Light in the Chaos
Listen carefully and Erik Peterson, hardly an optimist, is talking about the real opportunities for “those who get it right” in a rapidly changing new world economy. Peterson, managing director of A.T. Kearney’s Global Business Policy Council and senior advisor at the Center for Strategic and International Studies, described key areas of concern and growth for metals and manufacturing at the Specialty Metals Conference.
For those who see the world as a confusing business environment, Peterson quotes management guru Peter Drucker: “Strategy is a sense of direction around which you improvise.”
Peterson reminded the audience that amid the change in global energy flows, the United States would become the world’s largest oil producer this year. And this means new opportunities for domestic suppliers to service emerging energy intensive, critical sectors of the world economy. These will include the growing demand for increasingly scarce water to the development of global mega-cities and their thirst for electricity.
In just 15 years, Peterson said, one half of the world’s population, some 3.9 billion people, will be living under “severe water stress.” At the same time at least 37 cities each with more than 10 million inhabitants sprawl across the globe, including New York City, Los Angeles and Chicago, but also Tokyo, Delhi, Shanghai, Mumbai, Mexico City and Sao Paulo among the ten largest. How do you say “housing, general construction, and infrastructure opportunity”?
The growing demand for food from developing and developed nations will also put pressure on global agriculture to improve irrigation efficiencies, increase production and establish new and longer supply chains—growth opportunities for metals and manufacturing. “The world will have to produce 70% more food for an additional 2.3 billion people by 2050,” Peterson said.
Peterson said if the United States’ predicted GDP growth of 2.8% to 3.5% over the next few years is too frustrating, several developing economies should grow 4.3% this year and nearly 5% next year, with all the expanding markets that will entail.
He pointed out the convergence of technologies—robotics and artificial intelligence, biotech and genomics, and 3D printing—is already changing the face of industry, medicine, factories, and science among others. “Industrial robot sales will increase 9% this year,” Peterson said. “The Gartner group says that the 3D printing market will begin doubling sales year over year in 2017, which could rapidly change the basis of production.”
Peterson said if the United States’ predicted GDP growth of 2.8% to 3.5% over the next few years is too frustrating, several developing economies should grow 4.3% this year and nearly 5% next year, with all the expanding markets. This next wave will include China, Chile, Malaysia, Peru, Poland, the Philippines, Mexico and Columbia.
Peterson described seven pressure points that remain “areas of special concern, and that the metals business need to track.” Resource volatility, the economic strength of the United States, changing technology, and the global war for talent, top his list. Changing patterns of global economic growth, interest rates, and regulatory systems that are under increasing strains also deserve special attention.
Business leaders could, of course, choose to ignore these potential trouble spots, Peterson said, quoting W. Edwards Deming, another management wizard who a bit cynically noted: “It is not necessary to change. Survival is not mandatory.”