October 2004 | Volume 55, Issue 5
Overrated The most overrated, overexposed, and overanalyzed industry is the financial sector. Cornelius Vanderbilt captured in three words all anyone needs to know about the market: “It will fluctuate.” Yet most people view asset management as alchemy, and every breath and blink of Alan Greenspan, chairman of the Federal Reserve Board, is parsed for hidden meanings. Yet Greenspan and every other economist knows that following the “key indicators” is like steering a ship by watching its wake.
Underrated Without the chemical industry, modern life would not be possible. Yet even in the sector’s hometown, plant managers complain that the Houston Chronicle covers real estate and fashion more knowledgeably than it covers their industry.
The U.S. chemical industry produced $459.1 billion worth of goods and was the top goods export sector in 2003. Broadly defined by federal data, chemical exports in 2003 were $91.4 billion. And it is well ahead of number two, motor vehicles, $60.9 billion, and number three, transport equipment, $46 billion.
The chemical industry is the only thing between us and living in huts. Computers could not exist without synthetic materials. Without synthetic rubber and high-octane fuels, the Allies could not have won World War II.
The chemical industry employs more than a million mostly skilled workers and managers. And for every direct job there are at least four indirect employees providing goods and services to the sector. The industry spent $21.6 billion in 2003 on research and development. But because of its own secretive nature, and public fear and ignorance, it is also among the most reviled industries. At a community meeting in one Gulf Coast city a woman in garish polyester clothes and heavily dyed hair shrieked at local plant managers, “You get your poisons out of my neighborhood!”
This is not to say the industry’s sins should be overlooked. When accounting firms make mistakes, people go broke. When chemical companies make mistakes, people die. The worst incident was the disaster at Bhopal, India, in 1984, when a leak of methyl isocyanate, a pesticide component, killed more than 3,500, injured 200,000, and displaced another 200,000 people. Four years earlier industry executives in Canada had begun to formulate new guidelines for safe and environmentally sound operating and management practices. Ironically, this came roughly three years after the final evacuation of the Love Canal neighborhood near Niagara Falls, New York, because of toxic waste under the site.
The Canadian Chemical Producers’ Association adopted the principles of “responsible care” in 1985, and all members signed on in 1989. In the United States the American Chemistry Council also adopted responsible care and wrote additional codes for community awareness and emergency response after Bhopal. Both groups now have mandatory third-party inspections to ensure that their members live up to the letter and the spirit of the codes. The chemical industry is not a necessary evil. It is more like a high-maintenance friend.