Julie Meyer, CEO of Ariadne Capital in London and who also happens to be related to your editor, recently attended the World Economic Forum in Davos. She has written an excellent summary of the event, with some personal observations. Some of those comments concern areas that directly influence manufacturing and the effect of globalization, and are reprinted below.
- Overall the theme for DAVOS is the interconnectedness of the world; we cannot escape each other, so how will we live together?
- I have long been intrigued by Angela Merkel who is leading the party of the Right in Germany. She was a panellist on the European Competitiveness panel – "What’s the problem?" – along with Patricia Hewitt, the UK Secretary and Minister, and Henry McKinnell, the CEO of Pfizer and Klaus Zumwinkel, the Chairman of the Board of Management of Deutsche Post World Net. The Lisbon Accords of 2000 which promised to render Europe the most competitive region in the world within a decade were derided as being fantasy. Then McKinnell put it well by saying, "when a strategy is not working, more of the same is not the answer."
- European [political] leaders don’t have the backbone to take on the causes of the slow growth
- Trade Unions should be training their members for tomorrow’s jobs not trying to protect workers’ jobs of today
- We suffer from the "broken leg" syndrome in Europe; if one country has a "broken leg", the thinking is to break everybody else’s leg to be the same rather than to be best in class
- Globalisation is happening, and the political leadership doesn’t want to accept it.
As Digby put it, "India will have your lunch and China your dinner". Another friend of mine from Holland put it aptly that he felt that the trade unions should be held liable for the bad advice that they are giving their members.
- Dogs bark, regulators regulate. The countries with the highest level of regulation have the lowest levels of innovation.
- Europe talks too much in terms of Directives; Innovation occurs at night while the Government sleeps.
- "High Risk and Low Reward" doesn’t work. It’s still not culturally acceptable to want to get rich.
- The transactions cost of doing business in Europe are still very high, and a former Dean of INSEAD noted that 12 years ago people mentioned that the cultural attitudes towards wealth creation were unhelpful in Europe, and 12 years on, there’s not that much progress.
- Henry McKinnell gave very detailed evidence of how socialised [or government run] healthcare was destroying medicine in Europe. The effect on R&D has been devastating. Europe has a much weakened healthcare ecosystem because the markets are not driving the agenda; decreased innovation is the case.
- In Europe when an entrepreneur makes money, he or she might get investigated by the authorities and it’s assumed that they’ve done something illegal or wrong.
If you have a few minutes, I would highly recommend reading Ms. Meyer’s full summary of the event, including the economic, political, and social commentary not presented here.