Peter Huntsman Discusses Innovation, Leadership, and Regulatory Environments In Chemicals

It is my pleasure. Thank you very much for having me.

Well the business was obviously started by my father, and we actually started as a plastics packaging business. My father said that starting in the early 1980s that getting into the plastic side of the packaging, the plastics manufacturing, that's where the money was going to be made. I'm not sure that was necessarily has been proven to be the case.

Well yes, he originally started with egg cartons. My father originally started when they were first married selling eggs. He had an uncle that he worked with that gathered up all the eggs from the local farmers around Los Angeles. They'd bring them in. They had a huge number of these eggs that were breaking on the way, they couldn't be transported and so forth. And so they started a joint venture between Dow Chemical and Olson Brothers, which is my father's uncle's, Olson Brothers, and Dow and Olson together was DOLCO. That was the name of the first one, of the very first packaging businesses that had styrofoam egg cartons. And from there, the barriers to entry getting into plastic packaging is not all that high. They originally then went into building soup bowls out of plastics. That didn't sell very well, and so they melded the size and they made a clamshell out of it. And originally they tried to sell those to Avon, because women at the end of the day would come home — this is with the advertising, I'm not trying to sound sexist — women come home, they want to put their earrings and they want to take all their jewelry off and put it someplace convenient, so we'll put it in this clamshell. That didn't sell very well, that didn't take off. And eventually they went to McDonald's. McDonald's said that was a terrible idea, we'll never put a burger in that. So they went to Burger King. Burger King put their worst-selling ham and cheese sandwich out of Miami into this, and they found that it was able to keep the warmth of the burger. They could pre-produce and therefore have a fresher burger, and most importantly the material that these were made out was 100% recyclable, so all the environmental groups loved it. It's better than that waxy paper that can't be recycled and so forth. And then McDonald's came and said, why didn't you bring this to us? And then eventually we went from packaging into the plastics production, and then acquired many, many other companies, and then shifted and transformed about 50 — so I like to think of the arc of the company, it's very similar to the arc of the chemical industry. We started in grades of plastics that made clamshell containers for hamburgers. Today every Boeing 787 flying will have about 20 tons of Huntsman or Huntsman-related materials per plane.

That's kind of what the chemical industry's done. We've gone from cheap packaging all the way to where you cannot build an airplane today without our materials. Space travel, EVs, renewable energy — all of this is made possible through our industry.

Well, I'm always just a bit bemused in that most of the policymakers are looking to get away from hydrocarbons. Chemical industry, think about this: there's very few products we produce today that we were making 10 years ago. Paper can't say that, steel can't say that, most manufacturing processes can't say that, timber industry and so forth. What we make today in the chemical industry, we replace, we're continuously coming out with — think of something as simple as a bottle of water. Plastic containers, count how thin they are now. Those things are so thin, you get it in your hand, you're afraid that it's just going to come apart. That's how thin it is. We're saving hydrocarbons, we're saving money, we have efficiencies. I don't know of another industry that manufactures — now I know tech and chips, I'm moving that to one side here — but when I think, if you could see the sort of manufacturing proficiency in the steel, cement, wood, energy industry that you've seen in the chemical industry, that's what's so phenomenal about this industry, is we are the solution.

Well, the EPA today has 90 days by law. That was the Frank Lautenberg Act that they have 90 days, is a bipartisan bill that was passed, what was it, seven or eight years ago. And it was supposed to reform how you regulate chemicals and at the same time how you approve chemicals. I've been a chief executive officer for over 20 years. I rarely have ever heard CEOs complain about the overregulation of our industry as much as the regulations that just don't make sense. And so when you're trying to regulate something and you've got 90 days to regulate, we've got some products in the United States right now that have been on that wait list now two or three years. So I can go to China and I can probably get not only the approval virtually within a matter of weeks, but I probably get some subsidies from the government to build a new process, new technologies. I mean they incentivize you to bring new technologies over there for a whole host of reasons. And we're sitting over here thinking, well, if you really want to get beyond forever chemicals, you really want to get beyond perhaps some of the more toxic products that were made decades ago, we're constantly innovating, but if you don't have the means and the ability to get that approved quickly and efficiently and maybe even incentivize to replace those sort of things, maybe we get the front of the line if you have something that's going to be replacing yesterday's state-of-the-art chemistry. And so as we look at this, it just seems today that the EPA seems to be more interested in buying electric buses that don't work for school districts than they are getting the next generation of cleaner, more efficient, more effective chemistries and building blocks approved and into the market.

I'm not sure that there's a lot of immediate impact on that, and I say because when we build a chemical plant, you're building a plant that's going to be around for at least 30 or 40 years. So you're making an investment today and you're really saying where are we going to be 20, 30 years from now, because that's when the plant's probably going to be totally sold out. It's going to take a couple of years to permit. If you and I decided today that we're going to go out and build a billion-dollar ethylene plant or anything, you're probably looking at two or three years to be able to permit, to be able to engineer it, another two or three years to be able to build it. And so for — you're looking at five, six, seven years. It's a product like MDI, polyurethanes, things, you're probably looking closer to a decade.

So we're going to make a billion-dollar decision today, we're going to make that decision today for a plant that wouldn't be running for almost a decade, and then it's going to run for another 30 years after that. So I've got to be able to look today and say where I'm building this facility, I need to be able to look 40 years down the road.

It's a real challenge. I wish I say there's an easy answer to this. One of the questions that was asked, you may have heard earlier, was somebody who got up and said that free enterprise and democracies were the enemy because they're both short-term oriented, that they're the enemy of the solutions of what we need to change climate issues and so forth. Well, I take just the opposite approach to that. I think government has been one of the most ruinous. So if I look back in the United States, Huntsman, we've invested hundreds of millions of dollars in the production when the Clean Water Act came out in the 1990s, remember when we had to have MTBE? It was mandated you had to have an oxygenate in your gasoline. Our industry spent billions and billions of dollars, Exxon, Huntsman, Lyondell, great companies spent billions of dollars building these facilities. Within a few years it not only was it no longer mandated but it wasn't even permitted because of legal liabilities and so forth. So I can go through line in scripture of the government mandates that have come out, whether it's on aerosol usage or whether it's on hydrocarbons. And the amount of money that goes directly from the government into NGOs' pockets that are fighting the chemical industry, people like Mayor Bloomberg, he's spending hundreds of millions of dollars of his own money to get beyond petrochemicals. This is a guy that has multiple private jets, multiple homes around. He's got to be a huge customer of ours. I mean of all the products and everything. And he's spending all this money to try to ban the solutions to what we have in society. It's really ironic.

It is. And I have an opportunity to speak usually every other month or so at a university, and invariably I'll get a student that'll stand up and say, I want you to know I'm opposed to the chemical industry and I'm boycotting your industry. And I'll look at them and I'll say, what do you mean you're boycotting? And they'll say, well, I don't use plastic bags anymore, I've got a canvas bag. Okay, well, we haven't produced plastic for either bag or the plastics that go into the bag for decades. But you're wearing our product, you're eating our product, your anxiety medicine you're probably taking is our product, your eyeglasses, your computer, your skateboard, you've got the clothes, shoes, everything you have, the air conditioning coming, everything in this.

That's right. Yeah, you look at how much of our GDP today is around, you know, the financial services where just basically moving money around. A lot of what tech is — Apple does not build this phone. They license it to be built. They have a third party that builds it, but Apple themselves, they don't build this phone. They own the technology. When you download apps, they make money. It's a brilliant business model they have. But they're not making the phones. These companies that we think even manufacture today, most of them don't, and they'll sub it out to somebody else.

Well, unfortunately we're approaching it and that we have been cutting costs now for the last, really since about 2021. You start to see record-high — this is the year before Putin invaded Russia. This was, remember when all those really smart people went to Glasgow at one of the environmental summits and told us all how to live our lives? It was during that summer that you start to see a high pressure goes over Europe, there's not enough wind to produce the electricity, they start burning gas, it's going into the next winter's storage. And electrical prices the summer before the invasion go to historical high prices. So I'm not a fan of Vladimir Putin. I despise what he's done in Ukraine. I'm not saying that that has had zero impact. What I'm saying is that much of where we are in Europe is a problem of their own making. And what they have done, simply put, is that they have legislated and set targets with no real achievable way to get there. Now aspirational targets are fine, but when you start telling people this is going to cost you your jobs, you start telling people to shut down your facilities, you start getting a point where hundreds of thousands of people — look what's taking place in the automotive sector and so forth today — Europe does not stand a prayer, the chance of competing against the Chinese with EVs. They don't.