Credit: Shutterstock
Westlake produces polyvinyl chloride pipe that can transport drinkable water.
The impact of budget cuts ordered by the US Department of Government Efficiency has been well documented in C&EN and elsewhere. And no funding agency has been more decimated than the US Agency for International Development (USAID), which on Feb. 23 was effectively shuttered. The loss of programs to fight diseases like mpox and Ebola will likely weaken human health across the globe.
But a recent comment from a chemical company executive brought to light a less appreciated benefit of such international US aid: economic development, right at home.
The comment came from James Y. Chao, senior chairman of the board of Westlake, one of the largest US producers of polyethylene, polyvinyl chloride, and vinyl construction products.
Chao and his brother, Albert Y. Chao, were at New York City’s Plaza Hotel on March 4 to accept the 92nd Chemical Industry Medal from the Society of Chemical Industry’s America Section. Attendees were dressed in tuxedos and evening gowns, and everyone seemed to be enjoying a degree of the good fortune that transcends any debate about shifts in policy in Washington, DC.
Chao woke guests up to a potential business impact of those shifts when he started his acceptance speech by thanking USAID for giving him the opportunity to speak at the event. “If not for USAID, there would not be Formosa Plastics or Westlake,” he said.
It turns out that the Chao brothers’ father, Ting Tsung Chao, cofounded Formosa Plastics in Taiwan in 1954 with a $790,000 loan from USAID’s predecessor agency. The company became a success, and the Chao family moved on to other chemical manufacturing ventures. They entered the US market in 1986 by acquiring a polyethylene plant in Louisiana. It was the first asset of what is now Westlake, a Houston-based company that trades on the New York Stock Exchange.
Today, the two firms are among the largest chemical companies in the world. Westlake employs about 15,500 people overall, more than two-thirds of whom are in the US. Formosa Plastics employs about 3,000 people in the US in the production of plastics and chlor-alkali chemicals. Both firms create the kind of manufacturing jobs the second Donald J. Trump administration wants to cultivate in the US.
These days, most USAID funding is humanitarian, but before its staff was put on administrative leave last month, the agency was still funding occasional manufacturing projects. In Ethiopia, for example, it backed a venture launched in 2020 to produce plastic toilet slabs that help keep latrines clean and free of flies.
Layoffs and budget cuts threaten other US government agencies that help businesses get off the ground. And more often than not, these businesses are in the US. C&EN recently wrote about how chemistry-oriented start-up companies are scrambling to adjust to abrupt changes at US agencies like the Department of Energy, the Department of Agriculture, and the National Science Foundation.
Pam Marrone, an agricultural technology entrepreneur, told C&EN that Small Business Innovation Research (SBIR) grants and similar programs are essential for US companies with technologies that are promising but too risky for private investors. They often blossom. One commercial success is Ginkgo Bioworks, which received SBIR grants a year after it was founded in 2008 and is now a major supplier of biomanufacturing services. It has over 800 employees, mostly in the US.
Of course, grants and loans to entrepreneurial ventures, be they in the US or overseas, can come to naught. Investment is risky, and investment in new technologies and new companies is riskier still.
The payback on government assistance to business isn’t always measurable, but one way the US became the world’s most powerful economy is by betting on ambitious people and cutting-edge ideas. Yes, pulling back from such bets would save a few dollars, but in the process, will a future provider of thousands of US manufacturing jobs be left to wither?
This editorial is the result of collective deliberation in C&EN. For this week’s editorial, the lead contributor is Michael McCoy.
Views expressed on this page are not necessarily those of ACS.
Chemical & Engineering News
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