Transcript What will our Industry Organizational Structures Look

INTRODUCTION
What is Black Eagle Consulting 2000 Inc.?
Primary Sources
Manufacturers in the Canadian Hardware Housewares
Industry
Main Secondary Sources
Thomas Friedman, The World is Flat, A Brief History of the
Twenty-First Century (New York: Farrar, Straus and
Giroux, 2005)
Clyde Prestowitz, Three Billion New Capitalists, The Great
Shift of Wealth and Power to the East (New York: Basic
Books, 2005, Paperback, 2006)
The Globe and Mail
VISION 2020 – CORPORATE ORGANIZATIONAL STRUCTURE
REQUIREMENTS IN A CHANGING INTERNATIONAL
ECONOMY
With ever increasing consolidation of industry retail and manufacturing firms
combined with the continuing migration of manufacturing to Pacific Rim
countries and services to India, the organizational structure of retail and
manufacturing companies in North America is continuing to evolve and change.
What will our industry organizational structures look like in the year 2020? And
how can companies remain competitive and vibrant in the rapidly shifting
structure of our industry?
Today we will review current and future world economic trends with examples of
companies who are already adopting radically different organizational structures
to adapt to the new reality of international trade.
Outline of presentation:
Current economic trends relevant to Canada’s future.
Economic status of selected countries
Review of organization charts of Canadian companies (titles and locations
have been removed to preserve anonymity) and a suggested future
organizational chart.
Recommendations
BILATERAL TRADE 1990-2004
In billions of Canadian current dollars using Canada data*
$30
$24.1
$25
$20
CANADA
CHINA
$15
$10
$5
$6.7
$1.7
$1.4
$0
1990
2004
*Canada’s measure of imports from China is much bigger than China’s measure of exports to
Canada because Canada includes Chinese goods that pass through a third country such as
United States or Hong Kong. China does not count those sales as exports to Canada
SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS OF CANADA
EXPORTS – CHINA/CANADA
EXPORTS TO THE WORLD 1996-2004 in Canadian Dollars
1996
1997
1998
1999
2000
2001
$144,346,450,701
$275,819,202,123
$173,032,025,140
$298,072,025,068
$177,498,598,770
$318,444,036,137
$188,658,699,415
$355,420,330,391
$242,350,591,983
$413,214,848,279
$258,721,086,149
$404,085,073,347
$317,833,281,128
2002
$396,378,007,416
$429,358,023,215
2003
$380,865,995,588
2004
$582,640,440,300
$411,789,558,633
CANADA
CHINA
SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS OF CANADA
EXPORTS – CANADA/CHINA
CHINA'S TOP 10 EXPORTS TO CANADA IN 2004
in Canadian Dollars
CANADA'S TOP 10 EXPORTS TO CHINA IN 2004
in Canadian Dollars
$868,680,000
TOYS, GAMES, SPORTING GOODS
$2,050,510,000
FURNITURE , LAMPS AND ILLUMINATED
SIGNS, PREFABRICATED BUILDINGS
WOVEN CLOTHING
$1,633,438,000
$1,120,356,000
ORGANIC CHEMICALS INCLUDING VITAMINS,
ALKALOIDS AND ANTIBIOTICS
$766,568,000
CEREALS
COMPUTERS AND MECHANICAL APPLIANCES
$321,025,000
FOOTWEAR
913,574,000.00
FISH, CRUSTACEANS, MOLLUSCS AND OTHER
INVERTEBRATES
CROCHETED OR KNITTED CLOTHING AND
APPAREL
888,721,000.00
FERTILIZERS
$274,863,000
ELECTRICAL OR ELECTRONIC MACHINERY AND
EQUIPMENT
$252,219,000
IRON AND STEEL
750,120,000.00
PLASTICS
721,344,000.00
OPTICAL, MEDICAL AND PHOTGRAPHIC
EQUIPMENT
681,448,000.00
COMPUTERS AND MECHANICAL
APPLIANCES
ELECTRICAL OR ELECTRONIC
MACHINERY AND EQUIPMENT
$470,892,800
$432,800,300
NICKEL AND ARTICLES MADE FROM NICKEL
ORES, SLAG AND ASH
FATS AND OILS AND WAXES
WOOD PULP AND WASTE AND SCRAP
PAPERBOARD
$295,173,000
$232,150,000
$161,135,000
$152,785,000
$103,323,400
SOURCE: STATISTICS CANADA
CANADA/CHINA WAGES COMPARED
Average annual income in thousands of Canadian dollars
2004
$35.3
$2.3
2003
$34.5
$2.0
2002
$33.8
$1.8
2001
$33.0
$1.5
$0
$5
$10
$15
$20
CHINA
$25
$30
$35
$40
CANADA
SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS CANADA
CUMULATIVE FOREIGN DIRECT INVESTMENT IN
CHINA 1999-2004
In billions of Canadian dollars
$35
$32.83
$32.40
$32.09
$30
$23.55
$25
$22.91
$20
$15
$10
$7.62
$7.03
$6.63
$4.83
$3.56
$5
$0
U .S.
V IR GIN
ISLA N D S
JA PA N
SOU T H
KOR EA
T A IW A N
GER M A N Y
CAY M AN
ISLA N D S
U .K.
FRANCE
CANADA
$2.63
A U ST R A LIA
$1.77
IT A LY
SOURCE: EXPORT DEVELOPMENT CANADA
BIRTH RATE CHANGE AND POPULATION IN 2005
1.4%
1.2%
1.0%
CHINA
CANADA
0.8%
0.6%
0.4%
2000
2001
CHINA Population
1.3 Billion
2002
2003
2004
2005
CANADA Population
32.3 Million
SOURCE: UN POPULATION FUND & THE UN ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
CHINA EXPORTS TO G7 2004
In billions of Canadian dollars using China data
$180
$161.764
$160
$140
$120
$95.200
$100
$80
$60
$40
$30.690
$19.367
$12.858
$20
$11.974
$10.573
$0
US
JAPAN
GERMANY
U.K.
FRANCE
ITALY
CANADA
SOURCE: INTERNATIONAL TRADE CANADA
CHINA IMPORTS FROM THE G7 2004
In billions of Canadian dollars using China data
$140
$122.307
$120
$100
$80
$58.050
$60
$39.212
$40
$20
$9.943
$9.550
$8.357
FRANCE
CANADA
ITALY
$6.174
$0
JAPAN
US
GERMANY
U.K.
SOURCE: INTERNATIONAL TRADE CANADA
POST SECONDARY EDUCATION 2003
% of population 25-64
44%
CANADA
38%
U.S.
28%
U.K.
GERMANY
FRANCE
24%
23%
SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
HOUSEHOLD SAVINGS 2004
% of disposable income
FRANCE
11.8%
10.5%
GERMANY
U.K.
U.S.
CANADA
4.4%
1.8%
1.4%
SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
DEFICIT AND SURPLUS 2004
% of GDP
CANADA
-3.21%
U.K.
-3.65%
FRANCE
-3.68%
GERMANY
-4.72%
0.68%
U.S.
-3.57%
OECD AVERAGE
SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
CHINA’S ECONOMIC TARGETS
Category
First half of
2006
2006
Target
Real GDP
10.9%
8%
Investments in fixed
assets
31.3%
18%
Money Supply
17.4%
16%
Trade
23%
15%
Inflation
1.3%
less than 3%
SOURCE: NATIONAL BANK FINANICAL, XINHUS NEWS, SCOTIA BANK
2010 TRADE ZONES - POPULATION
3,100
ASSOCIATION OF SOUTH EAST ASIA
NATIONS - Japan, China, India, Australia,
South Korea, New Zealand, 10 member Asean
Group; Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Singapore, Thailand, The
Phillippines and Vietnam
431
460
NAFTA - Canada, United States, Mexico
European Union - Austria, Belgium, Cyprus,
Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland,
Italy, Latvia, Lithuania, Luxembourg, Malta,
Poland, Portugal, Slovakia, Slovenia, Spain,
Sweden, Netherlands, United Kingdom
Current Population in Millions
SOURCE: GLOBE AND MAIL 24/08/06
2010 TRADE ZONES - GDP
$12.90
$11.70
$10.00
ASSOCIATION OF SOUTH EAST ASIA
NATIONS - Japan, China, India, Australia,
South Korea, New Zealand, 10 member Asean
Group; Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Singapore, Thailand, The
Phillippines and Vietnam
NAFTA - Canada, United States, Mexico
EUROPEAN UNION - Austria, Belgium, Cyprus,
Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland,
Italy, Latvia, Lithuania, Luxembourg, Malta,
Poland, Portugal, Slovakia, Slovenia, Spain,
Sweden, Netherlands, United Kingdom
Current GDP in Trillions of U.S. Dollars
SOURCE: GLOBE AND MAIL 24/08/06
NAFTA “AFTA”
China in 2003 replaced Mexico as the #2 exporter to the U.S.
“China beats out Canada as top exporter to U.S.”, The Globe and
Mail, September 5, 2005
In July, Canada sold goods worth $20.6 billion south of the
border, down from $24 billion in June. China, meanwhile, sold
$21.3 billion in exports to the United States, up from $21 billion a
month earlier.
Mexico’s foreign minister, Jorge Castaneda, 2004: “it’s very
difficult for us to compete with the Chinese, except with high
value-added industries. Where we should be competing, the
services area, we are hit by the Indians with their back offices
and call centers.”
Mexico’s corporate income tax of 34% is twice as high as
China’s.
CHINA
Exports have climbed from $18 billion to nearly $600 billion and China
has a trade surplus that has enabled it to accumulate $650 billion of
foreign exchange reserves, second only to Japan’s $850 billion.
It is not consumption that gave China its miraculous growth but
investment, which reached 44% of GDP. World Bank, World Development
Indicators, 2004. Nearly all of it goes into building new infrastructure and
manufacturing plants.
By the mid-1990s, Wal-Mart…had formed a kind of ultimate joint
venture with China. Peter Goodman and Philip P. Pan, “Chinese Workers Pay for
Wal-Mart’s low prices: Retailer squeezes its Asian suppliers to cut costs”, Washington Post,
February 8, 2004
Wal-Mart estimates that it spent $15 billion on Chinese-made goods that
are exported mostly to the U.S. with some going to Canada and Europe.
If Wal-Mart were a country, it would rank ahead of Germany and Britain as
an importer from China. Wal-Mart’s procurement in China accounts for
over 10% of the bilateral trade deficit with the U.S.
INDIA
1947 – Nehru founded the Indian Institute of Technology with
seven campuses throughout the country and a world-class
engineering curriculum
From 1947 through 1990, India economy in disarray due to
declining business with Soviet countries and the Middle East.
Manoham Singh, India’s current prime minister came to the
rescue declaring that “for the foreseeable future the business of
India would be business”. India is to the world’s knowledge
and service supply chain what China and Taiwan are to the
manufacturing ones..
GE’s biggest research centre outside the U.S. is in Bangladore
with 1700 engineers, designers, and scientists.
Renting a car from Avis online? Managed in Bangladore
Tracing your lost luggage for Delta or British Airways?
Bangladore
INDIA
Total GDP is about $900 billion (U.S. GDP $11 trillion). GDP
expected to be $2 trillion by 2025.
By 2010 India may be the largest English-speaking country in
the world with more English speakers than the U.S.
Producing 3 million college graduates a year and that will climb
to 6 million in the next 5 years. That compares to 1.3 million in
the U.S. and 2.9 million in Europe, 2.4 million in China. The
European Union is India’s largest trading partner and investor,
as well as its major source of technology. Gurmeet Kanwal “Power
Politics: India’s Quest for Great Power Status, The Statesman, India, February 4, 2003
UNITED STATES
With just 5% of the world’s population, the U.S. accounts for
over 30% of its production and 40% of its consumption. At $11
trillion, America’s GDP is more than twice as big as the next
largest national economy, and its real per capita income is far
above that of any other country
Of the world’s largest 1,000 corporation, 423 are American,
and the New York and NASDAQ stock exchanges account for
44% of the value of all stocks in the world, Business Week, July 26,
2004
The United States is home to the world’s finest universities and
the overwhelming majority of its leading research centers and
its spends more on research and development than the next 5
countries combined. Consolidating and Expanding our Bilateral and Regional
Relationships, Australian Government Department of Foreign Trade and Development
But….
UNITED STATES
The U.S. trade deficit is over $900 billion annually. Joseph E.Stiglitz
article in Globe and Mail, October 12, 2006
The only way out of the current trade deficit is a significant cut
in consumption.
The United States has swung from being a major creditor nation
to having the biggest debt – now nearly $3 trillion.
Manufacturing has declined from 23% of GDP in the 1980s to
12.7% in 2005.
U.S. spending on R&D has declined in critical areas
..there is a link between the factory floor and the research lab.
Neither can survive without the other, i.e., the U.S. cannot lose its
manufacturing base and still maintain its leading edge in design
and R&D.
UNITED STATES
U.S. high-tech trade deficit is over $30 billion and climbing
powered by a high-tech deficit with China that has gone
from nothing in 1998 to $21 billion in 2003.
While the U.S may still have the best and most flexible
R&D, workforce, universities, rule of law, infrastructure,
and entrepreneurial business climate, along with the
world’s largest market, key elements of this “innovation
ecosystem” are eroding. We are not just competing
against foreign companies, but foreign countries.
President’s Council of Advisors on Science and Technology, Sustaining the Nation’s
Innovation Ecosystem, Information Technology, Manufacturing, and Competitiveness,
January 30, 2004
UNITED STATES – EDUCATION
THE QUIET CRISIS
Secondary education – American students now rank near
the bottom of all comparative international tests.
Intel’s director of Corporate Affairs: “Intel has to go where the
IQ is…We have just started a whole engineering function in
Russia, where engineers have wonderful training – and talk
about underemployed!”
Richard Rashid, Director of Research at Microsoft: “..we are not
getting enough students through our systems who want to be
computer scientists and engineers, and if we cut of the flow
from abroad, the confluence of those two will potentially put us
in a very difficult position ten or fifteen years from now”
UNITED STATES
Demographics are good:
By 2050, today’s 293 million Americans will have increased to
400 million and in the second half of the century, America will
rapidly pass the EU in population. By 2050 the age of the median
American will creep up to 40 compared with 43 for China, 48 for
Europe and 53 for Japan. India will be 38.
However, despite the good demographics, U.S. net saving is
down drastically from 11% in 1960 to near zero today,
government budget deficits are over 4% of GDP and will rise to
over 8% in next 10-15 years. Federal spending on physical
plant, R&D, and education and training which averaged over
6% of GDP in the 1960s and 1970s is now well under 3% of
GDP.
UNITED STATES
Nobody is taking an interest in the health of the long term
economic structure of the country because America’s economic
ideology says it is wrong to do so…The U.S. government
proclaims its devotion to laissez faire and retains no mechanism
for considering industry structure issues.
If China is going to be the world’s major manufacturer while
India provides a lot of the services, and Asia and Europe lead
the way in many areas of high technology, with Latin America
supplying the world’s food as U.S. production declines, what
will happen to the U.S. trade deficit and the dollar?
JAPAN
Today Japan enjoys a $45 billion trade surplus with China to go along
with its traditional surpluses with the U.S., Korea, and most other
countries. World Trade Organization, International Trade Statistics, 2004
Japan’s producers dominate the global markets for video camcorders,
digital cameras, DVD recorders, and 2.5 inch hard drives. They have
a monopoly on charge-coupled devices, the chips at the heart of
digital cameras. They have a stranglehold on plasma flat-panel
displays used for large TVs.
With half the population of the U.S., Japan annually graduates 2/3 as
many scientists and engineers, and its students rank near the top in
international math and science assessments. Dobbs, Global Test..
However, Japan has among the worst demographics in the world. Its
workforce is already contracting and its population declining. By 2050,
there will be 100 million Japanese compared to today’s 127 million,
and within 10 years China will pass it in size of GDP. National Institute of
Population and Social Security Research, Population Projections for Japan, 20012050
EUROPEAN UNION
The European Union comprises 25 countries with a combined
population of 456 million and a GDP of $12.6 trillion, compared with
the U.S. population of 293 million and GDP of $11.5 trillion.
Of the largest 140 global companies, 61 are European while only 50
are American and 29 are Japanese. Jeremy Rifkin, The European Dream, New
York: Tarcher/Penguin 2004
This new Europe is diverse, tolerant, inclusive, as concerned with the
quality of life as with rate of growth. It emphasizes community
relationships and obligations, sustainable development, and global cooperation through dialogue and negotiation. It’s about
interdependence rather than autonomy, about peace rather than war,
about cooperation rather than conflict.
Europe’s total population will peak around 2022 and by 2050 will have
contracted by 13% from its 2000 total. The current median age of 37.7
years will rise to 52.3 by 2050 and the working age will fall to 50% of
the total. Like Japan, this is going to be a really old and tired society
unless it gets massive immigration. Richard Bernstein, “An Aging Europe May
Find Itself on the Sidelines” New York Times, June 29, 2003
BRAZIL
In the last 7 years, exports have nearly tripled as a percentage
of GDP partly as a result of massive investment in everything
from soybean cultivation to steel and aircraft.
While coffee amounted to over ½ the exports 30 years ago,
today manufactured goods make up the majority of exports,
with coffee less than 2%.
Stable honest government, deregulation, privatization, better
corporate governance, currency devaluation, and better
international debt arrangements have put the Brazilian
economy on track to overtake Germany in GDP by 2035.
The European Union is Brazil’s largest economic partner.
OH CANADA!
Waterloo Region - Globe & Mail, April 25, 2006
Last year Waterloo region lost 2300 manufacturing jobs.
Soon, it will lose another 1100. From the Electrohome TV
to the Blackberry, it has relied on a century of change and
innovation to produce one of Canada’s strongest
economies.
It’s a knowledge capital with a thriving entrepreneurial
culture. It’s our future. If Canada is to prosper beyond the
current commodities boom, we must learn from Waterloo’s
success, or risk becoming a global economic backwater.
CANADA
Waterloo Model
The soaring dollar, surging commodity prices, globalization
and crises at the two largest U.S. auto makers have
exterminated more than 117,000 manufacturing jobs in
Canada in just 12 months.
Eight plants have shut or are doomed in KitchenerWaterloo-Cambridge. Massive layoffs have walloped other
large industrial employers. About 3400 jobs have
evaporated.
Kitchener-Waterloo, however, bounds ahead, leading the
country in economic activity and demonstrating the get-onwith-it fortitude displayed by legions of entrepreneurs going
back for more than a century. The jobless rate actually fell
last month to 5.2%, among the lowest in the country.”
CANADA
Waterloo Model
• “What happens in Kitchener-Waterloo in knowledge
creation and dissemination, and creation of high-value
innovation is a metaphor for the 21st century Canadian
economy.” David Johnston, President of the University of Waterloo.
• (Waterloo is) leaving behind shirts, boots and steelbelted radials and rolling into the new economy – worldleading Blackberry wireless communications devices at
Research in Motion Ltd., solar panels at ATS
Automation Tooling Systems Inc., digital imaging
systems at DALSA Corp.
CANADA
Waterloo Model
• For the moment, RIM, ATS and DALSA are also
manufacturing in Waterloo region and resisting the siren
call of China where hourly wages are measured in
pennies and India, where engineers are a dime a
dozen.
• Companies are thriving because of co-operation
between business, governments and educational
institutions. Tom Jenkins, Chairman and Chief Strategy Officer, Open Text Corp.
• Kitchener-Waterloo operates on a consensus that
growth need not run roughshod over environmental or
community goals.
CANADA
University of Waterloo
That’s another area where Waterloo led the country –
pioneering the co-op program where students spend fourmonth terms working at companies. The co-op program is
world renowned.
The university was founded by entrepreneurs who feared a
looming shortage of technical graduates. The University of
Waterloo was born with an engineering, computer science,
and mathematics focus..
Another crucial decision by the university founders has
helped incubate hundreds of spin-off companies – allowing
researchers to retain intellectual property rights for
anything they developed.
CANADA
“Dip in jobless rate masks Ontario woes” Globe and Mail, October 7, 2006
The national unemployment rate dropped slightly to 6.4% in
September as employers created 16,200 new jobs but the
moderate upbeat numbers cover up a worrisome trend. The
labour market in Ontario.. has deteriorated over the past year.
Now the province’s unemployment rate is 6.6% - only the second
time in 30 years that Ontario’s jobless rate has surpassed the
national average.
Ontario shed 34,000 full-time jobs last month. It’s the third month
in a row with declines in Ontario. Part of the explanation for
Ontario’s recent weakness lies in the province’s large
manufacturing sector, which has been under mounting pressure
for the past three years from rising energy costs, a strong dollar
and intense global competition. 70,000 manufacturing jobs have
disappeared the past year.
Expect lackluster job creation, trouble in Ontario, and weak wage
growth in the months ahead, economists said.
OIL
With 5% of the world’s population, America accounts for over 25% of
global oil consumption of about 80 million barrels a day. In 1973,
imports accounted for about 1/3 of U.S. oil consumption. Today it is
54% and is forecast to hit 70% by 2025. Annual Energy Outlook 2005
Real crisis occurring about 2020 when OPEC and Middle East
(production) peak. After that, oil production will decline inexorably,
never to recover.
Still there are enormous reserves such as the Athabasca tar sands in
Alberta, Canada and the shale oil in the western U.S. Alberta is
producing about a million barrels of oil a day now and could double
that in ten years.
The world’s consumption of oil will climb from today’s 80 million
barrels a day to about 120 million by 2025, Energy Information
Administration, Annual Energy Outlook 2005: Forecasting Tables
WORLD FOOD SUPPLIES
Era of the U.S as the “world’s bread basket” is over. In 2005,
for the first time since 1959, the U.S. is projected to run a trade
deficit in agricultural products. “We can expect the U.S. to have
a more or less permanent agricultural trade deficit from now as
a result of fundamental shifts in world food consumption and
production”
Alberto Jerardo, “The U.S. Ag Trade Balance: More Than Just a
Number” Amber Waves of Grain, February 2004
There has been a boon for traditional food producers like
Australia, Thailand, and Indonesia. And recently South America
has arrived on the scene as a new food producing heavyweight
– countries like Argentina, Brazil, Chile. Brazil has overtaken
the U.S. in exports of soybeans and meat.
THE END OF THE DOLLAR
George Soros, currency speculator and Warren Buffett, long-term
investor since 2002 have been moving funds into non-dollar assets.
Carol Loomis, “America’s Growing Trade Deficit”, Fortune, November 10, 2003
American consumers have been buying so much on their credit cards
and home equity lines that U.S. household debt is now at an all-time
high of 120% of household income. Alan Greenspan “The Mortgage Market and
Consumer Debt” remarks before the convention of America’s Community Bankers,
Washington, DC, October 19, 2004
Many foreigners are growing uneasy about the long-term value of the
$1.5 trillion American IOUs that continue to increase.
The Euro and Canadian $ gained over 35% against the U.S. dollar in a
two-year period
China is using its huge trade surpluses to buy oil rather than dollars
ALTERNATIVES TO THE DOLLAR
Besides the Russians, others are also sneaking into euros, which
is why it has recently strengthened so much. Chris Giles and Sever
Johnson, “Dollar Down as Moscow Trails Case for Euros”. Financial Times,
November 24, 2004
In Asia, there is serious discussion of creating an Asian currency,
or Acu.. Rebecca Buckman and Jason Singer, “Euro for Asia Gains in Allure” Wall
Street Journal, October 3, 2003
The global economy is highly distorted. Americans consume too
much and save nothing, and the rest of the world, especially Asia,
consumes too little and saves too much. There are 3 ways out of
this situation
1. Americans could consume less and save and invest more
2. Asia and the rest of the world could cut savings and increase
consumption
3.Dollar falls in value with gradual decline of 30-50%
ECONOMIC FUTURE - UNITED STATES
Conclusions by Clyde Prestowitz, author of Three Billion New Capitalists
U.S. performance in a broad range if areas – saving, education, energy
and water conversation, R&D investment, and workforce upskilling – is far
below the standard for many other nations.
Refusal to have a broad competitiveness strategy is, in fact, a policy. This
policy leaves decisions to the “unseen hand” of the market.
Solutions for the United States:
1. Balance the federal budget
2. Reduce energy consumption
3. Encourage personal saving
4. Introduce new consumption taxes
5. Reduce defense spending
6. Evaluate and re-structure education system.
7. Develop a national “ecosystem of competitiveness” such as Silicon
Valley (Waterloo in Canada)
8. Develop bilateral international initiatives with NAFTA, Japan, the
European Union, India, and China.
ECONOMIC FUTURE – EUROPE AND JAPAN
With high unemployment, aging populations, soaring social welfare
expenses, little venture capital activity, low of rates of adoption of
information technology, and rigid labor laws coupled with lower labor
mobility, Europe will have trouble adjusting to the new world of 3 billion
new capitalists.
Japan may even by in worse shape. Burdened by a moribund banking
and financial sector and mountains of bad debt, its economy over the
past decade has also been anemic. Its GDP growth per capita over the
past 13 years has been less than 1% annually, the lowest of all major
economies.
However, Europe and Japan may do better than the U.S. in the next
10-15 years. Japan has a trade surplus with China of $13.5 billion and
the EU has a trade deficit with China of $55 billion but good 2-way
trade.
Economic policy makers in Europe and Japan accept the legitimacy of
and the need for an economic strategy. They accept the notion that the
structure of the economy has a significant influence on its long-term
performance.
ECONOMIC FUTURE – CHINA
By 2050, China will be the world’s largest market for virtually everything
as well as the biggest recipient of investment from, and the largest
investor in, most other countries. It will be a large international creditor,
and the yuan could become the world’s money, or at least one of its
major reserve currencies.
Success is coming at the cost of pollution, water shortages, and
disease:
Rapid economic growth has cut forest cover in northern and
central China by more than ½ since 1985, and the country’s
deserts are growing by several hundred thousand square miles
annually.
By 2020, ½ million people will die prematurely every year from
bronchitis and similar illnesses while many farmers in central
China will have to abandon their land to rapidly advancing deserts.
The water in 5 of China’s largest rivers is dangerous to touch.
China is already the world’s second largest greenhouse gas
emitter.. This is environmentally unsustainable for China and the
rest of the world. Lester Brown and Chris Flavin, “China’s challenge to the U.S.
and to the Earth”, World Watch, September – October 1996
ECONOMIC FUTURE - INDIA
India will be to the world’s knowledge and service supply chain what
China and Taiwan are to the manufacturing ones.
In 2001, India had 1 billion people compared to China’s 1.3 billion. It
will pass China in population around 2035 and keep on going to at
least 1.6 billion people while China contracts. Two Systems, One Great
Rivalry, Economist, June 19, 2003
India’s water problems may be even worse than China’s. The loss of
½ of India’s forest cover has resulted in flooding, loss of water
retention, erosion of topsoil and further pollution of drinking water. Up
to 70% of people who contract serious illnesses in India do so as the
result of contact with polluted water. Ashish Khotari, et al.” Impact of
Environmental Degradation”, February 24, 2005
India’s air pollution is nearly as bad as China’s. Coal is the dominant
fuel and India is the world’s third largest producer after China and the
United States. The combination of coal and untreated industrial smoke
creates hazardous air pollution problems.
NORTH AMERICAN PARENT – SUPPLIER TO WORLD
NORTH AMERICAN
CEO PRESIDENT
FINANCE
VP & CFO
ORGANIZATION &
STRATEGY SENIOR VP
LAW VP
& GENERAL COUNSEL
BUSINESS UNIT
GENERAL MANAGER/PRESIDENT
NORTH AMERICA
INDUSTRIAL BUSINESS UNIT
GENERAL MANAGER/PRESIDENT
Strategy and Acquisitions
Senior Vice President
SALES VP
SALES VP
U.S./CANADA
Vice President
HR & Administration
Vice President
SUPPLY CHAIN
SENIOR VP
RETAIL OPERATIONS ASIA
GENERAL MANAGER
Quality and Processes
Director
SALES INTERNATIONAL
DIRECTOR
Sales & Systems Support
Director
PRODUCT DEVELOPMENT
& TECH SUPPORT VP
Marketing & Internet
Director
INDUSTRIAL OPERATIONS
ASIA
Information Technology
Director
BUSINESS UNIT
GENERAL MANAGER
EUROPE
U.S. PARENT – SUPPLIER TO WORLD
PRESIDENT
U.S.
GENERAL
MANAGER
CANADA
FINANCE/
OPERATIONS
ACCOUNTING/
FINANCE
QUALITY
IT
WAREHOUSE
CUSTOMER
SERVICE
IMPORT
PRODUCT 1
SALES
NATIONAL
ACCOUNT
MANAGEMENT
OUTSIDE
SALES
REPS
PRODUCT 1
MARKETING
PRODUCT
MANAGEMENT
PRODUCT 2
SALES
NATIONAL
ACCOUNT
MANAGEMENT
OUTSIDE
SALES
REPS
PRODUCT 2
MARKETING
PRODUCT
MANAGEMENT
U.S. PARENT – SUPPLIER TO WORLD
U.S.
PRESIDENT
U.S.
FINANCE
U.S.
LOGISTICS
U.S.
MANUFACTURING
U.S.
MARKETING
U.S.
CATEGORY
MANAGMENT
U.S.
SENIOR VP
PRESIDENT
CANADA
FINANCE
DIRECTOR
LOGISTICS
DIRECTOR
PLANT
MANAGER
BRAND GROUP
DIRECTOR
CATEGORY
DEVELOPMENT
DIRECTOR
HUMAN
RESOURCES
DIRECTOR
CUSTOMER
MANAGEMENT
VP
ACCOUNT
MANAGEMENT
MERCHANDISERS/
FIELD SALES
EUROPEAN PARENT – SUPPLIER TO WORLD
CEO
EUROPE
COMMERCIAL
MARKETING DIRECTOR
EUROPE
PRESIDENT
CANADA
VP OF SALES
NATIONAL ACCOUNTS
MANAGER
LOGISTICS &
NATIONAL
SERVICE MANAGER
SUPPLY CHAIN
MANAGER
SALES SUPERVISOR/
EDI MANAGER
REFURBISHING
MANAGER
REFURBISHER
FULL-TIME
& CONTRACT
FINANCE MANAGER/
CONTROLLER
FINANCIAL ANALYST
MARKETING/
MANAGER
ASIAN PARENT – SUPPLIER TO NORTH AMERICA
ASIAN PARENT
U.S.
VICE PRESIDENT/
GENERAL MANAGER
NORTH AMERCIA
MARKETING
CANADA
VICE PRESIDENT/
GENERAL MANAGER
ADMINISTRATION
NORTH AMERCIA
DIRECT IMPORT/
CUSTOMER WAREHOUSES*
ACCOUNT
EXECUTIVES
STORE SUPPORT
CUSTOMER SERVICE
IN-STORE SERVICE
OPERATIONS
MARKETING
SUPPORT
*All product shipped from Asian port is shipped directly to retail customer warehouses
EUROPE HOLDING COMPANY – SUPPLIER TO WORLD
EUROPE
CEO HOLDING COMPANY
WORLD
PRESIDENT PRODUCT DIVISION
NORTH AMERICA
CEO
CANADA
PRESIDENT
HUMAN RESOURCE
DIRECTOR
LOGISTICS
DIRECTOR
SALES
DIRECTOR
MARKETING
DIRECTOR
ENGINEERING
DIRECTOR
FINANCE
DIRECTOR
PLANT
1,2,3
FUTURE ORGANIZATION CHART – SUPPLIER TO WORLD
CEO PARENT COMPANY
WORLD
CORPORATE
SERVICES
ORGANIZATION &
STRATEGY VP
CEO PRODUCT
DIVISION, WORLD
ASIAN
CEO
EUROPEAN
CEO
NORTH AMERICA
CEO
PRESIDENT
CANADA
HR
DIRECTOR
SALES
DIRECTOR
MARKETING
DIRECTOR
ACCOUNT EXECUTIVE
SALES PERSONNEL
IN-STORE SERVICE
OUTSOURCED
CUSTOMER SERVICE
OUTSOURCED
LOGISTICS
DIRECTOR
PRODUCT
MANAGEMENT
FINANCE
DIRECTOR
WAREHOUSE
REPLENISHMENT
IT
MANUFACTURING
OUTSOURCED
RECOMMENDATIONS – FOR CANADA
Develop a Formal Industrial Strategy for Canada including
these key factors:
1. Protect key resource, high-tech, and agricultural businesses from
foreign takeover
2. Foster trade relationships, co-operation and dialogue with China,
Japan, other Asian countries, India and the European Union.
3. Support and assist Canadian companies locating in China, India, and
other growth economies.
4. Take advantage of Canada’s natural strengths in agriculture, water
preservation, pollution controls to assist other countries
5. Strengthen immigration policy to insure availability of skilled workers
and professionals and to maintain population growth
6. Upgrade the educational system to insure global competitiveness
7. Support high-tech infrastructure, e.g. Waterloo example
8. Give priority to environmental issues in regards to air and water
pollution both for health and business opportunity reasons
9. Promote the strengths of our land – vast open areas of land, water,
and forest, natural resources, highly educated population, high
technology competence.
10.Continue the “Canadian” way of being an open, tolerant, peaceful,
and multi-ethnic society.
RECOMMENDATIONS - FOR CANADIAN
COMPANIES
1.
2.
3.
4.
5.
6.
7.
Establish an organizational structure that will meet the challenges of the
changing international economy.
Give priority to R&D, new product development, and innovation
Seek partnerships with governments, universities, and other businesses
for new product and process development
Balance growth objectives with environmental and community goals
Consider or augment investments in China, India– provides entrée to their
billion+ consumers.
Lobby Federal Government for development of an Industrial Strategy for
Canada including government, business, and university participants.
Consider the Waterloo region’s lessons for Canada:
• Be entrepreneurial
•
Innovate - develop deep pool of technical expertise and innovation
• Network – build networks of visionary business, government, and
university leaders
• Build on strengths – recognize your company and industry’s
strengths and build on them
• Diversify – old products die, new products thrive
• Attract smart people – hire the brightest and best
And for further information:
www.blackeagle.ca
Black Eagle Consulting 2000 Inc.
Richard Simms, President
Oakville, Ontario
Tel: 905.842.3010
Fax: 905.842.9586
Email: [email protected]