Home' Technology Review : January February 2012 Contents Feature Story 41
Trade balance in high-technology goods (in billions, 1995–2008)
World manufacturing output (percent share, 1970–2008)
Factory-worker wages (dollars per hour)
Sources: United Nations Conference on Trade and Development, ITIF
Sources: IHS Global Insight, World Trade Service Database
*Asia-9 refers to India, Indonesia, Malaysia, Philippines, Singapore, South Korea,
Taiwan, Thailand, and Vietnam.
Sources: Economist Intelligence Unit; U.S. Bureau of Labor Statistics; selected
company data; BCG analysis
Annual solar-cell production (megawatts)
3% of U.S . worker’s wage
development presents a vision of what a recovery in the region’s
manufacturing base might look like. It also presents a snapshot
of the huge challenge involved in creating such an infrastructure.
About 125 miles north of the Detroit Hamtramck assembly plant
is one of the largest of the new battery facilities. Dow Kokam, a
joint venture of Dow Chemical, TK Advanced Battery, and the
French firm Groupe Industriel Marcel Dassault, is building a $322
million factory in Midland, Michigan, that will be able to make
enough lithium-ion battery cells for some 30,000 electric cars.
Though construction is ongoing and much of the equipment is still
being installed, a quick tour gives a sense of the operation’s size
and complexity. In one large high-ceilinged room are a vast num-
ber of automated racks where each battery cell will be “formed,” a
critical operation in which the battery is charged and discharged
to precisely set the chemistry.
It’s this kind of scale and attention to detail that attract the
interest of companies like Dow, the world’s second-largest chemi-
cal producer. The plant sits just outside the boundaries of Dow’s
Michigan chemical operations, a small city of low-rise production
buildings connected by a maze of crisscrossing overhead pipes. It’s
a sprawling testimony to the connections between various ingre-
dients and feedstocks used in making industrial products, and to
the efficiencies of scale often required in manufacturing.
The supply chain for lithium-ion battery manufacturing starts
deep within the chemical complex. Somewhere down one of the
streets that run through the plant is a nondescript building where
workers once made chemicals used in plastics. Now Dow is turn-
ing it into a production facility for the cathode and anode materi-
als needed in lithium-ion batteries. Anyone who enters must don
a white coat, wrap shoes in paper coverings, and submit to an
air-spray shower designed to remove stray dust and particles.
Inside, the powders for the cathodes and anodes are processed in
large containers designed to minimize contamination. The mate-
rials will be shipped to one of the battery plants being built;
though the nearby Dow Kokam plant is not obligated to buy the
anodes and cathodes from its parent company, it would be a nat-
Like GE’s Idelchik, Dow’s chief technology officer, William
Banholzer, acknowledges the risks of scaling up new technolo-
gies. But he says Dow’s size and deep pockets allow it to take risks
that would be difficult for small startups, and its extensive infra-
structure allows it to efficiently integrate the various aspects of
the manufacturing process. Dow’s size also allowed it to hedge its
bets on batteries by entering other new energy markets. On the
opposite side of the vast manufacturing complex from the Dow
Kokam plant, it is building a solar manufacturing facility, which
will make roofing shingles that incorporate thin-film photovolta-
ics. “The scale of energy is so big it’s very tough to say energy is
going to get solved by small companies,” says Banholzer. It’s not
The lead of the United States as the clear front-runner in manu-
facturing output has been challenged by China in recent years.
Even in high-tech products, the United States now imports
more than it exports.
Differences in labor costs between China and the U.S. are
shrinking, forcing some to rethink where to locate production.
Jan12 Feature Manufacturing.indd 41
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