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The Global Manufacturer: Cautious Exuberance from the Mountaintop

Feb. 14, 2013
As the world economy strengthens, you can be sure that more attention will be paid to the triple bottom line of people, planet and profits.

One thing I have learned from reporters discussing the recent World Economic Forum meeting in Davos, Switzerland is that no one really understands what the meeting's theme of "resilient dynamism" means. That leaves me feeling liberated to interpret it as I see fit. And I'll admit, I actually like the term. I think it roughly equates to "charge ahead even after you get smacked in the gob."

A lot of U.S. manufacturers must feel as if they are the poster child for resilient dynamism. With a few gray hairs on their head, they have watched China become the world's low-cost factory, heard experts tell them that we are a post-industrial economy and found themselves trying to undertake a quality revolution while the banks imitated casino night at a fraternity and mortgage lenders decided down payments were for sissies. Faced with all that, U.S. manufacturing has made important strides in rebuilding itself after a devastating decade of plant closures and job losses.

See Also: Global Manufacturing Economy Trends & Analysis

From all reports, there was a sense at Davos that the worst of the economic meltdown was over, but the world was not out of the woods. Christine Lagarde, managing director of the International Monetary Fund, told attendees: "We have avoided collapse, but we need to guard against relapse. 2013 will be a make-or-break year."

So what happens when the world's leaders come out of their recession bunkers and assess current conditions? One interesting theme was struck by Shimon Peres, the president of Israel, who said the world was becoming "ungovernable" and that multinationals were assuming the role once held by national governments. Peres pointed out: "Forty global companies have more fortune than all the governments in the world."

But as Voltaire once wrote, "With great power comes great responsibility." And so multinationals and many smaller firms continue to find themselves the objects (and active participants) in a passionate public debate about the social responsibilities they should assume. As the world economy strengthens, you can be sure that more attention will be paid to the triple bottom line of people, planet and profits.

 "Any company that focuses only on shareholder value will eventually self-destruct," William George, a management professor at Harvard, warned a Davos audience. He said many companies had lost their way prior to the Great Recession, paying attention only to short-term profit, but that if companies create value for society, their shareholders will be rewarded.

"Businesses have more power and money than ever before. They can destroy large parts of the planet. If your impact is high, your responsibility is high," said Feike Sijbesma, CEO and chairman of Royal DSM, a multinational life sciences and materials company based in the Netherlands.

In the United States, we can see the contentious debate over social responsibility with the critical issue of fracking. The U.S. uses about 20% of the energy consumed in the world, according to government figures, and the opportunity to become energy independent holds enormous economic and security benefits. But a January 31 poll by Quinnipiac University, for example, found New Yorkers deeply divided on the subject, with 43% supporting drilling for natural gas in the Marcellus Shale because of the economic benefits and 42% opposed to drilling because of environmental concerns.

Social concerns certainly aren't foreign to manufacturers. I can't think of a single manufacturing plant I have visited where employees and managers weren't actively involved in a host of charitable and community efforts, from supporting the schools to feeding the hungry to reducing their waste streams. But in a nation where many feel let down by the business community, manufacturers must continue to help forge the national and international structures that support both global competitiveness and social leadership. To do so, they'll likely need a healthy dose of "resilient dynamism."

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