In Manufacturing, the U.S. Is Surprisingly Competitive

By Peter Coy, BusinessWeek

Forget what you think you know about high-cost and low-cost countries for manufacturing because there’s been a dramatic shakeup over the past decade. According to a report by Boston Consulting Group, the U.S. has shot up the ranks of competitiveness, while Brazil has foundered badly.

The report ranks the world’s 25 biggest exporters of manufactured goods in terms of direct costs of production—factoring in wages, productivity, and electricity and natural gas. Indonesia and India are the cheapest and next-cheapest in terms of those direct costs. But they have other problems such as poor infrastructure, says Justin Rose, a co-author of the report and partner at BCG. Brazil’s costs have gotten as high as those of Western Europe. Mexico, on the other hand, has made big productivity gains.

The 10 biggest exporters account for about 70 percent of global manufactured exports–and are therefore destinations of choice for most companies locating new plants. China is still No. 1, though its lead has narrowed. The U.S. has moved into the No. 2 spot, followed by South Korea, the United Kingdom, Japan, the Netherlands, Germany, Italy, Belgium, and France.

It’s worth noting that the consultants’ ranking doesn’t line up too closely with countries’ trade performance. Despite its No. 2 ranking, the U.S. runs a huge trade deficit in manufactured goods. Germany, ranked No. 7, is a manufacturing powerhouse. Rose says Germany is hurt in the ranking by its high labor cost, but says that the country has managed to minimize that disadvantage by focusing on goods that have relatively low labor content and require high skill to make. Also, he said, the superior ranking of the U.S. could be a preview of things to come. “Part of the point of this work is this [relative competitiveness] is evolving quickly over time.”

ExportBoost™- a program designed to help exporters double their exports every 18 months – announced at the U.S. Ex-Im Bank’s Annual Conference

EXCLUSIVE! Tomorrow’s news today.

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Washington, DC – New York City

April 24th, 2014

ExportBoost™ – a new service guaranteed to help small and mid-size companies to at least double their present exports in 18 months – is being unveiled today by the Broad Street Capital Group (“BSCG”) at the Annual Conference of the Export – Import Bank of the United States (“US Ex-Im Bank”).  Specifically developed for US manufacturers and distributors with revenues of between $5 and $750 million and for providers of professional services , ExportBoost™ uses proprietary export building methodology and tools such as: Fi3E™ Export Indices, XPORTINSURE™, FinanceABLE™ and EZShip™ that were developed by BSCG’s subsidiaries  Fluent In Foreign Academy™, AMEX Import Export and Broad Street Capital  to greatly simplify export operations and mitigate international business risks.Fi3E Badge

“There are enormous opportunities for companies both large and small, to sell goods and services overseas,” said Alexander Gordin, Managing Director of The Broad Street Capital Group and Author of the book Fluent In Foreign Business. ” Expanded exports represent amazing possibilities not only to help companies grow their profits and shareholder returns, but also to benefit our nation’s economy by creating new jobs and generating additional tax revenues. President Obama’s National Export Initiative has served as a catalyst to spur job growth and led to a resurgence of manufacturing activity. More needs to be done, and companies should focus on exports as a fundamental part of their business activities, rather than an afterthought. Thus ExportBoost™ was designed to help small and medium companies who are either experienced exporters, or just looking to start their international expansion to significantly grow their exports. ExportBoost™ service has two tiers – one  where the exporter is guided by the Broad Street Capital’s professionals and implements the program internally and the second where Broad Street Capital Group implements ExportBoost™ on its client’s behalf.  In either case, the clients will be offered a unique guarantee, should they follow the program and their exports do not at least double in 18 months, Broad Street Capital Group will refund all the fees paid by the clients for the ExportBoost™ service.

fi180_coverExportBoost™ is the first product of the very ambitious project being developed by the Broad Street Capital Group and its partners to greatly streamline international trading operations. The project codenamed “Barbell” is scheduled to be unveiled at the Broad Street’s annual conference later this year.

Based in the heart of New York City’s financial district and serving business community since 1988, Broad Street Capital Group is a private merchant bank providing strategic international business development, cross-border financing, risk mitigation and export management services. The firm’s professionals have extensive expertise in working with all trade and development agencies of the US government, in developing and financing complex export transactions and projects.  Utilizing unique Develop, Finance Supply and Insure™ approach to international business Broad Street Capital provides coverage in 180 countries earning it a moniker of the “Merchant Bankers to the World”. For more information, please visit www.broadstreetcap.com or www.fluentinforeignacademy.com

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Is Ukraine a new Titanic?

“What happens in Ukraine will have global impact.”

308fbb9Recent events in Ukraine have shaken the entire world. Armed conflicts in the middle of Europe and redrawing of the borders under the barrels of heavy military equipment in the 21st century seemed surreal. All this as human civilization was becoming more sophisticated and technologically advanced READ MOREUkraine - Proprietary Fi180 Country Profile - page 1 of 4

How GE and IBM are Playing Global Development to Win

by Jonathan Berman, HBR BLOG

Most big corporations follow global development trends. Where there is economic growth, there is opportunity, and the companies that can predict where growth will take place are better positioned to take advantage of it. That is the reactive approach to economic development.

In the last few years, a more powerful dynamic has gained traction. CEOs are proactively engaging with emerging market government to spur economic development and create opportunities for their companies. In the fast growth markets of Asia, Africa and Latin America, national governments are responding to a more empowered citizenship, and looking for corporate partners to achieve their development goals. Companies that fill that need effectively are doing more than reacting to development. They are playing development to win.

General Electric is a good example. Four years ago, GE initiated a strategy to compete more effectively in Africa, one of the fastest growing regions in the world in terms of GDP. GE did more than take advantage of growth as it came. The company’s leadership moved proactively to accelerate it and shape it. “If we see a country where reward outweighs the risk, we want to invest,” CEO Jeff Immelt says in Success in Africa. GE spent months understanding the development priorities of countries where it planned to invest. Partnering with those governments, the company sought out discussions at the ministerial and head-of-state level to identify and work on the country’s most significant infrastructure challenges. The results are encapsulated in a “Country-Company MOU,” which describe key challenges the country faces and the role GE will play in helping meet them. For example, the two parties identified the challenge of national electrification and committed to work together to bring $10 billion of investment and 10,000 megawatts of new power online, along with local manufacturing and training. Emerging market infrastructure is a segment many Western companies have ceded to China, but GE is winning contracts because it is playing development to win.

IBM is doing something similar in data analytics. CEO Ginni Rometty took the top job in 2012, and identified Africa as a locus of technological growth early in her tenure. IBM identified a set of “Grand Challenges” facing the continent that could be addressed through superior data analytics, including water and sanitation, energy management, financial services, transportation, public safety, healthcare, and agriculture. Last month, IBM launched a dialogue with the government of Nigeria. It was co-hosted by the Minister of Technology and included ministers from the cabinet charged with meeting the Grand Challenges IBM identified. Rometty, on her second trip to the region in three months, led the session for the company. IBM is speeding the region’s growth, and helping shape its direction. That is playing development to win.

I recently spent some time with Bob Diamond, the former CEO of Barclays. Now head of Atlas Mara, he’s positioning the investment company to play development to win. Earlier this year, they raised $325 million in the public markets and this month acquired BancABC, a bank with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe. “Governments want banks who will lend to businesses and homeowners,” Bob explains, “That’s what we intend to do. The private sector is growing in Africa and we plan to enable that in multiple countries.”

Playing development to win does have costs. It requires an up-front investment of money and time to understand the growth challenges within each host country or region and to establish the government and civil society relationships needed to act on those challenges. It also demands senior management and board involvement. Companies playing development to win have CEOs traveling to the region 2-3 times per year, supported by engagement of the full management team. Furthermore, the returns on investment are long term. For a large company, it’s common to invest for a decade or more before shareholders see material earnings. The anticipated scale of new business has to be large enough to warrant that.

Playing development to win should not be mistaken for corporate social responsibility (CSR). Sustainability and core values support any great company, but expanding long-term earnings by meeting big development challenges takes more. At a company that’s playing development to win, business units are leading the effort, enabled by sales, marketing, finance, supply chain management, CSR, and social investment.

Some might see playing development to win as cynical or undermining the cause of inclusive growth. It’s neither. Cynicism would be to bet against development. The companies playing development to win need the institutions and policies with which they are engaging to yield tangible results. If the government of Nigeria fails to deliver widespread, low-cost power, the fallout for GE will be significant.

Playing development to win will be the hallmark of great companies operating in emerging markets. Over the next decade, they will be the companies addressing the most pressing challenges in countries where the potential for growth is ripe. As a result, they will shape the landscape in which they compete, attract and retain superior talent, build stronger brands and enjoy stronger relationships with customers in the fastest growing global markets.

More blog posts by Jonathan Berman

Bribery Happens


By Jonathan Weil, BloombergView
Today the American people learned an important lesson about bribery. It can happen all by itself. There’s even a name for this: immaculate corruption. And it works just like the old saw about guns. People don’t bribe, corporations do.

This explains why Hewlett-Packard Co. is paying $108 million to resolve some overseas-bribery investigations by the Justice Department and the Securities and Exchange Commission, while no individuals are being accused of anything. Because no living, breathing people did anything wrong (or at least none whose names we know of). Only Hewlett-Packard did.

Another important lesson our government taught us today is that Russia is corrupt. Who knew? So is Mexico. Poland, too.

The U.S. has laws to prohibit companies from paying off government officials in other countries to win business. We can presume Hewlett-Packard reasoned that the bribes were necessary because its printers, computers and tech services were so inferior in quality that this was the only way it could sell them. And I sympathize completely.

You could even make a semi-coherent argument that Hewlett-Packard had a duty to try to get away with breaking these laws for the sake of maximizing shareholder value. Back in 2000, when the first of the bribes was immaculately conceived, the Justice Department and SEC hardly ever enforced the Foreign Corrupt Practices Act. But then they started enforcing it again. So, practically speaking, it became illegal again to bribe corrupt government officials in Russia, Poland and Mexico. Hewlett-Packard found itself on the wrong side of the thin blue line.

Truth be told, the company’s biggest mistake was not being a bank. Neither the Justice Department nor the SEC has ever used the Foreign Corrupt Practices Act against a bank.

How bad was the conduct in this case? The bribes to the government officials in Poland helped Hewlett-Packard win a contract with the Polish national police agency. In Russia, they helped Hewlett-Packard retain a contract with the federal prosecutor’s office. That’s so bad it’s good. Like I always say, if you’re going to bribe anyone to get a government contract, you might as well get it with the cops.

So now Hewlett-Packard is going through the usual drill of non-remorse. The company’s Russian subsidiary agreed to plead guilty to criminal charges in a federal court in California. Its Polish unit got a deferred-prosecution agreement. And its Mexican subsidiary got a non-prosecution agreement. So the Mexican subsidiary had better watch out, because if it gets caught breaking the law again then it might have to suffer the slightly more severe punishment of a deferred-prosecution deal, like its Polish cousin got.

As for the people who did the bribing? Well, again, that’s the best part: There weren’t any. Because if there were, then the SEC and Justice Department surely would have filed some sort of claims against them. And this way, everyone is much happier. Hewlett-Packard pays its toll without anyone there getting in trouble with the law. The government lawyers get help with their case quotas. And Hewlett-Packard’s tall-building lawyers can claim to be heroes.

Justice has been served.

To contact the writer of this article: Jonathan Weil at jweil6@bloomberg.net.

They WILL be asking you to pay bribes, WHAT WILL You do? – A Chapter from the Fluent In foreign Business book

READ MORE ON THE H-P bribery case

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