MIT Department of Chemical Engineering Centennial Convocation (5/6)

[MUSIC PLAYING]

PRESENTER: This is a weekend when I'm normally fishing down on Martha's Vineyard. And when I do that I usually go fishing with a good friend of mine, and we spend most of the time talking in relatively little of it fishing. And as we talk, he often reminisces about meaningful times in his own life.

Among his most vivid recollections were his experiences playing football. Now, an American football, as most of you presumably know, each squad is made up of two entirely separate teams-- the offense and the defense. When the possession of the ball changes, one team's offense and the other team's defense charge off the field, and their counterparts rush on the field so that the game can continue.

My friend was one of those rare individuals who played both offense and defense. So while all others were rushing to and fro, he would just stand there. He would stand there for a few moments with what seemed like the whole world looking at him. He had that rare opportunity to contemplate in public. During those few moments he would reflect on the hard work, the sweat, the pain of what had just been accomplished, and contemplate the exhilaration of working with new people in facing new challenges in an entirely new environment.

We, of course, find ourselves in that situation today. In these few hours, we contemplate with pride the people and the achievements of the past. But we should also use this opportunity for a realistic assessment of the state of today's world for the professional chemical engineer. We should use this time to think about the future, and to assess what will be expected of chemical engineers during the next several decades.

Most importantly, we should consider the question, what should our leading academic institutions be doing about preparing for the future. But first, let me take my own brief look at the past. Doc Lewis and his contemporaries in the profession developed a curriculum designed to deal with the creation of new processes and the development of businesses to commercialize those processes. Faculty were selected for their technical prowess, to be sure, but they were also selected for a set of personal skills that could have led to successful industrial careers.

In the '30s and '40s and '50s, chemical engineering was the most entrepreneurial of the engineering disciplines. Since a chemical process in its large, specialized capital investment could be obsoleted immediately by a better idea, the concepts of risk analysis and management economics were usually part of the formal curriculum. I remember Ed Gilliland and Tom Sherwood telling me when I was a young faculty member at the Institute in the '60s, that the pioneers in the field signed on because they believed they had the capacity to remake the commercial world in a very fundamental way.

Ed's and Tom's eyes would gleam as they described their early plans for manufacturing synthetic materials that would replace many of the world's construction materials-- wood, steel, aluminum, were all, in part, to be replaced by succeeding waves of polymers, composites, and other new substances. Much was accomplished, but much of that optimism was not fully realized. The traditional industries-- wood, metallurgical, paper, and the like-- developed new products, and effectively retaliated with their own innovations.

The intellectual leadership of the profession turned either to a more exacting analysis of processes that already existed, often using emerging computer-based techniques, or to new areas of technology. During the '60s, for example, we saw a great commitment to the material sciences with particular emphasis on catalysis, or newly emerging applications based on polymer membrane inventions, or to creations stemming from work in surface chemistry. Frankly, at about this time we were struggling to attract the best, young technical minds through this field. Arguably, many of the best minds were moving to the electronics field, where the miniaturization of electronic circuits and the attendant software developments were revolutionizing the world that we all lived in.

To be sure, in our own field the '70s saw substantial progress in environmental problems, electronic materials manufacturing, and automation and process designed and control. But the process industries, the bread and butter of our profession, had grown to such a size that our blue chip companies often performed financially in accordance with the commodity-type price swings of their raw materials and products. Ralph has already alluded to this in his remarks.

Capital decisions, which previously had had a dominant technological input were now more heavily influenced by OPEC pricing decisions or futures prices on Chicago's Commodity Exchange. Our leading companies employed their large cash flows by diversifying into seemingly related fields. Corporate leadership positions started to become populated by lawyers and MBAs rather than the scientists and engineers who created these industries. Most importantly, the chemical and metallurgical industries were lured, in many cases, into backward integration into energy assets, and then were whipsawed in the subsequent downdraft of oil and gas prices during the '80s.

While all this has been going on, the pace of scientific change has accelerated. There has been much new science to be exploited by employing methods traditional of the chemical engineering. Modern chemistry is permitting more thorough and exacting analysis of raw materials and product mixtures. This has led to a much better understanding, and a potential for even better understanding of reaction mechanisms. Additional exciting applications are found in semiconductor manufacturing and in processing complex mixtures of synthetic molecules from the laboratory of the modern biologist.

Now, in the late '80s, while the leadership of our profession increasingly turns its attention to the collection of emerging applications described earlier by Professor Huawei, the economic backbone of our profession, the process industries, is under increasing assault. A group of businessmen and opportunists-- again, as described earlier by Ralph-- have recognized the vulnerable state of many of our domestic process industries, and have successfully gained control of these enterprises.

It is well known that the economic and financial systems in Japan and Germany are more conducive to long-term investment in research and product and market development. These factors, combined with a lack of success in recent years in the United States in diversifying many of our chemical industries, and catalyzed by the very attractive currency exchange ratios, have produced unprecedented interest in the acquisition of US-based chemical and energy companies.

In addition, we, in the United States have spawned an even more lethal attack from within. This attack has been organized by a sector of this nation's financial community. Now, our financial community is composed of financial analysts, lawyers, investment managers, and investment bankers, and for the most part, these individuals diligently and competently manage the assets of our country's institutions and our citizens. A portion of this community, however, is highly entrepreneurial. Some would call these people financial opportunists. Others would even turn them financial manipulators, or as in the case of Mr. [INAUDIBLE] and others, financial frauds and criminals.

These people have been particularly attracted to the values of our industry. And it produced remarkable speculative activity in chemical stocks. This speculation has transferred to the financial community in unprecedented degree of control and the allocation of capital, in the ownership, and even in the management of America's chemical and energy enterprises.

Now, I consider that the younger members of today's financial community to be among the most able people of their generation. Many of our most qualified young people in the United States are increasingly attracted to investment management to consulting and to financial advising. They do it quite simply, because that's where the money is. I know, because I used to hire them in my previous job at Fidelity. And I will tell you that they are highly motivated, exceedingly able, and very aggressive.

Now, this cadre, on the whole, is quite critical of the management of many of our chemical and energy companies in this country. They say that we have spent millions on diversification and have a little to show for it. They say that we have lost our international market share position in some of our principal industries. And they say that we have been, in some cases, negligent in creating growing values for those who own our enterprises-- our shareholders.

The problem, of course, is that there are strong elements of truth in these criticisms. These observations explain our automobiles industry's loss of its once dominant world leadership position, and the consequent loss of our tire industry's market share. Our best managed chemical companies paid up to acquire energy assets at an inopportune time. And for a number of years, our steel industry most often made headlines for its vigor in challenging the wisdom of America's trade policies.

In turn, all these events have led to the now commonplace wave of corporate restructurings, leveraged buyouts, takeovers, and ownership rates. In sum, it appears to me that one of the most creative segments of this nation's youth have been mobilized during this past decade in a highly effective assault on the industries created and built by their parents' generation. Many members of that earlier generation were graduates of this department.

In the meantime, the curriculum that we offer our students has remained substantially unchanged. We, as a department, and we, as chemical engineering academics, have remained, for all intents and purposes, above the industrial fray. Some would say industrial turmoil is inherent in the nature of technology-based industry. A process of renewal is essential. I would say that our graduates have been brilliant in building technologically-based enterprises.

Yet, many of these industrial organisms have remained remarkably unadaptive. I ask you to think about the status of Union Carbide, Phillips Oil, Firestone, United States Steel, Gulf Oil, Texaco, BorgWarner, Conoco, the great names of my professional youth. And I'd like to think that I'm not that old.

These are great companies, which either have not survived, or they are carrying on in a much weakened condition. And as we think about these companies, I ask all of you, my professional colleagues, how should we change the nature of our academic enterprise so as to produce people who not only create new technologies and industries, but who also have the capacity to draw from the past to drive the future, to understand the essence of modern commerce, as it is increasingly practiced on a global scale?

It has become commonplace to say that there no longer is, really, an American industrial enterprise, but only a global one. We must develop the capacity to combine the strengths of the past with the developments of today to appeal to the clients of tomorrow. When Gulf and Firestone are lost in forced mergers, we lose values and procedures and productive human beings. We must produce students who can help create new industry and develop and sustain organizations that can compete, adapt, survive, and dominate their markets worldwide.

Chemical engineering is the second of the engineering professions-- at least in my view of things-- the second of the professions to face this issue. For example, civil engineering never really had to cope with this situation. Bridges and highways do not, in general, become extinct for technical or competitive reasons. They simply wear out in time and are rebuilt, or replaced using contemporary technology.

On the other hand, industries based on mechanical engineering have already been through a similar evolutionary process, and have had mixed success, in my opinion. The economic woes of Detroit, Pittsburgh, Toledo, Akron, and Warren, provide ready testimony to our nation's difficulties in mechanical-based industries over the past decade.

Now, chemical engineers are in the midst of the maelstrom, and the early cracks in the dike are becoming apparent in our effort to maintain America's worldwide domination in electronics and computer hardware technology, and its attendant software development opportunities. IBM, Intel, DEC, Hewlett Packard, must now fend of competitive advances from Japan, Korea, Taiwan, and soon probably, from China and Russia.

Americans are learning that breakthroughs in research and development are not enough. We also need breakthroughs in the technology of manufacturing, of process control, which will lead to the production of products having the highest possible quality in the broadest sense of that word. So I re-ask the question, what should this department be doing about these problems? Specifically, what changes should be made in our chemical engineering curriculum?

It is my own view that substantial progress has been made in thinking about it. You've heard a summary of that earlier in the day. It is my further view that our undergraduate curriculum is already pretty fully committed as a result of the conflicting pressures from mastering an ever expanding body of technology, while simultaneously developing a real, integrated sense of the humanities and social sciences. However, in the graduate curriculum, particularly our doctoral program, I believe there is real room for improvement.

Doctoral students presumably have made a commitment to this profession, and many of them will end up in positions of leadership in industry or government. Our doctorate in engineering is patterned after the traditions of the doctorate in the sciences. As more and more science has become the focus of our engineering doctoral degree, in my judgment, we have lost sight of the concept that the function of an engineer is to apply science to solve problems of practical significance. As such, I believe our graduate students should be required to develop at least some sense of global economics, marketing strategy, product differentiation, and patent law.

During the five years that it takes a typical student to complete his doctoral work, shouldn't we require that he or she be able to interpret a balance sheet or an income statement, or to read intelligently a corporate or government agency annual report? How about requiring that all of our graduate students demonstrate some oral proficiency om a foreign language, not the less demanding written exams that we had in the past?

With our students lack of exposure to financial matters, organizational dynamics, and the simple basics of sales and marketing techniques, we are producing players who are entering a game where they are really ill equipped to compete effectively.

In my view, adequate exposure to many of these issues can be provided without unduly detracting from our primary objective of technical excellence. In addition, such exposure would also enable us to provide for our students an element of career guidance of a much higher order. And it is my view that this is an area where real improvement would be welcomed by our students. Having said this, it is becoming increasingly clear that the survivors of our older companies in the chemical and energy industries, and the strategies of our entrepreneurial companies, must now take into account the realities of a truly global arena.

You will hear shortly from my friend and former colleague, Lester Thurow, who I am sure will discuss the global nature of industrial development, and may describe some of his efforts to bring a sense of technology to MIT Sloan School's educational program. As you listen to his remarks, think hard about our own profession.

Dean Thurow's managers will not be effective without an appreciation of technology. The converse, in my view, is also true. Our graduate chemical engineers will not excel in their inevitable and rightful positions of leadership unless we provide for them a very different and broader approach to their education, and an expanded definition of professional competence.

So just as my friend recalled his past glories on the football field, we can also reflect upon our own achievements here today. These last 100 years have been exceptional, and have seen an unrivaled procession of outstanding individuals, new technologies, and industrial enterprises.

But too many of these industrial creations have not adequately met the test of time. As we contemplate the future, we need to know why, and we need to adjust our educational enterprise so that the institutions of the next century will exhibit more enduring values in an increasingly international competitive and complex marketplace.

Thank you very much.

[APPLAUSE]