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.

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.

Call to action: Bringing together politics, business, and individuals for global solutions

“Knowing is not enough; we must also apply. Willing is not enough; we must also act.”

This quote by German writer Johann Wolfgang von Goethe has accompanied me through the days in Davos at this year's World Economic Forum Annual Meeting. Seeing the pressing issues to be resolved has filled me with a sense of responsibility, corporate as well as personal. Yet no one person, company, or nation can achieve this alone. Change will only happen through dialogue and mutual respect; Davos offers a perfect forum to foster this conversation and build this respect.

Only together can we address and hope to resolve the big themes our world is facing:

Optimistic in an uncertain world

Last year, I described my Davos experience as being like going to Disneyland but not being allowed to try the rides. This year, attending as a delegate for the first time, gave me an Alpine rollercoaster experience – from the highs of meeting and hearing from inspirational innovators, entrepreneurs and experts in their fields, to the lows of some sobering economic debates.

The World Economic Forum has typically contained an element of future gazing – what is the 5-10 year outlook for business and society? This year, there was a much more short term feel, with a strong focus on solving the Eurozone crisis. Perhaps unsurprising, given the presence of Angela Merkel, David Cameron, and numerous finance leaders.

Davos is a great opportunity for me to spend time with the CEOs of our member firm clients, and to get a good sense of the latest thinking of political leaders, finance leaders, and regulators. It’s also a real opportunity to hear from experts in fields I wouldn’t normally hear from, for example, on the future of medicine. This broader agenda is not only personally interesting, but gives me new perspectives and challenges my thinking.

From Academic to Actual: Currency volatility and the real economy

In April 2011, my Deloitte colleagues and I, together with the World Economic Forum, put on our binoculars. We, like others passionate about risk to the global economy, looked at the topic of currency volatility and the international monetary system, and saw a potential period of instability. At that time, it could still be argued academic. Today, it is clearly very real. As we begin 2012, the level of uncertainty in international currency regimes is now front and center. We are a long way from the U.S. government’s former AAA debt rating, Italy’s four percent bond yields, and a time when few analysts were seriously discussing any kind of “landing” in the Chinese economy, be it hard or soft.

Markets are now driven predominately by macroeconomic developments, and systemic changes to the global economy seem to lurk behind every new policy announcement. It is clear that studying possible evolutionary paths of the international monetary system has moved out of the realm of academic discussion and into the real world in a way financial services providers cannot afford to ignore.

If it all goes wrong: Rebalancing the global economy

The future belongs to those who show up. — Mark Steyn

As leaders of Deloitte Touche Tohmatsu Limited and its member firms, participate at the World Economic Forum in Davos at the end of this month, I am looking forward to engaging with clients of the Deloitte U.S. firms in New York this Friday on whether growth is still possible if everything goes wrong. The challenge is looking for the pony in the pile of horse-do-overs. I think I have discovered no less than five. Here is the first one.

The doomsday scenarios related to overpopulation, which were previously forecasted, have failed to materialize. In fact the scenario which has unfolded is the exact opposite, with its own set of challenges. Birth rates around the world have plummeted to levels where the implosion of population represents a much greater threat to economic prosperity. Populations are already shrinking in Russia and most of the countries of the former Soviet Union, as well as in Japan. Throughout much of Europe, the population pyramid is standing on its head. For every 100 grandparents there are less than 50 grandchildren.

Deloitte’s latest look at the global economy

The world appears to be awash in “black swan” events. That is, events that no one expected are happening with unusual frequency and are having an impact on the overall economic outlook. The two most notable black swans lately have been the uprising in the Middle East and the earthquake/tsunami in Japan. Both have the potential to influence the global economy. In our latest Global Economic Outlook, we address the impact of both events. As for the Middle East, the big questions revolve not around Egypt, Libya, or Syria, but around what might happen in major oil producing countries such as Saudi Arabia. The recent rise in oil prices reflects uncertainty about the future, not any current shortage of oil. As for Japan, we have suddenly been reminded that, despite 20 years of relatively poor economic performance, this country remains an important cog in the global supply chain – especially in relation to high tech products. Thus, the short term outlook for production of electronic gadgetry is problematic.

Why WEP matters: The UN Women’s Empowerment Principles – one year later

It is a universal maxim that there is strength in numbers. While it’s great when one company commits to investing in women—it’s even better when that number is 170. That’s how many CEOs have now signed the United Nation’s Women’s Empowerment Principles (WEP). And as evidenced by the UN’s one-year commemoration of the launch of WEP last month, that number seems likely to grow.

This event, where I participated as a panelist, took the importance of WEP to a new level. More than 150 executives attended the conference, from such well-known companies as Banco de Brasil, Calvert Asset Management, and Novo Nordisk. The UN Secretary-General, Ban Ki-moon, himself opened the meeting—and there were nearly as many men as women in attendance.

All of this underscored a palpable sense of urgency that seemed to pervade the conference. An urgency that the time to invest in women is now. Not in a year or two when the economy recovers. Not when the dust settles after various laws and regulations take effect, but now. If you want to grow your economy or business and stay competitive, you need to start taking the role of women in organizations and in leadership roles more seriously—and focus on intentional change.

Crossing borders through global investment and education

It is with great pride each year that Deloitte is represented by a delegation of leaders at the World Economic Forum in Davos, Switzerland, an independent international organization committed to improving the state of the world by engaging business, political, academic, and other influencers of society to shape global, regional, and industry agendas.

This year, Barry Salzberg, CEO, Deloitte LLP, and Robert Kimmitt, Independent Chairman of the Deloitte Center for Cross-Border Investment, provided their thoughts from Davos on important issues around cross-border investment and global education initiatives covered at this year’s Forum. We are pleased to share the perspectives of these two leaders from this important world event.

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1:14 - Barry Salzberg on his impressions of Davos this year

2:19 - Bob Kimmitt's takeaways from Davos

3:39 - Barry asks Bob: How has the nature of cross-border investment changed as a result of the global power balance shift?

4:35 - Barry asks Bob: How should companies prepare to execute a cross-border investment?

6:08 - Barry asks Bob: What new cross-border investment models have emerged as a result of the global financial crisis?

6:45 - Bob asks Barry: How do we ensure our young talent force has the skills to compete in the global marketplace of the future?

10:38 - Bob asks Barry: How can businesses, governments, and academia work to combat the talent challenge?

14:21 - Bob asks Barry: What can businesses do internally to develop leaders of the future?

Deloitte’s latest look at the global economy

As editor of Deloitte Research’s quarterly Global Economic Outlook I often struggle to find new things to say about the economy other than updating the outlook. In this quarter, my colleagues and I have chosen to look a bit beyond the horizon. While many economists today focus on the short term transition out of crisis and into sustainable recovery, one cannot help but feel that a bigger and longer term transition is under way.

Of course, things have been changing for some time. For the past 30 years, the big emerging markets have gradually increased their share of the global pie following two centuries of relative decline. But now, the process of catching up appears to be accelerating, and with dramatic consequences. This is most noticeable in the aftermath of the global recession.  As developed markets struggle to recover, big emerging countries are racing ahead—not only boosting their own living standards, but stimulating growth in the rest of the world. With much more rapid growth than the developed world, these countries have become significant players in the global economy. For the first time, their policies are of critical importance to everyone else.  Moreover, as they grow, their middle classes are rising in importance and attracting the lion’s share of attention from many of the world’s biggest companies. For the developed economies, this means managing a process of relative decline.

Consequently, this quarter’s Outlook spends a good deal of time focused on the changing world of emerging nations. Interestingly, the challenges they face are quite different from those faced by the developed economies. In the U.S., Europe, and Japan, the biggest challenges are maintaining decent growth and reducing long-term fiscal deficits.  In the emerging economies, the challenge is to keep the economies from overheating and generating serious inflation. Hence governments are struggling with balancing the threat of inflation with the need to maintain competitiveness in the global economy. 

The emergence of the emerging nations is but one of the many new realities that global companies face.  Indeed, “new realities” is the theme of this year’s World Economic Forum meeting in Davos, Switzerland. In the latest issue of Deloitte Resarch’s quarterly Global Economic Outlook, Elisabeth Denison examines some of the new realities of the global economy and their implications for global business. She looks at the changing dynamics of East versus West, private sector versus public sector, energy demand versus sustainability, and youth versus aging among other topics.  The rest of the report focuses on specific geographies including the U.S., Europe, Japan, the BRIC nations, and a new outlook on sub-Saharan Africa.   

Today, readers of newspapers and viewers of television news are probably perplexed by the arguments about exchange rates, inflation, deficits, and the like. If you want a bit more clarity on these issues, as well as a point of view from people who do nothing but follow these issues, I suggest reading our latest Global Economic Outlook report.

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Dr. Ira Kalish is Director of Global Economics at Deloitte Research, Deloitte Services LP. He is an expert on global economic issues as well as the effects of economic, demographic and social trends on the global business environment. He has authored more than 150 articles and reports on economic and consumer trends around the world.