How to Build an American Job

A look at attempts by Dow, Globalfoundries, and Bridgelux to build competitive high-tech factories in the U.S.

By Peter Burrows, Jack Kaskey and Ian King

High-tech manufacturing plants that make products such as electric-car batteries and LED lighting may create millions of jobs in upcoming years. Few of those jobs are likely to be in North America, where 49 chip factories have shut down since 2000. In the same period, Taiwan and China have built dozens. Many technology executives say the only antidote is government assistance, which has been far greater in other parts of the world. Now some U.S. officials are responding with subsidies and tax breaks, in an effort to combat high unemployment. Here's a look at three companies that are seeking to take advantage and create high-tech manufacturing jobs at home.

DETROIT POWER PLAY

As the U.S. economy unraveled in October 2008, Andrew Liveris, chief executive officer of Dow Chemical (DOW), asked his director of business development, Ravi Shanker, how they could create jobs near Dow's Midland (Mich.) headquarters, 130 miles northwest of Detroit. Shanker suggested that Dow make lithium ion batteries, the key component of electric-car engines. The Li-ion industry is expected to grow from $200 million to more than $25 billion by 2015, according to Needham & Co. In 2008, Asian companies had 98 percent of the market.

On June 21, Liveris broke ground on an 800,000-square-foot plant in Midland that will employ 800 people making 60,000 Li-ion batteries a year. It's owned by Dow Kokam, a joint venture created in 2009 with a U.S. partner that licenses technology from South Korean battery maker Kokam. Liveris is hoping Michigan's skilled workforce will be able to help it win business from companies such as Honda (HMC), Ford (F), and Tesla Motors (TSLA), the electric-car maker that went public on June 28.

The deal was predicated on government support, as Dow Kokam received $161 million of the $2.4 billion the Obama Administration has earmarked for the electric-car industry. That covered half the cost of the 400,000-square-foot first-phase plant. An additional $180 million in Michigan tax incentives will help fund the second phase. "We would never have built it in Michigan, or the U.S., without that aid," Liveris says. "It takes some of the risk away from the investment."

Dow is using federal and state grants for a facility in town to make solar roofing shingles, employing an estimated 1,200 people. In addition to the 2,000 permanent workers at the two factories, Liveris believes the projects will create 14,000 jobs in local industries and services.

To make real progress, Liveris says the U.S. needs to cut corporate taxes and adopt an energy policy that promotes American-made alternative technologies. As a member of Thailand's Board of Investment, he advises the Thai government on how to craft the sorts of financial incentives he wishes were available in the U.S. "It's not a level playing field," he says. - Jack Kaskey

FUNDED BY ABU DHABI

When chipmaker Advanced Micro Devices (AMD) announced it was getting out of the manufacturing business in 2007, people in Malta, N.Y.—a town of 13,000 that is 20 miles from Albany—worried about the fate of the massive plant AMD was planning to build there. Help came from an unexpected source: the government of Abu Dhabi.

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