Competing in the Global Ideas Economy
March 15 2013 by Jennifer Pellet And C.J Prince
Both the time and place of 2013’s CEO Leadership Summit could not have been more fitting. In December, in the wake of the devastation of Hurricane Sandy and with the fiscal cliff still looming ahead, more than 100 business leaders from across the country gathered at the NYSE Euronext—an icon of free enterprise that later turned out to have been in the midst of a merger—to share ideas on navigating the challenges of the stormy global economy.
The ensuing discussions encompassed a wide range of topics, from dire conjecture around the nation’s debt load and the likelihood of tax hikes, to more positive predictions regarding immigration reform and opportunities in emerging overseas markets. The pages to follow capture some of the concerns, insights and lessons shared during the presentations and discussion.
Winning in a Global World: Douglas Oberhleman
The New Calculus of Value Creation: Doug Conant, Kurt Schneider, Murray Martin
Performing while Transforming: Abhi Talwalkar, Bill Nuti, Mark Dorman
How U.S. Companies Can Lead in the New Global Economy: David Novak, Nick Akins, Chris Kearney
Building a Capability for Breakthrough Innovation
What’s Next for Governance?
Winning in a Global World: Douglas Oberhelman, CEO, Caterpillar
Since becoming chairman and CEO of Caterpillar in 2010, Doug Oberhelman has delivered record profits and pushed Caterpillar’s footprint in emerging markets to the point where 70 percent of the company’s top line revenue comes from outside the U.S. However, delivering strong performance amid economic uncertainty evidently hasn’t lulled the 59-year-old into complacency—quite the opposite, in fact. Oberhelman has lowered Cat’s outlook for 2015 twice—citing the likelihood of “anemic and modest” growth—and become an active participant in the “Campaign to Fix the Debt,” a group of industry leaders devoted to lobbying Washington to address the country’s $16 trillion debt load. Leading a company considered to be something of a bellwether for the national economy, Oberhelman—who endorsed Mitt Romney in the presidential election—came to the Leadership Summit fresh from meeting with President Obama, where he reported having an open and honest dialogue with “a different President,” one more “sincere about reaching out to business” in his second term. Excerpts from Oberhelman’s comments on the economic outlook follow.
On the economy…
“The long-term problem in this country is: what happens to the debt growth that we’ve seen? It’s unprecedented. And if this continues, when interest rates go up, we will be chewing up a tremendous amount of our GDP in debt service, so it’s time to act on that.
“Underneath that mess, the U.S. is a steady economy, and our machine sales in the dirt are doing okay. Deliveries of tractors and loaders across North America have been stable—at a low level—but not declining. Housing has come back; everybody’s feeling it. And China is turning. Their leadership transition is over, as is ours. A month ago, that was a big uncertainty in this country. That’s now gone. [The] same in China. The stories there are positive.
“Latin America is pretty strong; the Middle East is strong. Africa is, for Africa, flat-out booming, and that is really refreshing. It’s a continent that’s overdue for development, for progress and for democracy—and that’s happening.
“So overall, not a bad story, not a good story. Not too hot, not too cold. We will see some growth in 2013, although I don’t know how much.”
On America’s infrastructure…
“Our port situation in this country is absolutely backwards and pathetic. The brand-new Panama Canal about to open will take the biggest ships in the world, but they can’t dock in the U.S. until we do some things to fix our ports.
“I was encouraged yesterday when President Obama told us that, as part of the Jobs Council that [General Electric’s] Jeff Immelt led, they are working on shortening the permitting time for a port in Jacksonville, Florida, from seven years to one year. That’s the kind of thing we need—to clean out the regulations and let us compete.
“Our airports—welcome to JFK—are embarrassing. It’s the same with our roads. When I talk about that, everybody says, ‘Caterpillar has a vested interest in infrastructure.’ Yes, we do. But I also look at competitiveness for our country, and everywhere I go, in China, Brazil and, to some degree, even in France and the Middle East, everybody’s building out very modern infrastructure. They want our jobs; they want our export markets. We had better be careful.
“When I joined Cat in 1975, the world population was maybe 3.5 billion people. Maybe a billion people were open for business. China was closed, Russia was closed, Vietnam was closed, Southeast Asia was bankrupt [and] Latin America was bankrupt. The Middle East was just starting to enjoy some wealth with higher oil prices. It was just North America, Europe and Japan—and Japan was fairly backwards.
“Now, we’re up to 7 billion people open for business today. Ninety-five percent of our potential customers are outside the U.S. Let’s go get them! To me, that’s the next wave that, somehow, all of us in this room have to take advantage of, whether we’re international or a domestic-only company that supplies an international company. We’ll return to growth in this country; there’s no question about it. But it’s a mature economy, so it will be 2 percent to 4 percent growth [with] some spurts and drops in between. The big opportunity is outside. We have to be there. Americans have to be there.”