Executive Summit - Speakers

SPEAKER SUMMARIES





Brian Beaulieu  - Make Your Move
“Make Your Move” was the title of this year’s presentation by Brian Beaulieu, economist and principal at the Institute of Trend Research and a regular at the ISEA Executive Summit.  He mixed his organization’s analysis of economic data with their advice on what companies should be doing at each phase of the economic cycle to craft a compelling look ahead.
 
In summary, ITR sees continued growth in the GDP through 2013, a mild downturn in 2014 and a return to growth in 2015-2017 - consistent with their past projections (ITR claims an accuracy rate of about 95%).  Liquidity is not an issue, he said, as banks have plenty of money available and are lending.  Employment is rising, and with it workers’ “marginal propensity to consume,” even as companies are right-sizing.  Retail sales and construction are improving.  The dark spot in the recovery is continued deficit spending by the government, which Beaulieu noted has long term consequences.
 
Globally, he singled out Turkey and Poland as countries whose growth opportunities match those of the better-known BRICs.  He encouraged companies to look for opportunities in Canada and other countries with winning demographics, avoiding countries with shrinking populations and increasing costs.
 
The tipping points for the 2014 downturn, which he described as a mild recession, will be higher taxes, higher interest rates, commodity price increases and the spread of Europe’s financial troubles to other parts of the world.  Oil could be a “painful” $120 a barrel by mid-2013.  Inflation will return, he said, fueled by growing labor costs in China and the higher cost of “going green,” among other factors.  He urged companies to borrow now and make investments in plant, facilities and people.  Companies will have to train new workers, he noted, because they probably will not come with the necessary skills.
 
Beaulieu continued to warn of a serious depression in 2030-2040, and warned his listeners to prepare now.  He said that the uncontrolled deficit will cause the world to lose confidence in the US, the aging population will further burden the economy, inflation and higher interest rates will cause deprivations and unemployment will continue.  He repeated his tongue-in-cheek advice:  “Sell your company to your least favorite child in 2025.  You can buy it back much cheaper later on.” 
 
Congressional solutions to the continuing deficit problem are essentially worthless, he said, showing that federal spending would still increase $1.6 trillion 2013-2021 with the sequester cuts.  The US will have to cut both entitlements and non-entitlement spending, raise taxes, and solve Medicare (“by acknowledging that life isn’t fair”).
 
Beaulieu ended his two-hour presentation with a review of what companies should be doing now to solidify their businesses and grow.  Add sales staff and hire people who can open new markets.  Find out what your customers really value, not what they tell you.  Align distribution systems to accommodate increased activity.  Invest in efficiency-building technology.  Lock in costs, while spending more on products, marketing and advertising.  “Boldly sell where you have never sold before,” he concluded, “with good people and other people’s money.”

Mara Liasson - The Battle for Washington 2012
“The campaign is on.”  This was Mara Liasson’s intro to a wide-ranging analysis of the political season.  The chief political correspondent for NPR and commentator for Fox News characterized the Presidential contest as a “vulnerable incumbent vs a weak challenger,” and predicted that it will be ideological and personal.
 
The polls show a tight race, she noted, and winning the independent voters will be crucial.  Romney wants to portray Obama as a President who wants government control, while Obama will try to portray Romney as a social Darwinist who is out of touch with the country.  Obama will play to his strengths, especially among women, Hispanics and young voters, but there is a question of whether he can sustain the turnout that expanded the electorate four years ago.  She said the President is making appearances at college campuses, but the enthusiasm is not what it was in his first campaign.
 
Romney is working hard to repair the damage from a drawn-out primary season, but it may not be as bad as some people imagine.  He will have plenty of money, including GOP super PACs that will probably outspend their Democratic counterparts, but does not have the grassroots infrastructure of the Obama campaign.  He will have to overcome a gender gap, crafting a message to women that reverses some of the negatives from his primary opponents.
 
Liasson told the audience to watch how the campaign unfolds in key states.  To win, Obama only has to keep the states that supported John Kerry in 2004, plus one.  Romney must win Ohio, Florida, Virginia and North Carolina.  She also reviewed possible vice presidential candidates, predicting that Romney has learned the lesson of the McCain choice of Sarah Palin, and will not pick charisma over competence.
 
In the Congressional races, Liasson said the GOP will maintain control of the House, and could take the Senate with a net gain of four seats.  But whichever party  controls the Senate will have fewer than 60 votes.  She also urged the audience to watch the Supreme Court, whose decisions on health care and immigration may influence the election by energizing one side or the other.

John Felmy - Energizing America - Facts for Addressing Energy Policy
John Felmy, chief economist for the American Petroleum Institute, is the industry’s chief analyst and spokesman on supply, demand, resources and production.  He presented an overall view of the oil and gas industries, and focused in on where energy is used in the US and where it comes from.
 
US energy supplies come from petroleum, natural gas, coal, renewables and nuclear power.  Felmy showed how each of these five sources feeds into four use sectors:  transportation, industrial, residential/commercial and electric power.  He said that the world will require 53% more energy in 2035 than in 2009, with oil and coal representing a smaller part of the mix.  Nevertheless, coal, oil and gas will still provide more than three-quarters of the energy needs in 2035.
 
Given these figures, Felmy presented data showing current reserves around the world, noting especially the “shale plays” in North America and offshore reserves.  With these resources, the US has the power to double production, he said, preserving or creating more than 9 million American jobs and contributing 7.7% to the economy.   Not only does product support jobs directly, the availability of energy makes other types of industrial production cheaper and their products more competitive globally.
 
But he cautioned that the US must make the right policy decisions for this potential to become reality.  The US is at a crossroads, he said, and we can move ahead or repeat the mistakes of the past.  He signaled out environmentalists as a barrier to growth, noting that they had shifted their argument from concern over depleting resources to concern over how these resources are extracted. 
 
Hydraulic fracturing, he said, has never been confirmed to contaminate groundwater, and the processes use well-known chemicals as additives to water inserted underground.  Yet opponents spread fear and potentially delay an energy industry that is posting help-wanted signs in parts of the country where jobs are desperately needed, and could help assure America’s energy sufficiency for many years in the future.

Sanjiv Bhaskar  - PPE Industry Outlook and the Impact of Megatrends
PPE manufacturers and marketers should be aware of global “megatrends” and their effect on markets and economies.  This message was central to the presentation by Sanjiv Bhaskar, global director for PPE at Frost & Sullivan.  Bhaskar reviewed market drivers for PPE – economies, population, employment and legislation/enforcement.  The intersection of these drivers is the growth zone for PPE, he noted.  He also showed the PPE product mix as reported in Frost & Sullivan’s global market estimates, and trends that their analysts see in the industry.  Among these are the move toward consolidation in suppliers, a younger workforce, and innovation that creates lighter weight, more adaptable and multifunctional PPE.
 
Frost & Sullivan researchers have identified a set of megatrends that they believe will affect the economy and society in 2020 and beyond.  Bhaskar singled out four of the nine megatrends that he considers especially pertinent to PPE.   The first is the rise of the mega-city, where the concentration of people creates specialized infrastructure needs.  Frost predicts that 60% of the world’s population will live in cities by 2020, where they will concentrate countries’ economic activity.  This also presents a risk, as disruption to a city could negatively affect a country’s GDP.
 
The social megatrend is focused on the emergency of generation Y and empowerment of women.  Gen Y workers are adaptable to change, more accustomed to wearing and using safety equipment and therefore more open to using PPE no the job.   Women will occupy more CEO positions, more seats in Congress, and represent a larger share of the workforce.
 
Trends in the economy will see the emergence of new economic powers: Poland, Turkey, Indonesia, Argentine, and others.  There will be a continued shift in corporate power away from the US to Asian companies.   Bhaskar noted that only eight US companies have been in the Fortune 500 for all of the last 40 years.   The fourth megatrend has to do with energy, with increasing supply from renewables and a “drive toward zero” waste and emissions.  This approach will also affect other sectors, he noted, including efforts to eliminate workplace injuries and security breaches. 
 
Bhaskar concluded with a plot showing how companies can use the megatrends to create business opportunities – identifying subtrends, evaluating their impact on an industry and future products and technologies, and designing and marketing products to meet unmet needs.

Henk Vanhoutte  - PPE in Europe
Regulation of PPE in Europe falls under a complex system of directives and national laws governing product performance, testing, certification and use.  Henk Vanhoutte, secretary general of the European Safety Federation (ESF) in Brussels, opened the Monday general session with a wide-ranging explanation of the European PPE regulations and standardization, as well as remarks on the possible consequences of the economic crisis on workplace safety and health.
 
The ESF is an umbrella organization whose members are the national associations of PPE suppliers, similar to ISEA.  It provides a forum for these organizations to represent manufacturers in deliberations of issues at the European level, where PPE and its use is regulated by a series of directives that each member state must adopt as national law.  The OHS framework directive 89/391, for example, establishes the hierarchy of controls and requirements for employee involvement in health and safety management in the workplace.  The PPE directive 89/656 establishes the essential requirements for various types of protective equipment, and the system under which each type is tested, evaluated and labeled.
 
The PPE directive has been in revision for some time, and Vanhoutte predicted that the new version will likely be published in mid-2014.  He said the revised directive will remove the differentiation between private and professional use of safety equipment, and update some of the product categories.  It will also clarify the definitions and roles of manufacturer, importer and distributor, and establish a stronger system of market surveillance to ensure ongoing conformity to product requirements.
 
Vanhoutte briefly described new PPE regulations being applied in Russia, and expressed European concern over efforts to draft ISO standards for PPE.  He pointed out that new ISO standards would become mandatory in Europe, even if they are not widely adopted in other parts of the world.  Europe is also facing many of the same issues that confront U.S. manufacturers, with competition from substandard imported products claiming compliance and bearing the CE mark.

ISEA members who attended the meeting can get copies of the speakers' presentations.  Contact ISEA for details.