I wasn’t disappointed at the May 26 luncheon sponsored by The Chicago Council on Global Affairs. Jim McNerney, president and CEO of The Boeing Co., and chairman of the re-established President’s Export Council, spoke to a packed house. My take-aways…
1. US-China interdependence in business is growing every day. Today trade between the two countries totals nearly $400 billion a year – or more than a billion dollars a day.
2. China’s demand for imported goods is being stoked by a growing middle class and massive government spending on infrastructure.
3. While the relationship between the US and China will always be complex, global interdependence will keep both nations motivated to work out their differences constructively.
Some further thoughts…
Ultimately, exports will play a critical role in America’s near- and long-term economic growth. The Obama administration aims to double US exports over the next five years in support of 2 million jobs here at home. China is the third-largest US export market, after Canada and Mexico, with $69.6 billion in sales during 2009, down just 0.2% over 2008 – by far the best record for a major export market in 2009. US exports to the rest of the world combined fell nearly 20% in 2009.
Export success stories…
- Caterpillar – 2009 Sales: $32.4 billion, including $10.4 billion exports from the US, of which $2.5 million was to Asia Pacific.
- Boeing – a leading US exporter, accounting for 35% of total US exports of aerospace products and services in 2009. Boeing employs 151,000 people in the US. Officials say that more than 1 million American workers contribute to the company’s supply chain.
- During 2009, the US exported $46.1 billion in medicinal, dental and pharmaceutical preparations, up 14.1% from 2008 (4.4% of total US exports).
Ultimately, US-based companies compete and win through game-changing innovation of their products and services, fueled by advancing technologies and ingenuity.
Electrification of the motor vehicle is an area of much increased R&D activity of late. The popularity of new powertrain technology will only grow. Market leaders will be those companies that have their fingers on the pulse of consumer trends and behavior.
- Strong consumer demand and the need for environmentally friendly vehicles with low emissions have resulted in tremendous innovation and advance in powertrain technology.
- Differing infrastructures and consumer needs around the world will require a portfolio of vehicle solutions. Successful auto companies will be those best able to accommodate the varied needs and preferences of their global customers.
- In a recent survey, over 10% of US drivers, which equates to approximately 20 million drivers, said they would consider purchasing a plug-in hybrid or electric vehicle. Even if only a small portion of the 10% are serious, there would still be enough demand to sell out the 2010 and 2011 production runs of the major and new manufacturers.
- Some of the biggest challenges for advancing the popularity of new powertrain technologies from the niche into the mainstream are access to charging stations, battery driving range and vehicle costs.
The Federal Reserve Bank of Chicago is preparing for Monday’s conference on the future of the auto industry (After the Perfect Storm). The meeting will focus on factors shaping the competitiveness of carmakers during the next decade. Four factors will receive attention: the existing uncertainty regarding engine technology, the need for flexible production systems, the extent to which carmakers need to globally integrate their product strategy, and the importance of successfully managing the supply chain.
I recently provided a client with an analysis of auto trends in the US. The ability to successfully market new powertrains will be key. Ten years down the road, who will develop the powertrain that carries the brand identication comparable to “She’s Real Fine My 409”?