Archive for the ‘U.S. Economy’ Category

h1

FORD IN BRAZIL

May 4, 2010

As if more proof of the speed and “nowness” of globalization is necessary—on top of the likes of McDonald’s, Yum Brands & Caterpillar—this video provides a fascinating look at what Ford is doing in one of the world’s fastest growing and “regulation friendly” foreign markets.

Not only is the whole idea brilliant,  it also provides a look at a fundamental change in business philosophy about today’s global marketplace (one that has brought Ford out of the automotive Middle Ages). The main underlying reason why this plant could never be built in the United States (given at the end of the video) is a genuine wake up call!

No matter what global market or markets one may work in, reading my book, Lies, Bribes & Peril, will assure a leg up on success. Check out Ford in Brazil: http://bit.ly/fordinbrazil

Advertisements
h1

Organizational Corruption is Rarely Isolated; It’s Systemic.

April 14, 2010

In one of the largest criminal fraud cases to be brought by the US Government in recent years a Kuwaiti owned logistics firm, Agility, was indicted last February for multiple instances of fraud and other crimes totaling (what has been reported to be) as much as two billion dollars.  Yes, that’s billion—with a “B”—dollars.

The criminal indictment issued by the US District Court in Atlanta is public domain and is available on many web sites.  It includes two conspiracy counts alleging (in simple terms) fraudulent large-scale over-billing, fraudulent large-scale concealment of distribution fees into item pricing, fraudulent retention of rebates from vendors, and fraudulent  large-scale repackaging of items. The indictment counts detail a time-line of fraudulent behavior from June of 2003 to December of 2008 and lists dozens of instances, meetings, communiques, and transactions covering contracts totaling about 8.5 billion dollars (whew, now it’s easy to see how the fraud could be a much as two billion). It’s a pretty damning document.

This week the indictment was amended to include the major US subsidiary, Agility Defense and Government Services (DGS) headquartered in Alexandria, Virginia, that seems to have been the contracted and operational entity. Lawyers for Agility DGS have pleaded ‘not guilty’ even though recent news reports suggest there are negotiations underway between the US District Attorney’s office and Agility that would have Agility pay 750 million to avoid a trial (now—in my understanding of the world—no organization pays three-quarters of a billion dollars if its’ innocent).  Also see Article in Atlanta Journal-Constitution.

Agility is a competitor in my industry so I have been closely watching the events unfold from a couple of viewpoints. First, as one of the largest competitors in my industry their demise would certainly be a boon to not only my company but other logistics companies as well; so I can’t say I’d be sad to see them crippled by their own folly.

Secondly, I’m keenly interested from an international corruption standpoint how the USG resolves the matter—I certainly hope it’s with greater impact than the 2008 Siemens corruption scandal.

In the Siemens matter no one went to jail and—incredibly—Siemens was not barred from doing business with the US Government.  ((I wrote a Letter to the Editor about the Siemens incident that was published in the Wall Street Journal on December 24, 2008:  If You Do the Crime, You Should Do the Time.)

Roughly half of Agility’s revenues come from business with the US Government and if any non-trial resolution of the indictment allows Agility to continue to do billions of dollars of business with the USG–well, there are very important reasons why that would be an incredibly bad outcome. To begin with (like the Siemens case), it would present no deterrent. If Agility is only “fined” 750 million dollars then, and from any knowledgeable cost assessment, they are way ahead—no question they probably profited much more than that penalty amount. Most importantly, if one looks back over large corruption scandals like Siemens as well as the great UN Oil for Food incident—the most notorious in recent memory—the similarity that cannot be ignored is the corruption was not isolated within those organizations; like a metastasized cancer it was systemic.

h1

The Future is Now–And It’s Moved. Hang on for a heck of a ride.

January 4, 2010

Entering this New Year and this new decade there are two pieces of information. One is a “factoid” and the other a researched fact and when deliberated together, they yield an undeniable conclusion about the future of the global economy. 

First of all, consider the fact that Goldman Sachs recently issued predictions that included a forecast that’s a major league world changer; Within the next two decades (note: 17 years was the precise prediction) the major emerging economies of China, Russia, India, and Brazil (or “BRIC” countries in the wisdom of the acronym makers) will eclipse the current G-7 (U.S., Japan, UK, Germany, France, Italy, Spain) in terms of Gross Domestic Production or GDP. The estimates for 2009 by the International Monetary Fund had the U.S. creating about one quarter of the world’s GDP and the G-7 comprising almost 55% of it. The IMF figures assessed the BRIC countries as producing just over 15% of the world’s GDP. Wow, if Goldman Sacks is correct then what’s ahead is sure to be one hell-ova financial switcheroo’!

Next, take into consideration reports of the highest returning money funds over the last decade. While the S&P index was losing about 3.3% annually for the last decade, the most lucrative funds were all emerging market funds and each of the top five returned over eight times their investment.

The top fund, East Capital Ryssland, returned 1524%…..double WOW. To put this in tangible terms, if you had put $10,000 into a S&P index fund in early 2000 you would now have, oh around $7,000 left in that fund to date (inflationary adjustments would just add insult to injury!). Contrast that with an equal investment in the Ryssland Fund for that very same time period: you’d be looking at about $152,400 by now. Any third grader can do the math there.

Where would you have wanted your investment?

Well, in one way or another, you’re going to get an opportunity to face that kind of decision. Assessing these points together can lead to only one conclusion–this kind of humongous market disparity will continue (and YES, Webster says “humongous” is a definitely a word).  If the mercurial pace of growth in the BRIC occurs as forecast (the IMF, World Bank, etc. —all divine similar growth) then not only the best investment opportunities will be in found in these emerging markets, but these countries will be the proverbial ground zero of global commerce for at least the next two decades. Unimaginable opportunity and wealth will certainly be created.

The next Microsoft, Wal-Mart, or Toyota will almost certainly not be from a G-7 country.  And NOTE: If historians ever point to any single corporate event that could be considered to have presaged the decline of the importance of the U.S. in the global economy, it just may be GM losing the place as the #1 Global Auto Maker to Toyota in 2008 (a spot GM had held for over 70 years!).

The widely forecasted colossal GDP growth in emerging markets will result in U.S. companies focusing their attention to those countries in a way that is historically unprecedented. 

Lastly the top careers within most U.S. corporations will be built by specializing in and mastering all the emerging markets–regardless of industry.  Corporate hegemony will inevitably see U.S. companies acquired by foreign companies in far greater numbers than ever before.  No matter where you live in the U.S. and regardless of your endeavor, your life and its rapidly changing challenges will be significantly affected.

A new economic world-order is upon us. What should these revelations tell anyone who is in college now (or anyone under 40 for that matter) where their careers will most likely revolve and where their fortunes will most likely be found?

Two guesses (and the first one doesn’t count).

What skills will an individual need to compete in what is sure to be a wild, woolly, exciting and tumultuous commercial free-for-all?

The primary countries in play couldn’t be more different: history, religion, languages (India alone has 28 different dialects) and the geography literally stretches to the four corners of the earth! How in the heck will the entrepreneur, the thrill and fortune seekers of the next twenty years succeed in such diverse areas?

Traditional business acumen will be important of course, but there will be much, much more necessary to have in place and in play achieve success. Suffice it to say that new skills (perspectives really) that are not required now or even necessary in the current American marketplace will be critical.

A good start on what those perspectives are and how to develop an understanding of them can be found by reading my book, Lies, Bribes, and Peril: Lessons for the REAL Challenges of International Business. Read it and think about it and learn this: there are NEW skills and perspectives required in the future Marketplace of Now.   Add a dash of ambition, a peck of dedication and a bushel of perseverance and we are all off on an intercultural economic adventure of a lifetime for the next few decades.  Enjoy it people–it’s going to be  one heck of a (wild and exciting) ride!

h1

Bailout for Main Street Instead of Wall Street

December 14, 2009

Reacting to the ever-widening cultural chasm that the economic meltdown and its aftermath has caused between Main Street and Wall Street, the current Administration is finally trying to do something for Main Street. Taking Cultural, Face and Logic Lessons from my book, Lies, Bribes, & Peril and demonstrating how they are applicable right here in the US should help to show their universal application…and, I hope, offer an interesting perspective.

What caused the cultural chasm to widen and who is to blame?  Well none other than the US Government.  Now, every Administration going back to Clinton shares plenty of blame, but the current Administration is responsible for the circumstances, the jack hammer if you will,  severely aggravating this domestic intra-cultural chasm.

How did we get here?

The ever loosening policies of the USG across the economic spectrum led to the environment causing the meltdown. Wall Street took too many risks and created risky financial instruments that no one understood by grabbing onto the Logic made famous by Gordon Gekko, one of the top fifty movie villains of all time; “Greed is good”.  Not to be outdone, Main Street also internalized that Logic and overleveraged, overspent, and overindulged on a scale to match Wall Street. Never mind the ethical abyss that is so evident everywhere, that’s a generational issue and way above my pay grade, schools and parents have their hands full for the next few decades at the least! So both Main Street and Wall Street are culprits in the meltdown–maybe not equally but, hey, let’s not split hairs.

So, we have the meltdown and both Wall Street and Main Street should have been equally hammered—oops not even close to correct. Here Logic begins to frame the cause of the Cultural rift. Most of Wall Street gets anointed “too big to fail” leading to companies and jobs that, from a Darwinian perspective, should not have survived, but did. Moreover, the Administration not only gives huge sums of TARP money to these “should-have-failed” businesses, but grants many of them new status as full-fledged “banks,” hence allowing access to huge sums of Federal Reserve monies at practically zero interest.  OK now that’s like giving the fox not only the keys to the hen-house, but the deed as well!  If Bernanke and Geithner did not realize these new “banks” would channel all their money and efforts to lucrative trading activities (whose huge profits yield no worthwhile product or service benefitting the overall economic system), while putting zero effort into lending activities to Main Street (widely reported in the media and by the USG), then we are in really in big trouble. What did Main Street get? Cash for Clunkers?

This past fall the huge trading profits begin to roll in to Wall Street while Main Street continued to reel, realizing no tangible benefit from the Bailout. To say that Main Street has been having trouble following the Logic of the Bailout would be an understatement. Then Wall Street, oblivious to Main Street’s ongoing agony, starts crowing about their profits and making plans for huge bonuses. C’mon, the Administration can’t be surprised that a cultural divide has occurred, heck, the real story is that it hasn’t evolved to something much nastier (The UK has seen attacks on bankers such that many dress for work in jeans instead of suits!).

The incredible inequity of the Administration’s Logic underpinning the Bailout has unleashed a wave of outrage across Main Street that remains unsurpassed in my lifetime. The outrage actually derives from the “Face Issue”—intrinsically linked as it always is—of immeasurable proportions. The disrespect, the subliminal unimportance and inconsequential-ness, exhibited by both Wall Street’s actions and the Administration’s Logic, clearly attached to Main Street’s role in the US economic recovery has been the main reason for the huge cultural tear in our societal fabric.

 It’s about time the Administration did something. Let’s hope it works!