"It is a great success story to have come out of Chapter 11"

It's the world's largest manufacturer of silicones, which in turn are used to make sealants, adhesives, cosmetics and breast implants. Stephanie A. Burns, Chairman, President and CEO of Dow Corning Corporation, knows all about them. Armed with a doctorate in organic chemistry, Burns took up, in the early eighties, a research job at this $3.8 billion (Rs 17,100 crore) joint venture between Corning Glass Works (now Corning, Incorporated) and The Dow Chemical Company. Over the years, she worked her way from the labs to the management levels, eventually taking over as CEO two years ago. In this exclusive interview with BT's Krishna Gopalan, Burns throws light on a host of issues, including how Dow Corning came out of nine years of Chapter 11 bankruptcy protection, her plans for India and what it means to be a woman CEO. Excerpts:

What are the factors that interest you about India?

It is a combination of many things. First of all, our customers and the ability to grow the market here is phenomenal. The excitement comes from the potential in the market here. Our materials are sold to other companies who then make finished products. Knowing that there is a growing disposable income and a growing middle class is also exciting. I could answer this question regardless of where we were investing and that comes down to how excited I am about the people here. This is about their enthusiasm and intellectual capability.

What are the markets that are key to you?

Obviously China is an emerging geography and for us Russia is also key since they have built a large economy based on our material. India has some advantages like language and it being a democracy. Importantly, it has laws in place that are very business-friendly and from my perspective, the ability to protect intellectual property is important because we are very much a technology-driven, R&D based company. The ability to protect IP is a big bonus here. Today, over 65 per cent of our revenues come from outside the United States.

You have manufacturing locations in various parts of Asia, including India. Where would India figure in this Asian market and in your larger scheme of things? What is your five-year outlook for your Indian operations?

We don't generally give specific numbers. Asia is roughly one-third of the corporation and in about 10 years will account for half the revenues of the corporation. We are already very strong here in Asia. We are continuously adding asset and resource capabilities. While India's contribution is relatively small, it is growing very fast. In that context, there is a lot of potential. From a strategic perspective, India is right on top with China.

We are a 63-year-old company and have traditionally created almost every application for silicone. We have always quickly moved into new markets. We got into Japan in the early 60s and then Brazil in the late 60s. We have a model that works very well and that is about our products growing and developing the local markets. For that, we have to put in place the local capability from a technical and a manufacturing perspective that allows us to connect with local customers. We want to build the technical capability to formulate products for the local manufacturers and for the global MNCs who are in India today for all our industries. All the sectors that we operate in India are growing (healthcare systems, infrastructure and automobiles to name a few). In about five years, we would have made more investments here and we would be exporting more from our capabilities here. It is a local team here and that's not been our history. When we expand geographically, we put in more expatriates, be it American or European. India already had the capabilities.

What are the issues about India that concern you?

My main concern is that of infrastructure. Will the growth rate of infrastructure match that of the growth rate of the market? This could be power or transport. Other than that, there is really nothing.

Dow Corning was in Chapter 11 for a few years. How do you recall the experience today and how has it been since then?

We got out of Chapter 11 in the middle of 2004 and for the past three years, we have been setting records on our financial performance. Last year was a record in terms of absolute profitability in terms of dollars. It is a great success story to have come out of Chapter 11. Personally, for me, I was very involved. I have been in the company for 23 years now. Very early on, the management of the company separated the Chapter 11 issue from running the company. For most employees, they did not feel the strain of being in Chapter 11. Of course, for the people involved, it was a stressful time and we are very happy we are out of it. We have not seen a lot of companies getting out of Chapter 11.

The 2000-01 period is said to have been very critical for Dow Corning. Can you tell us what really happened then and why it was so decisive for the company?

We had come off a phase of relatively five years of flat growth. Strategically, we needed to change our thinking about the company. We had to grow from an innovation and also a geographical perspective. We took tough decisions where we said we will not invest in certain businesses and geographies. We had to reduce headcount also. It was really the most critical time for the company from the time I joined. This was ironic since we got into Chapter 11 before that. At that point in time, India was clearly on the roadmap. We had strategically decided that geographic development was going to be an investment that we made for the long-term. Today, everything that we talked about then has come to fruition.

To your mind, what are the biggest challenges for Dow Corning?

One is the cost of energy, which is a challenge and an opportunity. Our manufacturing in some cases are very high energy-consuming operations. This translates into higher raw material costs. The other thing is the changing regulatory environment in our industry. A lot of this is being led out of Europe and it's a challenge to stay up with those changes. I have no doubts about the enabling nature of our technology and our market opportunity. Again, the positive on energy is that we are the largest manufacturer of polysilicone metal that is sold into wafers for electronic chips. That same material is used for solar cells. I see that as a great opportunity to match our technology and our commitment to sustainability, especially when you are speaking of reducing the world consumption of oil. So, solar is a big opportunity for us and globally it is growing at about 30 per cent per annum. For us, it's a question of understanding the opportunities in India. Rural India may not even have the electrical grid. Solar may just be the solution just to reduce the dependence on oil.

"Don't hold on to your mindset. If you see change, adjust with it"

Getting back to the Asian market, what are the key differences for your company between China and India?

Obviously, China is bigger for us. India is growing, though the absolute base for China is larger. There are a lot of similarities in terms of talent and education. The education in China is getting to be very good. I think China is ahead in terms of the market development and the growth of infrastructure. The government has been a very important component in bringing in business. We are the leaders in both the countries. As an MNC, we follow our global customers into these countries, be it somebody in Japan or Europe. The other thing is that when we build capabilities in new countries, we leverage on our global capabilities.

You have a presence in several countries. If there was one market which been the toughest, which one would that be?

Each of them is so unique and so different. Japan, for one, has been tough since the economy has been stagnant and the economy has been going through a lot of change. Industry-wise, automotive is a challenge more so, with those in the us going through their change and crisis. It tends to go not only by country but also by industry. The toughest industry has been semi-conductor because of its cyclicality.

There is an advantage you have in terms of a global presence. If there was one takeaway that India could gain from your global experiences, what would that be?

Don't hold on to your mindset for too long. If you see change coming, you have to adjust with it. It is important to recognise change. Silicone-based materials are highly specialised. It took us a long time to realise that there was a part of our business that was more commoditised than the rest. We kept serving that market with the same business model. The lesson is that we should have moved faster here and in one sense, we did not let go of the past. You have to be flexible in the global environment today.

From a woman's perspective, how would you describe your stint at Dow Corning and what have the last four years been like?

I can't tell you how a man would react (laughs). I don't think it's a male-female thing for me. From the time I was about 20 years old, I have been in this technology. I think the reward for me comes from the science perspective and knowing that we are innovating and creating these new opportunities. That to me is more rewarding than the male-female dynamic. The vision for the company is one of silicone-enabled technology benefiting everyone, everywhere. We need to make good products for society. For instance, four hours of power for someone could make a huge difference. The last four years have been the most exciting. It helps when you have great financial results.

What has been the one big learning for you from the Indian market?

To me, it is understanding the needs of the end consumers. I thought the consumers here would need the same products that are used in other countries. It is a very different dynamic here. It is very different to develop products for a water-constrained society. That's a big learning for me. The entire learning in India has been intellectually very interesting. I think the changes are rapid here and it looks a very exciting time for India.