The Business Economist at Work: Air Products & Chemicals, Inc
Meldrum, Duncan H., Business Economics
As corporate economist at Air Products and Chemicals, a $4 billion industrial gas and chemical company, I take traditional economic tools and use them to become a story teller, an instructor, or sometimes even a court jester. The stories describe the world outside management's immediate experience in an attempt to improve the decisionmaking process by broadening perspectives. As court jester, I often find myself cooling the fires of enthusiasm at cyclical peaks, or warming the ice of depression at cyclical lows. I believe the jester can keep his head as long as his stories contribute to the effort to improve company profitability.
To expand the story of how I attempt to make economics valuable to Air Products and Chemicals, let me describe a representative day in January. By way of introduction, we recently completed the long-term economic outlook that becomes the background for the strategic plan.
7:00: As the first one into the office, I make the coffee. In a cynical moment, I think that may be the last productive thing I will do today. According to my position description, "the corporate economist for Air Products analyzes and communicates the impact of changes in the external economic environment on company performance." However, I continually struggle with making economics relevant for the company. I report to the Vice President for Corporate Planning, who in turn supports the six-member executive committee headed by the CEO. However, I rarely do much more in the department than make the coffee.
Two other employees fill economics positions in the company. In keeping with our management philosophy of empowered, flexible teamwork, neither position reports formally to the corporate economist, but we maintain a very strong informal link. One Ph. D. economist, in our energy department, focuses on regulatory and microeconomic issues related to the energy industry. She developed the long-run energy outlook that fed our strategic plan economic outlook. The other economist, who holds a master's degree, concentrates on industry and company analysis in the marketing and planning staff of our largest operating group, the $2.3 billion industrial gases group. He also provided inputs to the plan, covering industries important to our gas products. Fifteen years ago, we had a formal team of about fifteen members who produced a massive economic document. Today, the three of us are at least as effective as the old team, and because we now communicate results as shared databases and presentations, we have significantly lowered administrative costs of the economics function.
7:30: I've checked e-mail and downloaded some international industrial production indexes from the economic service firm we use. The indexes go in to a company sales-weighted composite measure that provides our CFO with an economic backdrop for our quarterly earnings release. It's a good quarter and our performance has out-paced that of most of the thirty or so economies in which we operate, so my economic brief of the CFO actually will be very brief. My efforts shift to reviewing the long-run international economic outlook presentation I'll give in an hour to the senior team that runs the Chemicals Group. This $1.4 billion group produces a variety of polymer, nitration and specialty chemicals. The outlook will provide the economic backdrop for their strategic planning effort.
8:00: My one assistant arrives and checks that I have enough handouts for the Chem Group presentation. A former executive secretary, she's expanded her role with on-the-job training and by taking an undergraduate economics course. She now fields a variety of questions, distributes routine reports, and assists with presentation preparation.
9:05: The half-hour presentation to the Chem Group went over by five minutes, but it started ten minutes late due to an overrun by the person before me. It still amazes me that I have to collapse a ten-year outlook covering fifty countries into a fifteen-minute presentation, with fifteen minutes for Q&A. …