahead. We’ve done it before and we can do it again. What better place to start than here!”
The Summit was a mixture of general sessions and town hall meetings devoted to the four focus areas. The town hall gatherings were most often led by a moderator (often a CEO or leading business media editor), with three or four panelists such as Senator Carl Levin, Dr. Alan Shaw, CEO of Codexis, Inc. (a global pharmacological and bioindustrial enterprise aligned with Pfizer and Shell,) John Engler, former Michigan governor and now CEO of the National Association of Manufacturers, D. Scott Davis, CEO of United Parcel Service and Dean Kamen, the inventor of the Segway and holder of more than 400 patents - many for medical devices that have improved health care and quality of life worldwide.
A sampling of Town Halls
The town halls were wide-ranging within their assigned focus area, and most participants were frank and open in the thoughts and ideas they shared. At one point Bill Ford, in his role as a panelist discussing clean transportation under the Environment umbrella, disagreed with the contention of Timothy Manganello, CEO of BorgWarner (and one of Ford’s manufacturing partners) that most hybrid vehicle owners don’t invest in a second one. “Most of ours do,” Ford responded. All of the panelists, Ford included, agreed that the recent setting of a national standard for vehicle emissions and mileage was a good thing. “Stability is a good thing,” they concluded.
In the same panel, Peter Marks, chairman, president and CEO of Robert Bosch LLC stressed the need for “sustainable mobility” as he phrased it. This concept essentially called for greater emphasis on development of alternative fuel sources, as he predicted that by 2016 the demand for oil would exceed its extractability under traditional methods resulting in the price of a barrel going beyond $200.
This led to a discussion of the inequality of federal vehicle fuel taxes, particularly between the higher amount levied on diesel versus gasoline - which is perceived by some as one reason there is less acceptance by the American driving public of “clean diesel” vehicles. American refineries, it was pointed out, are actually exporting diesel fuel to Europe - where the tax structure strongly tilts toward diesel-powered vehicles.
Environment: Green Homes
In another environmental town hall, Timothy Wadhams, CEO of Masco Corp., pointed out that the company that is now the largest automotive manufacturer in the world is also moving into the housing market. Toyota Homes has partnered with former U.S. Secretary of Housing and Human Development, Henry Cisneros, to build affordable housing near its new $850 million truck plant in San Antonio, Texas. The homes are energy efficient - and carry a 60-year warranty.
Many of the town halls included instant-response polls of the audience. A question was posed on large projection screens and each audience member had a hand-held device, much like a television remote control, with which they could select the most appropriate answer.
Michael Thaman, CEO of Owens Corning, corrected the audience’s thinking about energy usage. Residential building energy use in the U.S. is 40 percent of the national total, while residential electrical usage is 70 percent - the audience thought there was a variety of other heavy energy users. This led him to the conclusion that the best way to create more domestic energy supply is not to concentrate on building new power plants, but to focus instead on reducing usage. “Eventually, of course, we’ll have to do both,” Thaman said. His company has now aligned itself with C. Boone Pickens, the billionaire oilman, because Pickens has created a national energy policy that Owens Corning feels will work for the country.
Thaman pointed out that by using existing proven technology it would be possible for most American homes to reduce their energy consumption by 50 percent. This would create a positive impact on investment capital -money actually being saved, rather than most new technology solutions which often produce a negative impact on capital.
In the same town hall, Sam Rashkin, the national director of the Energy Star for Homes division of the U.S. Environmental Protection Agency, began his remarks by saying, “I’m from the government and I’m here to help.” It got the expected laughs. Rashkin is one of the keepers of a very strong brand image - more than 70 percent of American consumers recognize the Energy Star blue box. An Energy Star rating on an appliance or home represents not only energy efficiency, but cost-effectiveness and high performance. And the brand works: “Americans,” Rashkin reported, “with the help of Energy Star, saved enough energy in 2008 alone to avoid greenhouse gas emissions equivalent to those from 29 million cars - all while saving $19 billion on their utility bills.”
Technology Innovation Drives Education Solutions
If you accept the argument that education is going to provide a positive pathway to the future for a generation of children sired by parents who spent most of their lives on an assembly line - sometimes without a high school diploma - then you would have loved the fireworks ignited in this town hall. Moderated by Tony Uphoff, CEO of TechWeb, the country’s largest publisher of business technology news, the panel featured Harold McGraw III, CEO of The McGraw Hill Cos., Robert Youngjohns, a Microsoft division president, Jonathan Harber, CEO of SchoolNet, Inc., John Grillos, director of Curricki, a nonprofit educational organization that was founded by Scott McNealy and Dean Kamen, the inventor of the Segway Human Transporter and hundreds of other paradigm-shifting devices. Kamen is also responsible for FIRST (For Inspiration and Recognition of Science and Technology - the global robotics competition that had 160,000 kids between 6 and 18 participating in 2008.)
There was a consensus that the educational system needs to adapt to meet the challenges of the real world. This translates into using technology to help kids learn how to be creative, how to learn and why it’s important to continue learning - and be creative - for a lifetime.
There was a thought that the business school discipline of management science be brought to bear on the way kids are taught today.
The current system of “delivering education” is too inflexible to meet the changing needs of a rapidly evolving knowledge economy.
Current school buildings are designed for an outdated (going back to the 19th century) approach of a teacher standing before rows of kids and “teaching.” Collaboration is the key to successful innovation in the workplace - except that collaboration in the classroom is called “cheating.” Today’s students (and tomorrow’s as well) should be able to work more in small group situations and their classrooms should facilitate that rather than restrict it.
Subject Matter Experts (SMEs) from business and industry, particularly in math and science, should be brought into elementary and middle school classrooms to help teachers. Many teachers know the process of teaching, but didn’t necessarily go into the classroom equipped to teach today’s increasingly complex and changing subject matter.
Technology - from intelligent whiteboards to real-time interactive collaboration with other students from around the globe via the Internet - should be encouraged.
Get kids passionate about learning, about things that matter. As William Butler Yeats said, “Education is not the filling of a pail, but the lighting of a fire.”
In a general session devoted to a Vision for America
Michigan Governor Jennifer Granholm explained to those in the packed ballroom that in the decade between 2000 and 2010, Michigan, “just one state, will have lost 1 million jobs. So we are a state that’s undergoing a seismic paradigm shift in education. We were a state where you could go from high school to a good paying, lifetime job. You could be in the middle class and have a great life without having to go to college.” Pacing back and forth on stage in a very active and passionate speech, Granholm said that she had just returned from a national governors’ conference where, after a discussion of the global nature of competitiveness, she decided that the world was “going to eat us for lunch unless we can get our kids to go to college - and beyond. We have revamped our high school graduation requirements so that every child is taking a college prep curriculum in high school. They’re taking a college entrance exam as their testing measure.”
In a comment that was underreported, Granholm touted the state’s unique geological underpinnings that, at the moment, “make us the country’s largest ‘storer’ of natural gas.” Looking toward the day when carbon dioxide-producing industries would have to sequester excess carbon, Granholm said “we have another opportunity because of our odd geology to store this carbon in our underground ‘pockets’ just like we store natural gas.”
For the invited high school and college students in the audience Granholm painted a picture of what life might be like in 2030. “You’ll get out of work and drive home in your electric car, the guts of which and perhaps the whole thing, will be made right here in Michigan. You’ll drive to your home, which is a net carbon-zero home. You’ll plug your vehicle into a plug in your garage, which will be connected to a smart electric grid. Your house will be equipped with a smart box which will adjust your electric needs for when you’re present or not. So when you walk in the door, some - but only some - of your LED lights will come on to greet you. The garbage bag that you’re carrying will go into a trash compactor which may produce biofuels for your house. Meanwhile, your car is negotiating with the grid, via its smart battery, to purchase only the amount of electricity it needs to recharge itself. Perhaps the wind turbine in your yard or on your roof, along with the solar panels, will have produced enough excess electricity for you to be able to sell some back to the grid. And all of this will have happened because of the great talent you and your fellow college graduates have applied to make it happen.”
Ian Bremmer, president of the Eurasia Group, followed Granholm, a task for which he was well prepared. He said that she was an extraordinary speaker among all of the governors he’s heard, and that basically he agreed with much of what she had to say - but that he had a slightly different focus. “If we got globalization wrong anytime during the past 20 years we literally missed the boat. I want to make it clear, globalization is not a good thing. It’s not a bad thing. It’s a thing.. We shouldn’t worship it. Globalization is a process,” Bremmer continued. “We needed to know it is there because it created winners and losers. A lot of people benefitted from globalization. If you were an entrepreneur in Bangalore, you did really well in the last 20 years. If you were an autoworker in Detroit, you did not.”
Two emerging trends
“This is Ground Zero, in many ways, for globalization,” Bremmer said, “and it’s Ground Zero for the global recession. The ascendency of globalization is over. We are entering a world where two emerging trends are becoming very important: increasingly, it’s not the private actors who are affecting the economy, it’s the state actors. New York is no longer the financial capital of the United States. Let’s be clear: Washington is. And that’s happening all over the world.” Business people used to go to the world’s business and trading centers to conduct commerce, and now they go where the money really is - and is controlled - the world’s political capitols. “The new capitols of capital,” Bremmer calls them. “The tipping point was last September when Lehman Brothers went down. That was the beginning of the bailout and the stimulus and the rise of the capitols of capital.”
He continued, “The second big trend is political. The United States has long been the world’s only superpower. As we look around the world it becomes increasingly obvious that the United States has not the ability, nor the will, to continue to be the world’s only superpower. That’s true whether we talk about nuclear proliferation or stability in Iraq and Afghanistan or a new financial architecture. How is this going to happen?” he asks. “People used to say it would be in the hands of the G7, which is now becoming the G20. People used to say the G7 was like herding cats - which is hard. I say the G20 isn’t like herding more cats, it’s like herding cats and animals that don’t like cats - and that’s not herding, okay?”
A View of the World Post-globalization
“Where I see us going,” Bremmer continues, “is not a multi-polar world, but a non-polar world.” Explaining that many of the G20 members have their own, less global, agendas, Bremmer said that even the United States at the moment is focused “on priorities 1, 2, 3, 4, 5 - which are domestic. It’s the domestic economic crisis. It’s health care. It’s infrastructure. It’s education. We are living in a world where globalization isn’t subsumed, but challenged, by state capitalism and by non-polarity.
“What should we expect?” he asks. “Trade and financial markets that will become more regionalized and less global, as state actors play more of a role. China will become much more dominant in its region - except maybe for Japan. Saudi Arabia will do the same in the Gulf. The list goes on. Increasingly it won’t continue to be as feasible for companies, such as Wal-Mart, to do their sourcing exclusively out of China. They’ll have to focus more on home.
“The second point,” according to Bremmer, “is that our expectations for global growth, as a whole, should be moderated. You’re going to see more inefficiencies because governments aren’t going to focus on profitability. Focusing on profitability is not always such as good thing. Over the past 20 years banks were focused on profitability, but it was short-term profitability, not long-term. Short-term compensation, not long-term.”
“The last big thing is that we’re not going to be able to act as globally as we used to because there just won’t be the global coordination there used to be. North Korea tested a nuke and we said ‘we’re very angry.’ They did it again and the anger was palpable. But can we do anything about it? Probably not.”
Bremmer concluded, “We need to stick to our advantages - our values, the free market system, the rule of law, an independent judiciary.”
Other highlights which you may not have heard about:
From Van Jones, Special Advisor for Green Jobs, Enterprise and Innovation, White House Council on Environmental Quality:
“We need to be aggressive, we need to compete, we need to be uppity-¦
We need to look close to home, at the Rust Belt, for signs of success.
The President is not pro-intervention, he’s pro-innovation. He stands not with the last century’s problems but this century’s problem solvers. Barack Obama is not the country’s first Black President, he’s the first Green President.”
From Gary Locke, U.S. Department of Commerce Secretary:
“In the 1950s one job in three was in manufacturing; now it’s one in 10.
There is a new policy to provide one-stop-shopping for all of the commerce department’s services. This will also draw on other government services as well to make life simpler for business.”
From one of the “Summit Up” closing sessions:
To get out-of-the box thinking you first have to have the box.
University of Michigan president Mary Sue Coleman told one panel member that 15 percent of her incoming freshman class has already started a business. “We can’t afford to quash that kind of entrepreneurial spirit. Remember Bill Gates.”
The average Michigan power plant is near the end of its useful life of 40-50 years - yet it takes 10 years to go through the planning and permitting process to build new ones - no matter what kind of fuel source they use.
Being sustainable is not an option, it’s a necessity because globally so many are ahead of us.
No matter what you may hear, the Administration in Washington gets it.
There will be more on The National Summit in Corp! e-pub issues to come as we conclude Summit coverage with notes from Day Three, and follow up on the results of the “to-do/must-do” list that will be compiled by the Summit’s “knowledge partners” of Deloitte, PriceWaterhouseCoopers, Ernst & Young, and McKinsey & Company and taken to President Obama by Commerce Secretary Locke. We’ll also be reporting on some of the activities in the Innovation Expo, an assembly of companies large (Microsoft) and small (Urban Enviroscapes, an eco startup run by two University of Illinois seniors.)
Meanwhile, for those of you who were there, and those who weren’t, we invite your comments and participation in an extended conversation about this “bold new initiative to define America’s future in an increasingly challenging global marketplace.”