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A Chemist Heats Up Dow Corning


In 1967, when chemist Shailer L. Bass retired as chief executive of Dow Corning Corp., Stephanie A. Burns was a seventh-grader in Ann Arbor, Mich., who spent her days dreaming about becoming a scientist. After school, Burns dissected frogs and snakes and did chemistry experiments with her older brother. She stuck with it, getting a doctorate in organic chemistry in 1982 and then a research job at Dow Corning, the privately held joint venture between Dow Chemical Co. (DOW) and Corning Inc. (GLW). She made her way from the lab to the ranks of management, and in January, 2004, was named CEO. For the first time since Bass, a chemist is heading Dow Corning once again.

The company needs Burns's scientific brainpower. Dow Corning is the world's biggest maker of silicones, a family of silicone-based compounds used in sealants, adhesives, cosmetics, and, most famously, breast implants. In June, the Midland (Mich.)-based company emerged from nine years of Chapter 11 bankruptcy protection -- its refuge from thousands of lawsuits filed by women who believed leaky implants made them sick. Dow Corning will spend the next 15 years financing $3.3 billion in settlement payments. Meanwhile, the industrial markets the company serves are nearly saturated. To rev up profits, Burns needs to pioneer new markets.

COOL UNDER FIRE

Burns, 49, is drawing on her own experience in the lab to guide her company's rebirth. As a young scientist her specialties were inventing silicone compounds that could withstand high temperatures, as well as developing semiconductor materials for autos. Now she's nudging scientists to invent new compounds for other high-growth markets such as electronics, pharmaceuticals, and aerospace. Dow Corning's chairman, Gary A. Anderson -- who handpicked Burns to replace him as CEO -- says her ability to assess ideas right down to their chemical formulas "gives her a definite advantage in judging where we should devote our research efforts." Burns is also speeding up Dow Corning's expansion in China, India, and other markets where silicone use is a fraction of what it is in the U.S.

The company is making progress. In the nine months that ended on Sept. 30, Burns's China initiatives helped drive net income up 23% over the same period in 2003, to $167.8 million, while revenues jumped 19%, to $2.5 billion. Still, Burns concedes that she's nowhere near achieving her ultimate goal: to derive at least 20% of annual sales from products that are less than five years old. "Innovation is a key priority for this company," she says.

Not that long ago, virtually no one had much faith in Dow Corning's future. Formed in 1943, the company hit on the idea of making breast implants with silicone in the 1960s. Originally designed for women who had mastectomies, the implant became a sensation as a cosmetic device. But some women developed autoimmune diseases such as lupus, which they attributed to the implants. Although the allegations were never scientifically proven, Dow Corning pulled the product in 1992. A wave of injury lawsuits followed, forcing the company into bankruptcy.

The firestorm over implants put Burns on the path to the CEO suite. She had not helped develop the product, but in 1994, as the siege on the company intensified, Burns was named director of women's health. Personable and gregarious, she was given the tough job of acting as liaison between the Food & Drug Administration, plaintiffs, and Dow Corning, relaying results from independent research on the alleged side effects of implants. She even appeared on The Oprah Winfrey Show, bravely rebutting pointed accusations.

Anderson, who was then CEO, was so impressed with Burns's ability to explain complex data while staying cool under fire that he began promoting her, first to director of science and technology in Europe, and then to executive vice-president. "She calmed the waters," Anderson recalls. "That was the key to her ascent."

REVVED-UP RESEARCH

Burns, a mother and grandmother who is married to a Dow Corning chemist, spends much of her off-hours trying to get children excited about science -- especially girls. She preaches to industry groups about the importance of science education in schools, and she set up a mentoring program that sends Dow Corning scientists to local classrooms. As one of the few women at the top of the chemical industry, Burns sees herself as a role model. "Science is no longer cool," she says. "That's really tragic."

Burns was always an enthusiastic science student, enjoying both the discovery process and the camaraderie of most labs. As a graduate student at Iowa State University, she often set off dry-ice bombs to startle her classmates. "She was a heck of a lot of fun," says her former adviser, Thomas J. Barton, now director of the Energy Dept.'s laboratory in Ames, Iowa.

While some might shy away from the corporate-turnaround test she faces today, Burns savors the challenge. Even before she moved into the top job, Burns was steering the company into new territory. In 2003 she helped shepherd Dow Corning's $115 million acquisition of Sterling Semiconductor Inc., which makes silicon carbide microchips that are used to power devices in the aerospace and automotive markets. Dow Corning is also making more efficient silicon wafers for solar panels -- a business that is growing 30% a year. In the lab, meanwhile, researchers are mixing silicon with carbon-based compounds to try to develop newfangled fabrics, building materials, and pharmaceutical products such as skin patches that emit drugs.

Burns's ex-lab partners understand the immensity of the challenge at hand. "She is giving us the responsibility to change the face of the corporation," says Thomas H. Lane, a veteran Dow Corning scientist. It's no small task. But with a chemist at the helm, Dow Corning's innovation makeover is well under way.

By Michael Arndt in Midland, Mich.


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