Talent and reinvesting for growth

With the 2012 Olympics just around the corner, I cannot imagine a better venue to host a discussion on competitiveness than in London. The city provided an ideal backdrop for a recent Deloitte industry event which underscored the talent issues faced by many global manufacturers and the importance for companies to continuously reinvest for growth to remain competitive.

The Deloitte Manufacturing Competitiveness Summit event featured a distinguished panel of senior executives from three prominent manufacturers, ArcelorMittal, Siemens, and Jaguar Land Rover, as well as a senior representative from the European Commission.

The panel shared views on how they were working to ensure their companies remain globally competitive. It was fascinating to hear one of the executives say that 100,000 apprentices will be needed in the United Kingdom (UK) manufacturing industry alone in order to replace the retiring baby boomer generation in that company. Another executive reinforced the talent issue by outlining the skill shortage in fields like engineering and production supervision saying it was particularly challenging in their business to find these experienced hires.

Another one of our panelists highlighted the increasing difficulties in gaining access to capital to grow their business, suggesting it was not just an issue for small to medium manufacturers, but also larger companies. The panel also agreed that despite the slowdown in economic growth, the demand shift will continue towards the East in places like China and India and other emerging markets.

I had the pleasure to join this panel and speak about global competitiveness in manufacturing and highlight the findings of a newly released report where Deloitte served as the Project Advisor to the World Economic Forum report entitled the Future of Manufacturing. The report has garnered global media coverage including Industry Week in the United States (Report: Manufacturers Can't Innovate Without Talent) and Economic Times in India (Ten million manufacturing jobs vacant due to skill shortage: Study). This summer, Deloitte Touche Tohmatsu Limited looks forward to the highly anticipated release of the 2012 Global Manufacturing Competiveness Index report (see the first study, 2010 Global Manufacturing Competitiveness Index).

Thanks to Deloitte UK, we were very fortunate to host the client event at the Deloitte House, a special hospitality facility which take centerstage for Deloitte client events during the upcoming summer Olympic Games. It was a somewhat typically cold and rainy London night so we were only able to gain a glimpse of the Olympic Park grounds, but even through the fog and the mist, it certainly looked impressive.

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Tim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 32-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development.

An eye on Africa

Two weeks ago, I traveled to Johannesburg for my first ever trip to South Africa. It really expanded my perspectives to the many opportunities and challenges that lie ahead in both South Africa and the broader continent of Africa. It is easy to see why many companies have an eye on Africa.

While I was only in the country for four days, they were certainly full ones. I was able to lead several client workshops, participate in a forward-looking discussion on the future of the manufacturing industry in Africa, and join a media interview.

Perhaps the high-point of my visit was making three client presentations to one of the largest companies in Africa. The senior executives were very interested to hear about the extensive research that Deloitte’s Global Manufacturing Industry team is leading on the trends and developments within the global chemical sector. Insights from the most recent report, End market alchemy, which focuses on the customers served by the sector, helped to generate interactive discussions on the strategic implications for the clients’ business.

Another topic of discussion which was of particular interest to the client centers on the recent shale gas phenomenon. I am finding this is viewed by many in the industry to be a real game changer, not just for the energy industry, but also for many companies that consume energy. Shale gas and its implications on energy pricing globally seems to be peaking the interest to manufacturers everywhere.

An interesting aspect of my visit was a strategy session with several Deloitte South Africa leaders on the emerging economies in the many regions and the 54 countries that make up the large continent of Africa. I am not sure about you, but I am increasingly finding that Africa, and its evolving business opportunities, is becoming an important topic of discussion with companies seeking top-line growth in emerging markets. Manufacturers from Europe, China, India, Brazil, and the United States are paying close attention to the developments in Africa. The automotive sector is perhaps the most established sector, but there is also increasing investments in the metals and mining, aerospace and defense, chemicals, and other industrial manufacturing sectors. While Africa attracted US $52.3 billion in foreign direct investment (FDI) in 2010, I learned that the investments are unevenly distributed with a large share of FDI going to extractive industries in a limited group of countries. Attracting more investment into diversified and higher value-added sectors remains a challenge as well as an opportunity for Africa.

Finally, I was able to find time to interview with CNBC Africa joining Andrew Mackie, Deloitte South Africa Manufacturing Leader, in a discussion about the many opportunities and challenges that lie ahead for both the country and the continent. It was interesting to work alongside Andrew, and hear his first-hand perspectives and outlook for Africa. (View the interview, African Prospects in Global Economy)

My travel schedule seems to be fairly extensive these days and I find myself incredibly energized by what I see happening in the global manufacturing industry. With the busy world around us, I am sure many of you will appreciate a comment I received from one of our clients, who chastised me for coming all the way to South Africa, and allowing no time whatsoever to tour their country. I am left however with a much better appreciation of South Africa and on my next trip will do my best to find time to experience the beauty of the country to explore Cape Town and the wonders of Victoria Falls and Kruger National Park.

Africa is a fascinating continent and certainly one to key your eye on.

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Tim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 32-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development.

Mind the gap: Countries should take action on uncollected revenues

We’ve all seen the headlines: Canadian government reports unprecedented deficit; U.S. elected officials clash over debt ceiling; Greece teeters on the edge of default. They all point to the monumental fiscal struggle most countries are engaging in these days. But, what if there was a way to put billions of dollars back into government coffers—money that is technically their due? That’s exactly what could happen if countries step up their efforts to address the tax gap.

Simply put, the tax gap is the difference between the tax collected and the theoretical tax liability if every taxpayer complied with the letter and spirit of the law. Take the United Kingdom. It’s been estimated that in 2010 the tax gap was US$56 billion. In Sweden in 2010 it was estimated at US$20 billion. And in the United States in 2006, it was estimated at US$385 billion. (Sources: HMRC (UK), Swedish Tax Agency, Internal Revenue Service (US))

An 8,500 mile journey to the other side of the world

A couple of weeks ago, I took an interesting trip to Chennai, India. In advance of my trip, one of my clients pointed out that if you drew a straight line through the center of the earth departing from my home city of Milwaukee in the United States, to the other end of the earth – some 8,500 miles away – it would take you to Chennai. So it goes to say that it was certainly a long airplane ride.

In preparing for my first trip to Chennai, I learned that the city is actually known as the Detroit of Asia. A number of global automobile manufacturers (OEMs and suppliers) have set up operations there to serve the domestic market and also use it as an export base given the fact that Chennai is the second largest port in India. As a result, Chennai has become a significant manufacturing hub for India. Complementing this manufacturing focus, the city is also known for its extensive engineering and technology talent. As I met with a number of executives it was apparent that an increasing number of manufacturers are relying on the engineering talent in Chennai to design the products produced there.

30 percent by 2057 – Can we get there quicker?

There is no doubt that the trend to have more women on company boards and their greater representation at the senior levels of companies and other organizations is on an upward trajectory. The problem is that the trend is moving at a slower pace than many would wish. And the reasons for this are infuriatingly varied. There is no one easily identifiable issue which is holding up progress and this makes it harder to try and accelerate that progress. But there are many areas where enthusiasm, enterprising initiatives and, in some cases, government action, are making a real contribution to change.

Much of this came to the fore at the recent workshop of the OECD, BIAC, the business and industry advisory committee to the OECD, and the American Chamber of Commerce in France. I’ve mentioned this event before in previous blogs, and it is its second session on which I reflect today.

Big ideas, little price tag

Sometimes it’s the little things that make life better. Like the DVD envelop buried beneath my pile of mail—a reminder that for a low monthly cost I can enjoy unlimited movies with no late fees. Or the way my MP3 player untethered my favorite tunes from a growing avalanche of CDs and forever changed the way I think about buying, sharing, and listening to music. Or how a free phone app lets me quickly pay my parking meter without a frantic search for spare change.

As a modern consumer, I’ve grown to expect new technologies and services that help me get things done in new and different ways. It's a simple progression: technology advances, prices drop, and over time performance generally improves.

But one major sector of the economy has struggled to embrace the type of innovation that will achieve more for less—government. In an era of increasing commoditization, consumers want quality and convenience, all for a small price tag. Governments have certainly leveraged technology to improve the performance of cumbersome processes in the past 10 years but often at a high cost.

Reflecting on 'the business case for women’s economic empowerment' workshop

The recent joint workshop on the business case for women’s economic empowerment which I chaired at the Organisation for Economic Co-operation and Development (OECD) in Paris was, I hope, another small step to integrating women’s experiences, perspectives, and voices into the fabric of our organizations, systems, and societies. Over 120 experts from around the world had gathered, including the U.S. Ambassador to the OECD and the OECD Deputy Secretary General, and representatives of business, government, and investor communities.

It was a joint meeting between the OECD; BIAC, the Business and Industry Advisory Committee to the OECD; and the American Chamber of Commerce in France and the aim of the day was to provide a business perspective and best practice experience to the OECD’s Gender Initiative. A report on the shared ideas will go forward to the 2012 OECD Ministerial and Forum to be held in May.

The levels of engagement in the discussion reflected just how important an issue this is for many, and for many reasons. What was being discussed didn’t seem to be mostly about the research and the data. It was much more grounded in common-sense and shared experience. Several people mentioned President Obama’s recent remarks on the subject and used them as their starting point. He had said that what we are talking about when we talk of women taking a much greater place in the economic structure is very simply that we want the same opportunities for our daughters as we want for our sons. Put like that the issue becomes very simple and almost unarguable.

Once more with feeling

In his second blog of 2012, Simon Holland, Global Head of Strategic Change and Organizational Transformation, explains why making emotional connections with people is one of the hallmarks of great leadership

Emotions have always been a business taboo. It’s time to redress the balance. Feelings not facts move people to action when implementing decisions

It’s Valentine’s Day and my thoughts are turning inevitably to warm and fuzzy things: feelings and relationships. However, my inspiration for this month’s blog is not Saint Valentine himself, but some of the most eminent leaders on both sides of the Atlantic.

A couple of books, The Corner Office and The Language of Leaders, have been brought to my attention. The former is by Pulitzer prize-winning American journalist Adam Bryant; the latter by communications expert Kevin Murray, a South African who’s spent most of his working life in Britain. They’re both based on transcripts of interviews with leaders, many of them big names, and they offer some strikingly similar lessons. Chief among them is this: the soft stuff matters—and it matters hugely. Leaders who don’t understand people and know how to communicate with them are lost. Business, as Jeff Swartz of Timberland reminds us in The Corner Office, is personal.

Public sector, disrupted

The global public sector is under massive financial pressure. But that’s only one of its challenges. Citizens—the public sector’s customers—are also demanding better value for their taxes. And that includes dealing with government in new ways. With every sector of the modern economy and society changing in response to new technologies and social practices, citizens can’t help but wonder why so many government offerings remain shackled by the practices of yesterday.

These conditions indicate that the time is right to bring the principles and practices of disruptive innovation to the public sector. As a recently retired U.S. government senior executive, I am, of course, quite familiar with government’s ability to avoid change until it in fact becomes unavoidable. This persistent late adoption of new and more efficient technologies and processes costs government money, efficiencies, and, perhaps, most importantly, credibility. That’s why public sector executives everywhere need to become familiar with the concepts behind disruptive innovation and consider where in their organization they can plant the seeds of change.

Ladies first

Ladies first: An old adage, but one that was top of mind on 2 February 2012 at the Business and Industry Advisory Committee (BIAC), AmCham France, and OECD joint workshop on the economic empowerment of women. And so it should be. Women are a critical resource in facing the challenges of our global economy, both as an emerging market and as a significant pool of human talent.  Further, gender diversity creates the potential for better, more informed decision-making in our societies, an educated and diverse source of talent for private and public institutions, and role models who can be an inspiration to billions of women and men worldwide.