From Dar­win to Davos, Dow Chem­i­cal’s An­drew Liver is The Ac­ci­den­tal CEO


The Australian - The Deal - - Front Page - by An­drew White

WHEN Dow Chem­i­cal chief An­drew Liveris vis­ited Aus­tralia re­cently he got plenty of head­lines. There were his pithy views on lo­cal pol­i­tics and his ar­gu­ments that Aus­tralia’s open door en­ergy pol­icy is do­ing huge harm to lo­cal man­u­fac­tur­ing. How­ever, few knew that the 60-year-old Dar­win-born­busi­ness­man, one of Aus­tralia’s most suc­cess­ful business ex­ports, was also back in the coun­try to at­tend a cer­e­mony in Can­berra with huge per­sonal sig­nif­i­cance, re­ceiv­ing an Or­der of Aus­tralia. Liveris was at the an­nual business gath­er­ing in Davos in Switzer­land when the award was an­nounced on Aus­tralia Day this year. He couldn’t work a visit to Can­berra to col­lect the award into his “in­sane’’ travel sched­ule un­til Au­gust.

The low-key cer­e­mony at Gov­ern­ment House in Can­berra with Liveris, his Bro­ken Hill-born wife Paula and two of his three adult chil­dren, was an emo­tional event for Liveris who over­sees an in­ter­na­tional business em­pire which turns over some $60 bil­lion a year and which ranks in the For­tune top 50 US com­pa­nies.

“I was in the mo­ment and I didn’t think I would feel emo­tional in the mo­ment, but I did,’’ Liveris, re­calls an in in­ter­view with The Deal. “It was re­ally just the re­al­i­sa­tion that a ca­reer in this great company that I work for and my Aus­tralian back­ground could in­ter­sect such that I could play in role in help­ing Aus­tralia progress, in the in­ter­na­tional business com­mu­nity in par­tic­u­lar. I don’t think that it is un­fair to say that Aus­tralia cel­e­brates its sports stars and movie stars in­ter­na­tion­ally on a rea­son­ably common ba­sis. We have al­ways felt good about ex­port­ing our sport­ing and en­ter­tain­ment but ex­port­ing our business tal­ent and hav­ing it recog­nised is not that common.’’

Get­ting the award had a par­tic­u­lar fam­ily sig­nif­i­cance for Liveris whose fa­ther died when he was 15. Twenty four years ago, his un­cle “Les” Liveris, who be­came his men­tor and piv­otal fig­ure in his life after the death of his fa­ther, was also awarded an Or­der of Aus­tralia. A for­mer se­nior of­fi­cial in the Depart­ment of Im­mi­gra­tion in Dar­win, Les re­ceived his AO for pub­lic ser­vice and ser­vice to the com­mu­nity in 1980. Liveris jokes that him be­ing the sec­ond in his fam­ily to re­ceive an AO puts “a lot of pres­sure on my kids”.

Liveris runs a company that em­ploys 54,000 peo­ple and has a pres­ence in 160 coun­tries. His ex­ter­nal com­mit­ments in­clude be­ing a di­rec­tor of IBM, serv­ing on Pres­i­dent Obama’s Business Round­table, a trustee for the United States Coun­cil for In­ter­na­tional Business and a mem­ber of the in­ter­na­tional board of the Spe­cial Olympics. It’s a long way from his care­free early child­hood in Dar­win in the 1960s and early 70s.

The grand­son of a Greek mi­grant who came to Dar­win on a trad­ing ship in 1915 and stayed on a whim, Liveris grew up play­ing in the streets of the city with chil­dren of dif­fer­ent races and cul­tures. He cred­its that up­bring­ing with teach­ing him in­for­mal­ity and in­clu­sive­ness that he has car­ried through his adult life. “Grow­ing up in a Greek im­mi­grant fam­ily al­lowed me to walk that line be­tween be­ing An­glo Saxon at school and Greek at home,’’ Liveris says.

There were lots of muddy roads and tad­poles in pud­dles after the heavy rains, bas­ket­ball in lo­cal courts down by the fire sta­tion and try­ing to ex­plain the baklava – the sticky Greek pas­try and wal­nut sweet – in his lunch box to An­glo kids at school. “My up­bring­ing was very mixed – I had lots of Chi­nese friends, Abo­rig­i­nal friends, half-caste friends and I think that re­ally, re­ally helped me in my life,” he says. “I have been very in­clu­sive all of my life, I have never un­der­stood di­vi­sion based on skin colour and all of th­ese non­sense things’’.

Liveris has spent almost all his work­ing life with Dow, ris­ing to the ranks of chief ex­ec­u­tive in 2004 and chair­man in 2006. His world in­cludes face-to-face meet­ings with world lead­ers such as Chi­nese pres­i­dent Xi Jin­ping and US pres­i­dent Barack Obama. In many ways Liveris is very much the ac­ci­den­tal chief ex­ec­u­tive. His bril­liant ca­reer hap­pened almost de­spite his more mod­est am­bi­tions. After Cy­clone Tracy dev­as­tated Dar­win on Christ­mas Eve 1974, Un­cle Les moved the Liveris fam­ily to Bris­bane. An­drew got a gov­ern­ment schol­ar­ship to study chem­i­cal en­gi­neer­ing at the Univer­sity of Queens­land. It was a lec­turer, Pro­fes­sor Don Nick­lin, who en­cour­aged Liveris to look for work with Amer­i­can com­pa­nies, whom he ad­mired and thought of­fered bet­ter prospects than the lo­cal scene. Liveris joined Dow as a young grad­u­ate work­ing in its of­fice in Mel­bourne. He was pro­moted through the lo­cal ranks and soon of­fered a re­gional role in Hong Kong. He thought the over­seas job would be tem­po­rary. His goal was to one day re­turn to his dream job as chief ex­ec­u­tive of the Aus­tralian op­er­a­tions.

“I was on a man­age­ment track. Clearly I was some­one con­sid­ered to be of po­ten­tial and I was be­ing trans­ferred to Hong Kong to help run an Asia-Pa­cific business out of Hong Kong. But leav­ing Aus­tralia for my wife and I was al­ways go­ing to be tem­po­rary. The de­sign was never to make my way to head­quar­ters and be the CEO of the company. I’m sure, in some wild dream, I might have fan­ta­sised about that (but) when we left in 1985 and had our sec­ond child (in Hong Kong), com­ing back to Aus­tralia was very much on the cards if that’s what some­one wanted me to do. My dream job was to be the gen­eral man­ager of Dow Aus­tralia. But I got pro­moted beyond it. The next job I got was a pro­mo­tion and by the time it (the Aus­tralian job) came up there was no way I could do it, that would have been a de­mo­tion.’’

Liveris’ pro­mo­tion to the US meant he was not com­ing home to Aus­tralia any time soon. It pro­voked a round of fa­mil­iar ques­tions for any ris­ing ex­ec­u­tive look­ing off­shore. He and his wife dis­cussed whether the kids should be raised Aus­tralian, did they want to send them to board­ing school in Aus­tralia. Did they keep prop­erty here? Did they aban­don his ca­reer and re­turn to Aus­tralia, or stick with it for a while, make some money and re­turn to Aus­tralia to live? In the end Liveris and his wife both felt they could have the best – or at least enough – of both worlds to sat­isfy the con­flict­ing de­mands. They kept their Aus­tralian pass­ports and their Syd­ney prop­erty, reg­u­larly up­grad­ing as prices rose. “But both of us never felt that we had given up any­thing by be­ing over­seas. We had our fam­ily; we had our rel­a­tives back here. We kept com­ing back on hol­i­days, they kept vis­it­ing us.”

Liveris kept be­ing pro­moted within Dow and things started to be­come se­ri­ous. “When I be­came vice-pres­i­dent it be­came very clear that sud­denly I was in the top 100 jobs, then I was in the top 50 jobs then the top 20. Ob­vi­ously you are get­ting to the peak of the nee­dle. And by then I thought, ‘You know what, even if I don’t get the CEO job at Dow I will go and get the CEO job some­where else’.’’ By 2002 Liveris was a ris­ing star in the company. The board put him and three other can­di­dates through the mill for the job of chief op­er­at­ing of­fi­cer. The un­der­stand­ing was that who­ever got that job, the chief ex­ec­u­tive role was theirs to lose. Liveris got the job and went on to be­come chief ex­ec­u­tive in Novem­ber 2004. Tak­ing over the top job, his goal was to trans­form Dow, mov­ing it away from the lower-value com­mod­ity chem­i­cal business and ex­pand­ing the spe­cialty and cus­tom parts of the business higher up the value chain. Ten years on it is still a work in process, with the pres­sures of the mar­ket cre­at­ing end­less de­mand for the company to in­no­vate, can­ni­balise and rein­vent.

“My in­dus­try was be­ing dec­i­mated by the com­modi­ti­sa­tion trend,” he ex­plains. “It meant that you had to get out of those busi­nesses or you would have to run them for cash. You wouldn’t invest for the fu­ture. That dy­namic is the plan I pre­sented to the board; that we had to move away from be­ing 90

per cent ex­posed to that (com­mod­ity chem­i­cal busi­nesses) to some­where less than 50. We are way more than that – so I would say we are very suc­cess­ful.’’

Even so, the rate of change and of com­mod­i­fi­ca­tion of in­no­va­tions in the chem­i­cal in­dus­try, as in the in­for­ma­tion tech­nol­ogy in­dus­try, is in­creas­ing. And it is not just pri­vate sec­tor com­peti­tors driv­ing that. Na­tion states – Liveris points to Chi­nese state-owned en­ter­prises – are push­ing into the space, try­ing to cre­ate jobs and com­pet­i­tive ad­van­tage for them­selves in the in­dus­try. “The im­age I give our staff is, ‘Imag­ine you have this semi-trailer truck com­ing up be­hind you and you are on a bi­cy­cle. If the bi­cy­cle is your in­no­va­tion en­gine, you are go­ing to be run over by the com­modi­ti­sa­tion trend. What you have got to do is get a very fast sports car and race ahead of that in­no­va­tion truck so that you are never run over.’ But never for­get that the in­no­va­tion of to­day is the can­ni­bal­i­sa­tion of to­mor­row. Even though you have in­vested huge cap­i­tal for the first ver­sion, you


de­lib­er­ately can­ni­balise your­self for the sec­ond ver­sion be­cause the con­sumer at the end wants another prod­uct.’’

Liveris, too, has had to adapt and change as a chief ex­ec­u­tive since 2004 and as chair­man since 2006. “Ten years in I like to say I am on my third or fourth ver­sion of my­self,’ he says. In July 2008 Liveris an­nounced a $US16 bil­lion deal to buy US spe­cialty chem­i­cal company, Rohm and Haas, only to be hit with the global fi­nan­cial cri­sis soon after. What looked like a sound strate­gic move turned almost turned into a bet-the-company cri­sis as credit mar­kets froze. Liveris was forced to cut the div­i­dend. The company got through it but Liveris says that try­ing time changed him.

The “China melt­down’’ in which con­cerns about China’s growth roiled mar­kets and forced Dow to make some as­set sales was another. More re­cently Dow has been in a pub­lic bat­tle with ac­tivist in­vestor Daniel Loeb and his Third Point hedge fund over Liveris’ plans to sell more as­sets to stream­line the business. But it is the bounty of cheap US en­ergy that has per­haps best de­fined Liveris – at least in the lat­ter part of his ten­ure.

Cheap and plen­ti­ful shale gas has put the US on a path to po­ten­tial en­ergy self-suf­fi­ciency and sparked a re­nais­sance in man­u­fac­tur­ing. He has made it a mis­sion to spread the word on cheap en­ergy and re­viv­ing man­u­fac­tur­ing. He wrote a book, Make it in Amer­ica – the Case for Rein­vent­ing the Econ­omy, in 2011 and reg­u­larly at­tracts head­lines – par­tic­u­larly in Aus­tralia – for his views. The US re­stricts its gas ex­ports. Liveris ar­gues that Aus­tralia, with its plen­ti­ful sup­plies of gas, should also keep a sig­nif­i­cant pro­por­tion at home to pro­vide a low-cost source of en­ergy for its do­mes­tic man­u­fac­tur­ing in­dus­try.

With soar­ing en­ergy prices wreak­ing havoc on man­u­fac­tur­ing – a study by Deloitte for the coun­try’s main en­ergy users and man­u­fac­tur­ers pre­dicts a $118bn con­trac­tion in the in­dus­try over the next seven years as users are forced to com­pete with high­priced ex­port mar­kets for gas to run power sta­tions – Liveris wants that bounty har­nessed for Aus­tralian users. He stops short of ad­vo­cat­ing a na­tional reser­va­tion pol­icy for Aus­tralia – with gas to be set aside at prices be­low the higher mar­ginal prices paid by Korean, Chi­nese and Ja­panese util­i­ties. But he ar­gues that state and na­tional gov­ern­ments in Aus­tralia need to be smarter about en­ergy pol­icy – some­thing now in prospect with a fed­eral gov­ern­ment green pa­per on the is­sue an­nounced last month.

While it was a small cer­e­mony in Can­berra to re­ceive his Or­der of Aus­tralia, you could not have missed Liveris in the days around that visit. He cre­ated in­ter­na­tional head­lines for his crit­i­cism of Aus­tralian pol­i­tics as “scary’’ and an “em­bar­rass­ment on the world stage’’. He opened a new fac­tory in Vic­to­ria along­side Premier De­nis Napthine, fronted an Aus­tralian In­sti­tute of Company Direc­tors fo­rum in Bris­bane, at­tended a meet­ing Aus­tralian Davos Con­nec­tion fo­rum and man­aged to watch his beloved St Kilda AFL team play against the Western Bull­dogs. That visit was just a slice of an hec­tic travel sched­ule that has him on the road 240 days of the year.

There is, he says a method to the hec­tic sched­ule. Liveris be­lieves he needs to have an ac­tive in­put into the de­bates around his in­dus­try. “Dow is an en­ergy in­ten­sive trade ex­posed man­u­fac­turer,’’ Liveris says. “I need free mar­kets to sell my goods. I would like to be in a po­si­tion of in­put and in­flu­ence on what free mar­kets look like. I need mar­ket ac­cess in Ja­pan or China and (if) the US is ne­go­ti­at­ing a free trade agree­ment, I am a voice in that con­ver­sa­tion. Rather than hav­ing some­one else that ne­go­ti­ates that and I get the rules, I would like to par­tic­i­pate in the rules and be un­der the tent.’’

Liveris says the li­cence to ar­tic­u­late and ad­vo­cate on the company’s be­half was a core part of his pitch to the board when he was vy­ing for the top job. It was a part of a broader mis­sion to rein­vent the company to get it off the back foot and again play­ing of­fence. “So I get to or­gan­ise events with Pres­i­dent Obama and I get to be in the room when all of those dis­cus­sions are go­ing on,’’ he says. “I can make my points about tax re­forms, on en­ergy pol­icy, trade, you name it, any of the is­sues that mat­ter to Dow.’’

It’s a role that seems to come nat­u­rally to Liveris, who speaks knowl­edge­ably across a range of sub­jects, can be force­ful when he needs to be, and al­ways uses plain, ac­ces­si­ble lan­guage. “I also re­alised that I had an at­tribute – whether it was a gift from God or I learned it – that I am ar­tic­u­late and I can sim­plify and I can help peo­ple un­der­stand com­plex is­sues,’’ he says. “And I can do it on TV. I can do it in an in­ter­view like this and I can de­bate. I don’t know where I learned all of that and maybe it was in­nate skills. But I can tell you I do my home­work, I know my top­ics, ex­plain my point of view. Those things mat­ter to Dow and I chose what to do based on that.’’

Liveris won’t rule out a ca­reer in pol­i­tics when he even­tu­ally re­tires from Dow and cor­po­rate life. He plans to re­turn to Syd­ney, where owns prop­erty, mean­ing Aus­tralians are likely to hear and see a lot more of him.

Liveris has made it a mis­sion to spread the word on cheap en­ergy and re­viv­ing man­u­fac­tur­ing

With Ger­man Chan­cel­lor An­gela Merkel at this year’s AmCham Ger­many an­nual meet­ing

In an early pro­mo­tion, Liveris helped run the Asia-Pa­cific business out of Hong Kong

A young An­drew Liveris, right, as part of a petro­chem­i­cal team in Ade­laide in 1981

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