Thanks for inviting me – and The Dow Chemical Company – to talk with you today about the state of education and the potential negative effect it could have on our collective future.

But before I go to the future, I want to go into the past. I want to take you back more than 100 years when this great industry I represent began a remarkable journey. It was then that a man in the German chemistry industry found a way to create a stable form of a new wonder drug you probably have in your medicine cabinets right now. And exactly 115 years ago today, he registered the name of this new miracle drug. He called it aspirin.

I wanted to share that brief story with you for two reasons. The first reason is that many believe this was when the Golden Age of chemistry truly began. Beginning around 1900 and continuing until the 1960s, the world of chemistry was on fire. We create molecule after molecule and unleashed a tidal wave of advancements. And along the way, we helped usher in an era of growth and innovation that is unrivaled in human history.

New plastics. New medicines. New agricultural products. It was simply an unprecedented time.

What a lot of people don’t know, however, is that big chemical innovation was brightest in the ‘`60s and has gotten dimmer and dimmer ever since.

Between the 1970s and 2000s, the chemical industry invested trillions of dollars into Research and Development. And while we’ve been rewarded with incremental innovations, we haven’t seen the breakthroughs we had in the past. In fact, since 1970, only four truly new-to-the-world chemical products have generated sales of more than $1 billion a year. [aspartame, glyphosate, polyacrylate superabsorbents and MTBE.]

Big innovation in the chemical industry – it seems – is at a standstill.

Now there are lots of reasons why this is true. But I don’t think it’s any surprise that this innovation slump mirrors an overall decline in our education system … our ability to mold enough of the kinds of minds that are necessary for innovation to spark.

So, the second reason I began with the aspirin story was this. Unless we find a way – collectively – to begin turning around our education system, we’re going to need a lot more of those aspirins in the future. The search for talent is creating one massive headache in this country. And while you’re in the medicine cabinet, you might want to grab some TUMS, too; it’s going to be a bumpy ride.

Think about this: the greatest leaps in humankind have sprung from our access to key raw materials. It wasn’t until we developed farming and the ability to grow and store food en mass that we truly begin to flourish as a species. When we didn’t have to live off the land, our brains grew, our intelligence grew and we had the energy and time to create civilizations. We had the time and energy to learn and try new things.

It wasn’t until we got ample and affordable supplies of carbon fuels like coal and oil and gas that our industrial revolution was kick started.

Innovation works the same way. Except our key raw material is of the human kind. We need talent – and lots of it, sufficiently trained – to once again make the great leaps we did in the past.

Unfortunately, that’s not what we have today.

A lot of people don’t realize that there is, right now, a critical shortage of human talent in this country. It’s surprising because the unemployment rate in this country is still nearly 7%. But it’s true and it’s acting like a huge brake our economy.

Let me show you how that’s affecting the U.S. in general and Texas specifically.

In the U.S., we are on the cusp of what could be … what could be … one of the biggest investment eras in generations. Because we’ve figured out how to get affordable supplies of natural gas from shale formations deep in the earth, the price of natural gas in this country has plummeted.

Our country – which just two generations ago thought we would forever be at the mercy of the global energy cartels – is suddenly rich with natural gas AND oil.

That is leading to unprecedented investments. Dow is currently tracking nearly 130 announced energy-related manufacturing projects representing more than $100 billion in investments. That’s $100 billion with a “B” … all planned for the United States.

Nearly a third of those are here, in Texas. The oil and shale plays in Texas and around the country have sent industrial investments into overdrive. And they are creating jobs at a rate not seen in more than 100 years. The Eagle Ford Shale play – in just 14 Texas counties – supported nearly 100,000 jobs in 2012. By 2022, that number is expected to double.

One analysis found that U.S. manufacturing companies by themselves could employ approximately a million more workers by 2025 … all because of affordable energy.

I imagine right now you’re thinking what a lot of people would think: Sounds great! What’s the problem?

The problem is this: All of those investments, all of those projects and all of the projects that will inevitably follow depend on two big things. The first is affordable and abundant energy … the second is a supply of workers to actually build the plants and staff them.

We believe the first is attainable: I’m confident we’ll have a long run of competitive energy supplies in this country if we manage it correctly.

The second one, however – plentiful and skilled workers – is doubtful. Some would say it’s a pipedream.

And, this, ladies and gentlemen, is THE huge problem of our times.

I’m convinced that the nations that succeed in the 21st century won’t be the ones with the most oil or gas or gold.

The nations that succeed and advance in the century to come will be the ones who educate their children now for meaningful work tomorrow. It really is that simple.

But let’s be clear about one thing. There is not a worker shortage anywhere in the world. In fact, we have scores and scores of people unemployed and underemployed.

There were 12 million unemployed people in the United States last year. Twelve million people.

Clearly, we don’t have a worker shortage. We have a skills shortage.

As one of my counterparts in the energy business put it, “If you can spell ‘shale’ you can get a job, today.”

And yet, businesses report nearly four million jobs are open because the workers who are available don’t have the right skills, primarily skills in Science, Technology, Engineering and Math – what’s commonly referred to as STEM skills.

And we’re not talking about people with PhDs and engineering degrees. Mostly we’re talking about students who need an associate’s degree in a STEM-related area or, at least, better STEM skills coming out of high school.

Here’s a sad fact. According to the U.S. Chamber:

For every 100 9th graders in the U.S. only 68 will graduate on schedule.

  • Of those, only 40 will enroll in some college.
  • Of those, only 27 will remain enrolled.
  • Of those, only 18 will earn an Associate’s degree within three years or a Bachelor’s degree within six2

That’s a tragedy on multiple levels. First, it’s a tragedy on a personal level. How many students and families are being left behind simply because they don’t have the basic skills to get a good-paying job? You’ve heard this before but it’s worth repeating: The quality of U.S. math and science education ranks 47th out of 144 countries.

Secondly, this is a tragedy for the economy. Consider that if we raised our student’s math abilities to those achieved by Canadian students, the GDP in this country could rise by nearly $80 trillion over the next 80 years. To put that in terms you and I can understand, it means everybody’s paycheck – everybody’s paycheck in the U.S. – would be 20% higher3

I gave you a sad fact earlier. Here’s an amazing one that more kids – and their parents – need to hear.

Did you know that last year, the starting salary for students receiving a bachelor’s degree at the South Dakota School of Mines & Technology was higher than those who graduated with a bachelor’s degree at Columbia University?

Those South Dakota kids – in their first real jobs – out-earned the kids from Columbia!

By the way, they also out-earned their peers who got Bachelor’s degrees from Cornell … Case Western … Princeton … Duke … Rice … Dartmouth … and, yes, even Harvard.

Another amazing fact: According to the Bureau of Labor Statistics, nearly two-thirds of all jobs openings will come in occupations that don’t even require a postsecondary education.

But they do require more than we’re providing our kids. And that’s our fault.

So, what can we do? How can we turn the tide?

We at Dow are as concerned about this as any manufacturer. We have $4 billion in investments planned for the Gulf Coast. And just yesterday we announced the opening of a new Research & Development Center in Freeport. We’re adding hundreds of new jobs over the next several years in Texas and creating even more downstream.

On top of that, we have to replace those that are retiring. Like a lot of companies with an aging employee base, we’re looking at a tremendous loss of experienced workers.

In fact, more than 40 percent of Dow’s Operations Tech & Bargained-for population in Texas are retirement eligible at this very moment.

All of that explains why we’ve been so busy in Texas, especially in the Brazosport area. We provide STEM-related grants, student expos, professional development workshops for teachers, mentoring programs for younger science teachers and a host of other events all designed to get kids interested in STEM.

That’s on top of what we’re doing in the greater Brazosport area and around the country to support college-level STEM education. You can read about that in the brochures I brought for you.

We’re doing a lot and I’m proud of that. Still, we’re just one company. It’s not enough.

And that, more than anything, is my main message to you today. We at Dow need your help. Manufacturers, builders, the construction industry throughout Texas needs your help. Our kids need your help.

We need your help to spread the word that the lack of skilled workers in the U.S. is at a critical stage and that we need our communities to step up. Business and education must come to the table – together – to solve this crisis.

How? Dow has a STEM Executive Council that’s been working on this for some time. We talk with professionals in the field, we talk with teachers, and we talk with other business people to learn what their needs are.

And we’ve come up with a four-step plan to help close the gap.

The first step? We must commit ourselves to improving teachers’ skills through mentoring and formal training. Study after study show that having a teacher who’s knowledgeable and motivated can be THE most important difference to produce inspired students.

Second, we must engage our students with hands-on learning as a model to build, support and grow the STEM pipeline. Let’s face it, most kids today have a math phobia. We need to build their confidence while showing them the great advantages of a STEM career.

They need to understand, for instance, that even having an associate’s degree in a STEM field pays more than having a bachelor’s degree in any other field. They need to hear that the average starting salary for a chemical industry employee in Texas is nearly $90,000. Do they know that, with just a little overtime, skilled construction workers can earn more than $100,000 within a few years of starting a job?

They need to know and we need to show them. That’s the second step.

Step three is to encourage creative partnerships and collaborations that support stronger curricula and better educational and trade facilities. We need to build the pipeline for talent. Better curricula in secondary and community colleges. More co-op opportunities. More internships. More partnership between the customers like you and me and the institutions providing the talent. It’s a key step and one I’m proud to say Dow has a long history leading.

The last step is one where you can help us directly. We need you to advocate for higher-performing schools and a hands-on curricula. Be a leader for change in our education system. Engage on the state and national level so our government leaders understand the issue and act accordingly. Make sure they understand that the main difference between continuing mediocrity and excellence is education.

I began today by telling you about all of the announced investments coming to Texas and the country because of affordable energy prices. All of that is exciting. But I left out the most exciting part.

We categorize the investments already announced as representing waves of investment.

Wave one was the energy extractors … those investing to get energy out of the ground and to the companies that need it.

Wave two represents companies like Dow that take the raw materials and actually add value to it. We’re building ethylene plants and crackers right now that will do just that and, when they’re finished, they’ll be among the most competitive in the world.

Wave three includes our downstream customers. Those who make things like steel, tires, packaging and glass. They’re just beginning to announce investments and it’s extremely exciting. Real production is coming back to the U.S.

But it’s the wave after that which is truly magical. Wave four is on the horizon. Wave four is when we get our country gets its mojo back. This is when we begin co-locating our knowledge-based industry next to our raw material-based industry. Research and development – like Dow just announced in Freeport – will flow in to support the new manufacturing base.

And innovation – which has been at a standstill – will begin to accelerate again

It’s a virtuous cycle that starts with affordable energy and leads right on to innovation and discovery and growth.

But … this is key … we need to remember that it all revolves around having skilled and talented people. None of the investments matter – in fact, many of them won’t even become reality – unless we have the talent to build the plants, solve the problems and make that next key discovery.

We know this isn’t an easy problem to solve. If it was, we would have done it years ago.

But it’s essential we get it right. And it’s critical that we start now … before it’s too late.

I’m confident we can. With your help … together … in collaboration … I’m confident we CAN educate our kids and get our economy back on the right track.

And then, finally, we can trade the aspirin bottle for a champagne bottle and celebrate the fact that we’re not only helping ourselves … but helping generations yet to come.

Thank you for what you’re doing. Thank you for making Houston such a vibrant city which so many Dow people call home. And thank you again for inviting me here today.

Joe Harlan remarks as prepared for delivery (3/6/14)

2NAM’s Manufacturing Institute and U.S. Chamber
3Stanford Profesor Eric Hanushek in WSJ based on CBO estimates.