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

[MUSIC PLAYING]

PRESENTER: Should know a bit about economics and management. Now, we'll have the reverse side, and learn perhaps what those in economics and management should know about technology. Professor Lester Thurow.

LESTER THUROW: I think I'm the first person today who's on this platform that's neither a chemist, nor a chemical engineer. And since I'm the only non-chemist or non-chemical engineer, let me say happy birthday for those of us from the rest of the Institute. Chemical engineering is clearly one of the crown jewels at MIT. And the rest of us at MIT appreciate its existence.

Now, Ralph said that, in 1981, he decided to give up being a chemical engineer and become an economist. And I should warn him that he's going from a high prestige occupation to a low prestige occupation.

[LAUGHTER]

And it's so low prestige, I must tell you something about the space agency. When the space agency had to go from the Challenger to the Discovery, they decided that, in doing their experiments, they would replace the rats with economists. And they announced that there were three reasons why they were replacing rats with economists.

The first reason was that they're now more economists, and they're cheaper than rats.

[LAUGHTER]

The second reason is you sometimes get emotionally attached to rats.

[LAUGHTER]

And the third reason is there are some things that rats just won't do.

[LAUGHTER]

[APPLAUSE]

Now, people often ask, is economics a science? I think economics is a science in exactly the same sense that geology is a science, which is a little different than chemical engineering, in that you can't do experiments. For example, geologists perfectly understand earthquakes and volcanoes. It's called plate tectonics. But they can't predict when the next earthquake will occur and how big it will be.

And I think you have exactly that same problem in economics. We understand the fundamental forces to plate tectonics. But we have a hard time, when it comes to timing and magnitude, because we can't go into the laboratory and simulate those kind of things.

But if you look at the world around us at the moment, there is one fundamental force from the economic plate tectonics, which is going to affect us all, and especially chemical engineering. And that is you can think of those of us who've lived in the United States as basically living behind the Great Wall of China, economically speaking, that kept the barbarians out.

Our wall was based on five things after World War II. We were wealthy, and they were poor, so we could afford to do things they couldn't afford to do. Because we had invented mass public education and mass higher education first, we had a better educated workforce than they had. Because we weren't blown up in World War II and because the Europeans had given us some of their very best brains like Einstein, we had superior technology. We had the world's biggest market by a factor of seven. And perhaps, we had the world's best managers.

And if you put all of those things together, we in the United States were not in a competitive world. We had effortless economic and technological superiority. The problem, of course-- and it's a problem based on success, not failure-- is the Great Wall of China-- the economic Great Wall of China has melted.

Today, we are no longer wealthier than they are. If you look at international purchasing power, there are nine countries in the world. There are eight countries in the world that have a higher per capita GNP in the United States, not counting the sheikhdoms. Austria, Switzerland, the Netherlands, West Germany, Denmark, Norway, Sweden, and Japan all have, in terms of international purchasing power, higher per capita GNP than the United States. And since they save more than we do, they can afford things that we don't seem to be able to afford, in terms of a capital equipment.

Where we once had the world's best educated labor force, they've caught up and in many cases, surpassed us. If you look get college education, about 30% of Japan, Germany, and the United States go to college in this day and age. But in both Japan and Germany, about 40% come out in engineering and science, and the United States, a little less than 20% come out in engineering and science, which means for every one engineer on American payrolls, there are going to be two engineers on German and Japanese payrolls. And we shouldn't regard it as a surprise then that perhaps their products are a little bit better engineered, because they're putting twice as much talent into it.

In terms of market size, in 1992, of the United States becomes AAA ball. Europe becomes the economic big leagues with integration. 320 million people, with a per capita income approximately equal the United States, it'll be about 25% bigger than the United States as an integrated market.

And perhaps, our managers are no longer as good as those in the rest of the world. The buzzword in economics is managers are change agents. Well, if that's the name of the game, you measure change, in terms of how fast is productivity growing, and productivity in the United States is growing somewhat slower than it is in the rest of the industrial world, and particularly slower than it is in Germany and Japan, which would be some indication that perhaps, our managers have also melted, in terms of this superiority.

And so the fact of the matter is the walls are down. And in some sense, Genghis Khan is waiting where the walls used to be. And the name of the game, of course, is can we change? Because what we said to ourselves after World War II-- and it may have been a lie, but we said it-- what we said was we wanted to live in a world of other equally wealthy people. And the problem of living in a world with other equally wealthy people is that means they really are your equals, and they really are competitive, and you're sometimes envious. And I think we have all of those problems at the moment.

Now, if you think about the chemical industry, it's a relatively bright spot in the American economy, despite its problems. Over the last 10 years, productivity in the American economy has grown at about 0.8% a year-- a little less than 1%. And that's what it grew in 1987.

Manufacturing is better than the national average. It's been growing at about 3. But productivity in the chemically related industries have been doing even better. I looked up the productivity growth rate in the three major ones for the last four years.

If you take chemical products, productivity has been growing at about 4.6% a year. If you take petroleum and coal products, productivity has been growing at 7.3% a year. And if you take rubber and plastics, productivity has been growing at 4.2% a year. And as was mentioned, in terms of export performance, chemicals is one of the few industries, along with aircraft that still has a positive trade balance.

And in 1987, our exports of chemicals rose 19%, while our exports of all products across the American economy were only rising 12%. And so in this sense, your industry is one of the better performers in the American economy. That doesn't mean it's performing as well as it ought to. But it means it's one of the better performers.

And a question I want to investigate today is, what can we learn from its successes? Is there anything out there to learn? And I think there is something to learn.

And the purpose of looking at other countries is not to do what they do, but basically to use them as a mirror to see what you do, not to adopt what they do, but to say, if they've learned how to do x, we have to learn how to do x in a way that is consistent with American history, culture, and tradition. For example, take the Olympics. Think about it. 17 million East Germans win more medals than 245 million Americans.

Now, we don't want to train athletes the way the East Germans do it. But what the East Germans tell us is you can't do it the old American way. Because if you do what the old American way, you won't win.

And therefore, you have to find a new way to train athletes that consistent with American history, American culture, American tradition that lets your athletes run as fast as those in East Germany, even though you don't want to do it the East German way. Because the East Germans set the standards, even though they don't tell you how to do it. And I think that's what the rest of the world does for us economically. We can't do it as the Japanese do it. We can't do it as the Germans do it. But we have to do it, nonetheless.

If you look at American industry and say, well, why is it that American firms have had so much trouble in international competitiveness, I think you find a whole set of events. And you have to ask yourself, what causes these events? One of the things that is clearly true is, in the last couple of decades, American firms have been very reluctant to make major bets on technology, the kind of bets that cost you a billion bucks to make.

A dramatic example would be oxygen furnaces, where we built our first oxygen furnace in America seven years after the rest of the world built their first oxygen furnace. Now, if you ask why, I think there was an answer. The basic answer was this was a billion dollar bet, maybe even a $2 billion bet in today's dollars.

And the people at the top of the industry were not on top of the technology. It was a black box, as far as they're concerned. And the buzz word was hire the expert. You don't need to be on top of the technology yourself. But who's going to bet a billion dollars on a black box, even if the expert tells you to bet? I think the answer is nobody.

And so what you're going to do is you're going to sit there and wait until the numbers are clear. But by the time the numbers are clear, the other guys spent three years building his mill and three years operating his mill, and you're seven years behind, and that kind of thing. And if you look at the technological background of CEOs of Fortune 500 equivalent companies, you see a very interesting difference between the United States and either Germany or Japan.

In the United States, about 30% of our chief executives have technological backgrounds, and 70% do not. In Japan and Germany, it's exactly the opposite. 70% do, and 30% do not.

Now, the interesting thing, of course, about the chemical and chemical engineering industry is it's one of the few industries in the United States, in fact, in which technological people tend to come to the top. The other day, I saw a survey of CEOs who had PhDs. There aren't a large number of them in America, but they're almost all in either pharmaceuticals or chemistry. Outside of pharmaceuticals and chemistry-- chemical industries-- you almost never find a PhD heading a company. And I would, at least, suggest that maybe that's one of the reasons why this industry is a relatively good performer.

Secondly, if you look at technology, you tend to find that American firms are still pretty good when it comes to product technology. Recently, a group of Europeans divided all of science and engineering into nine categories, tried to figure out who was the leader in each of the nine categories. And this was product technologies. And they came to the conclusion that Americans were leaders in five industries, tied for number one in two industries, and number two in two industries.

Now, if you have five firsts, two ties, and two seconds, you're obviously number one in the world. There was something different. The difference, of course, was that our gap between ourselves and the number two wasn't as big as it used to be. And the other interesting difference, of course, was that there was a definite number two.

Every place we were number one, Japan was number two. Every place we were tied for number one, it was with Japan. And every place where we were number two, they were number one. And so for the first time in our history, there is a competitor on the playing field that is identifiable-- the Japanese.

If, however, you look at process technologies, it is difficult to find places where American industry is world class, in terms of quality or productivity. And once again, the chemical engineering industries is one of the few exceptions where you can really find first class process technologies in existence in American firms-- for example, the yield rates on semiconductor chips. The best American firms can't get the same yield rates as the best Japanese firms on those process technologies. They're closing the gap, but they're not yet there.

I think there's an answer to that. My impression is that in chemical engineering operations, the way they're set up, you can't make this sharp distinction between product and process that people make in the rest of the world. And that sharp distinction has become a distinction in most of American industry between first class operations and second class operations. The people who do product technologies are first class brains. The people who do process technologies are second class brains.

And you see that right across American industry if you look at pay, promotion curves, routes to the top. In most of American industry, production is not the way to the top. It, in fact, is a dead end. Not too long ago, Fortune Magazine asked the CEOs of large companies, what's the route to the top in your industry? How many of those CEOs do you think said production? Well, 5% said production, 34% said marketing, 25% said finance, and 24% said general management.

Now, my graduates at the management school read those statistics. And if you read those statistics, would you ever go into production? Of course you wouldn't, because it's only the place that stupid people go who don't know the real facts about life and how do you get to the top of the heap.

And because of the nature of this industry, I think I would suspect that if you ask that question inside the chemical industries, you wouldn't get exactly those proportions. Now, as was mentioned, one of the things we're trying to do at MIT is do a little bit of reversing of that, because we think we're partly to blame, in most of MIT, for treating process technologies and process management as if it was a second class activity. And we recently put together this program called Leaders In Manufacturing, which is joint between the engineering school and the management school to try and turn out people that are both interested in, and first class in, doing both the management and scientific aspects a process technologies.

And I should say, I think that the engineering school really took the leadership on that and got the initiative going. Because when it first got going at the beginning, I think the management school was dragging its feet a little bit on that process, because we were still in this mode of thinking, hey, you just hire the expert. You don't have to be on top of it yourself. And I think Jerry Wilson and his crowd should be congratulated for pushing that program through. And we have actually have our first students here in June, 6 months ago or a number of months ago, who started on this process.

We're also busy trying to put management into our master students in engineering and a little bit of technology into our students and management. Because if you think about it, management schools have been very funny in the past, because they teach accounting. They teach finance. They teach marketing. But they don't teach management of technology, when in fact, even if you're in a service industry, in general, you're going to be managing technology.

So one of the things that you have to think about is how do you make process technologies into a first class activity? And I think almost, because of the technology and the chemistry business, it wasn't possible to make processes a second class activity, in the way in which it was in much of the rest of American industry. Another place where you see a tremendous American problem is basically on the skills and technological training of the workforce-- not the engineers, but the workforce.

Now, here's a place where I think the chemical industry was lucky, not smart. It was lucky, simply because you don't hire any people. And therefore, you can't have a lot of illiterates on your payroll.

[LAUGHTER]

If you're in a technology that really requires people, then you've got to worry about the education of the average person. And if you look at American workforce and compare it with the workforce in Germany and Japan, our problems do not lie at the level of the 30% of the population that goes to college. They're about as good as the 30% of the population goes to college anywhere else in the world. Our problem lies with the high school graduate who does not go to college, because if you look at a 12th grade graduate in Germany in Japan, they are just far above the performance of a 12th grade graduate in the United States.

Now, because their high school exams are so tough, we catch up during college. Because in the freshman south year in college, a Japanese student in Japan does precisely zero. And so by the time you graduate from college, we have caught up. But if you don't go to college, you never catch up.

And increasingly, technologies are moving in directions where average production workers have just got to have levels of skills that they didn't have to have in the past. For example, if you go to the IBM semiconductor facility in Burlington, Vermont, where they have 8,000 people working, you will find that they are busy teaching all of their production workers algebra 1 and algebra 2.

Why are they teaching them algebra 1 and algebra 2? Well, to make one million byte chips, you got to do statistical quality control. To do statistical quality control, the workers have got to know a little operations research. To learn the operations research, they've got to know a little algebra. And so there is IBM busily teaching algebra 1 and algebra 2.

But I can guarantee you if something. Hitachi is not teaching algebra 1 and algebra 2. Because Hitachi knows that every graduate from a Japanese high school knows calculus, much less algebra 1 and algebra 2. And so this whole question of investing in your workforce and having a high skill workforce is one of the places where, if you just look across the board, you see systematic underinvestment in the United States. And I don't think you see it in the chemical industry, but for the reason I mentioned. You don't hire anybody, and therefore, you can't invest in anybody.

If you look at R&D, you see a number of interesting differences between ourselves and the rest of the world. And here again, these differences are smaller in the chemical industry. If you look at civilian R&D, we're putting about 1.7%, 1.8% of the GNP into civilian R&D.

Both Germany and Japan are putting about 2.8% of the GNP into civilian R&D. So we're being outspent by one percentage point. Unless you think we're smarter than they are-- and I don't-- that isn't viable in the long run.

Now, if you add in military R&D, we spend about the same amount-- about 2.8. But either, it's because we're going into space, and the time lags are longer, or we're going into space, and the applicability is less. In recent years, it has been getting harder and harder to find spin-offs for military research into civilian research.

People, when you talk about spin-offs, instantly mentioned the Boeing 707, which came from a modified military transport plane. But my god, that was 30 years ago-- 1957. In recent years, the great innovations have spun into the military, not spun off.

The transistor was the telephone labs, and it spun into the military. The semiconductor chips was Texas Instruments, an oil well drilling firm, and it spun into the military. The small computer was-- I don't know-- maybe Steve Jobs' backyard-- and it spun into the military. But none of these things were invented in the military and then spun out into the general economy.

And so one of the problems we have is how do we organize a society where we up, in some sense, the research intensity of our efforts. That's partly a private problem in the chemical industry, as you've seen the data. It's almost all private money. But on average in the United States, about half the money comes from government, and half the money from private industry. And both of those pieces have to be brought up, I think, to that world class level.

Now, if you look at our distribution of R&D-- and I don't know how this would come out in the chemical industries-- you see an interesting pattern. The National Science Foundation divides industries into high-tech industries, medium-tech industries, and low-tech industries. A high tech industry is anyone that spends more than twice the national average in R&D as a fraction of sales. A low tech industry is any industries, which spends less than half the national average of R&D relative to sales. And middle tech is obviously between one half and two.

On that basis, America puts 88% of its research money into high-tech activities, 8% in the middle-tech activities, and 4% into low-tech activities. The Japanese do it almost precisely the opposite. They put 21% into high-tech activities, 12% into middle-tech activities, and 67% into low-tech activities.

And what they are doing is basically picking off those industries, which traditionally have either not done any research or have gone out of the research business and making them into relatively high-tech industries and getting a tremendous competitive advantage out of doing it. For example, automobiles is a low-tech industry. Traditionally, automobiles have put almost nothing into research and development as a fraction of sales.

And think about the innovations in automobiles since World War II. The last one that begun in the United States was the automatic transmission in 1947. But all of the innovation since then have come from abroad to the United States. Four wheel steering, four wheel drive, turbo charging-- all of those things are things that started abroad and came into the United States. Interestingly, Germany is halfway between the United States and Japan when it comes to spending its money on high-tech, middle-tech, and low-tech.

And one of the things we need to think about is are we spending our research money in the appropriate way? Another place where we're systematically different than the rest of the world is how we divide our money between new product R&D and process R&D. We put almost all of our research money into new product R&D and very little in the new process already. I suspect, in the chemical industry, that's not true. A good fraction of it still goes into process R&D.

Now, the reason we do that is the conventional wisdom, in the '50s and '60s, was the rate of return on investment is always higher on new product R&D. Because if you invent a new product, you got a kind of a quasi monopoly position for a little while, and you can earn more money. And I think that was probably true in the '50s and '60s, but it's obsolete in today's world economy, because simply inventing something isn't good enough, unless you're the lowest cost person in the world at making that something. Because anything you can invent can be reverse engineered in six months. And if the other guy can make it cheaper than you can make it, he makes it his product.

And a perfect example of that was video recorders. Video recorders were invented in America But we could never get the production costs down low enough to make them into a home product.

The Japanese do that. And they, last year, made 38 million video recorders. None were made in the United States. Do you know how many of those video recorders were sold in Japan? 6 million. Do you know how many of were sold in the United States? 22 million. An American intervention, but generating billions of dollars worth of profits and hundreds of thousands of jobs in Japan, because we weren't on top of the production processes, even though we were the inventor of the product.

And I think what the world economy has done is changed the nature of those IRIs. And American industry hasn't yet rebalanced its research portfolio to take into account that modern reality. If you're not the lowest cost producer of a product, it doesn't do you any good to invent the product. And that's a reality that most of American industry has yet to encompass.

Now, the other part of this world economy that we have to face, of course, is the rest of the world's different. It isn't little Americans or big Americans. It's different, and we have to find a way to cope with those differences and recognize those differences.

Let me just give you a couple of differences for you to think about on the way home tomorrow. In Japan, they have the Big Zaibatsu groups-- Mitsui, Mitsubishi, Dai-Ichi Kangyo group, Fuji group. Once a month, the companies in each of those groups-- and there are 25 to 45 companies in each group-- get together, and the CEOs have a meeting-- an all day meeting. Sometimes it's called the Thursday club. Sometimes it's the Tuesday club. Nobody but the CEOs can ever go. No substitutes are allowed. No outsiders are ever allowed.

I have obviously never been to one of those meetings. But I know precisely what they talk about. What do you think they talk about? They talk about joint strategy.

Very important, busy people don't spend the day having Oreo cookies. All of those companies are in the United States. If you had that meeting in the United States, every one of them would be thrown in jail, because that meeting is against the law in the United States. But it's a fact of life in the world economy.

Now, we may not want to allow those kinds of meetings in the United States. We have no way to stop those kinds of meetings in Japan. But the question is, given that fact about the world economy, how do we organize ourselves?

I think one of the things that means is that we're going to have to learn both how to compete and cooperate. In order to compete, American companies are going to have to learn how to cooperate within in an industry, in terms of doing some of the research and development together, to cut costs, and a whole variety of cooperative things will be required. At the same time, you want to maintain competitiveness. And we have to find a way to do that.

One other example-- Mr. Honda, 14 years ago, decided he wanted to quit being a motorcycle company. And as he told his employees at that time, he wanted to build the biggest and best automobile company in the world. When he was a motorcycle company, he made a 9% rate of return on his investments. Since he has decided to become an automobile company, he has made a 3% rate of return on investment. But he doesn't regard that as a bad performance. He just regards that as the cost of building the biggest and best automobile company in the world.

What American company could do that? What American company would do that? Well, the answer is if none could or none would, then American companies will not be the biggest and best in the automobile industry. And it's just that simple, because there's something in economics, which is technical jargon, which is called factor price equalization. But it has a very simple bottom line.

The bottom line is if you aren't smarter than a guy in the rest of the world, if you don't have more capital than the guy in the rest of the world, if you don't have more technology than the guy in the rest of the world, if you don't have better management than the guy in the rest of the world, you will work for exactly the wage he works for. And so if you aren't better on any of those things than the Koreans are, you will work for Korean wages. , Now American managers like that part of factor price equalization.

What they don't like is the other part. If a capitalist in Japan called Mr. Honda will work for a 3% rate of return, then you will work for a 3% rate of return, unless you are better than he is. And it is very hard to be better than he is, because he may be the world's best.

I was on a platform not too long ago with Lutz of Chrysler, as the number three man at Chrysler. And he said, Honda has the best productivity in the world, the best quality in the world, superior design, but they don't make any money. And of course, he didn't jump to the bottom line. If they don't make any money, Chrysler won't make any money, because he just admitted that Chrysler wasn't better than Honda on any of those dimensions.

And see, that's the world economy. It's different, and I think what you have to think about, inside the chemical industries, is even though you're a relatively bright spot in the American economy, how do you make yourself into a real power in the world economy, as opposed to just a relatively bright spot in the American economy? And what the rest of American industry has to say is, first of all, how can we get up to the level that the American Chemical Industry is already at? And then, how can we also be world class performers?

Because see, if you think about international competition, it has two downsides. On the 4th of July, Americans like to talk about competition. And we always make it sound like it's a positive. But in fact, competition is not a positive on two dimensions,

The first dimension, upon which competition is a negative, obviously, is you can be beaten not one year, but every year. The Chicago White Sox have never won a pennant.

[LAUGHTER]

America may become the Chicago White Sox. And of course, the second part of it is, if you want to win, you've got to change. Thank you.

[APPLAUSE]

PRESENTER: Thank you very much, Lester, for a very enjoyable talk.

The next major thing on our program will be the open house. Just prior to ending the symposium, we'll have some closing remarks from Ray Baddour.

Ray was the department head when our new building, which some of you may never have seen before and will have the opportunity see in a little while. Ray was the department head when that was planned. And the money was raised, and we got it. And it was the first building ever built on campus explicitly for chemical engineering. So I'd like to introduce Ray, who will make a few closing remarks.

RAYMOND BADDOUR: Well, this will be a real change of pace from what you've been listening to. These are sort of private remarks to the alumni, and a thank you for what they've done. Because the story of the chemical engineering building is the story of how our alumni came to our assistance when we needed their help, as they have so many times before.

At the end of World War II, we inherited building 12, which was constructed on campus for the Army's chemical warfare service at the instigation of Bradley Dewey. Bradley foresaw that the department would be able to use this building as a home when the war was over, and which we did for many years. But by the mid-'60s, we had outgrown the building, and the laboratories were inadequate for the kinds of research which we were doing. We had to have new quarters.

However, when I took over from Ed Gilliland as head of the department, in March of 1969, the Vietnam inspired student unrest was in full swing. Within a week after I took the job, some students had battered down the door to the offices of the chairman and president and occupied the suite. All academic building plans at the Institute had been canceled, and the campus had the appearance of a place under siege.

Furthermore, the department graduated only 24 seniors that year, the smallest class since the department became independent of chemistry in 1920. This was the situation at the Institute when I approached the administration for authorization to raise $16 million for new chemical engineering building, which is equivalent to about $35 million today.

Well, they looked at me like I was proposing to walk on water, and understandably so. What they didn't know was that I had a secret weapon. We weren't going to walk on water. We were going to run on oil. And here is the lineup that we had to do that-- Ken Jamieson, Chairman of Esso, was chairman of our visiting committee. And Ken had agreed to support my proposal to the administration and help by chairing a sponsoring committee.

Bob Gunness was President of Indiana. And Bob is as loyal and supportive an alumnus as we have. Butch Granville, an alumnus of the Practice School, was Chairman of Texaco. Jerry McAfee was President of Gulf Oil of Canada. Bob Dorsey, Chairman of Gulf Oil was not an alumnus, but Jamieson brought him on board before my very eyes in an operation so smooth and painless that poor Dorsey didn't even know what hit him.

[LAUGHTER]

And there was Standard of California, with George Keller prepared to carry the day for us there. [? Dayton ?] [? Cluell ?] at Mobil, Dan McGee at Kerr-McGee, and Bob Sharborough at Sun Oil. In fact, the oil industries responded generously to our approaches, as they had to if we were to succeed. And it was our alumni in those industries who made the success.

There are many interesting stories to be told about this effort. But one will be enough to give you the flavor of what our alumni did. Knowing that the administration were too preoccupied with unrest on the campus to raise money for a chemical engineering building, I took Jerry Wiesner to Joyce Chen's for lunch. And while he was preoccupied with egg rolls, I asked him if I would be permitted to raise the money for our building myself. Jerry's response was that no department head had ever done this before, but why not? I had my first support.

By the time the campaign began two years later, Howard Johnson had become chairman at the Institute and agreed to work with me on the fund raising. But we needed a sympathetic audience to practice on to perfect our presentation, since this kind of major fund raising was new to us.

Bob Gunness agreed to arranged for us to make our first pitch to John Swearingen, then chairman of Indiana. Those of you who know Swearingen can understand that this was letting the Red Sox warm up by playing the New York Mets. I can give you an idea of how that first attempt came off by telling you that compared with the job that we did before Swearingen, Dan Quayle would seem like a professional debater.

[LAUGHTER]

But Gunness saved Indiana for us. We polished up our act and went on to set the following new records for the Institute.

First, ours was the first successful building fund campaign led by the department head himself. Second, ours was the first academic building funded entirely from private sources, since George Eastman financed the construction of the Cambridge campus-- no government money. Third, ours was a pace setting campaign, averaging $2 million a month for most of the funding. Fourth, our alumni topped it off with two privately funded chairs, the Edwin R. Gilliland chair, led by Paul Cook, and the Willard Dow chair, led by Herb Dow.

In announcing these two chairs at the dedication of the new building, Howard Johnson stated that this was a first for the Institute. Of course, there were a large number of alumni who contribute to these successes. But these are the ones with whom I worked directly-- the succession of visiting committee chairman, Ken Jamieson, Bob Gunness, John Haas, and especially, Ralph Landau, whose name the building carries, and who has long been active in almost every aspect of the department's affairs. We are all grateful to you alumni who have supported us for so long in so many ways.

But when you visit the new building, you will also see new people. There are many here of my vintage, who remember the department, as Doc Lewis, Bill McAdams, Ed Gilliland, Ernie Hauser, Hoyt Hoddle, Fritz Meissner, Harold Weber, Tom Sherwood, and Walter Whitman. Now, we have a new department.

On this point, I will close by telling you a story that Tom Sherwood told me when I was bemoaning the loss of the old guard. When Tom was in high school, his school football team won the division championship. But the football team were all seniors and graduated together. The whole school was worried, because they would have to field a brand new team the next year.

When Tom was telling me this story, he looked at me and smiled. And do you know what happened? They won the championship. I can still hear Tom laughing. Thank you for coming. Enjoy your visit.

[APPLAUSE]