Company bosses talk up value of local production

A BUSINESS OPPORTUNITY: The irony is that when more walls show up, it is a good opportunity for services companies to help do business across those walls. - MR VISHAL SIKKA, chief executive of IT services provider Infosys, on Mr Trump's promise to br
A BUSINESS OPPORTUNITY: The irony is that when more walls show up, it is a good opportunity for services companies to help do business across those walls. - MR VISHAL SIKKA, chief executive of IT services provider Infosys, on Mr Trump's promise to bring back manufacturing jobs.
HOW TECHNOLOGY HELPS: With 3D printing, for example, some of the supply chain will re-shore and come back to the local economies. - MR FRANS VAN HOUTEN, chief executive of Dutch healthcare technology group Philips, on technological advances helping c
HOW TECHNOLOGY HELPS: With 3D printing, for example, some of the supply chain will re-shore and come back to the local economies. - MR FRANS VAN HOUTEN, chief executive of Dutch healthcare technology group Philips, on technological advances helping companies to shorten their supply lines.
THE PRICE OF GROWTH: The issue on Trump is what you win on the US swings, you may lose on the international roundabouts. - MR MARTIN SORRELL, chief executive of WPP, the world's largest advertising agency, on the cost of US growth for nations elsewhe
THE PRICE OF GROWTH: The issue on Trump is what you win on the US swings, you may lose on the international roundabouts. - MR MARTIN SORRELL, chief executive of WPP, the world's largest advertising agency, on the cost of US growth for nations elsewhere.
NO CHINA-U.S. TRADE WAR: I think that China and the US should never have a trade war, will never have a trade war, and I think we should give President-elect Donald Trump some time - he is open-minded, he is listening. - MR JACK MA, chairman of Chine
NO CHINA-U.S. TRADE WAR: I think that China and the US should never have a trade war, will never have a trade war, and I think we should give President-elect Donald Trump some time - he is open-minded, he is listening. - MR JACK MA, chairman of Chinese e-commerce company Alibaba Group, on the possibility of a US-China trade war.
AVOIDING TWITTER ATTACK:  Let's try and pre-empt that tweet by having a long-term discussion about the supply chain. - MR RICHARD EDELMAN, chief executive of communications marketing firm Edelman, on preparations to adjust to the Trump era.
AVOIDING TWITTER ATTACK: Let's try and pre-empt that tweet by having a long-term discussion about the supply chain. - MR RICHARD EDELMAN, chief executive of communications marketing firm Edelman, on preparations to adjust to the Trump era.

CEOs in Davos change tack on topic of outsourced supply chains to head off criticism from Trump

DAVOS • Business leaders in Davos, traditionally the high priests of globalisation, are talking up the benefits of local production this week to shield themselves from criticism from incoming US president Donald Trump.

Elected on a jobs-focused "America First" platform, Mr Trump has taken to Twitter to rebuke major companies such as General Motors, Lockheed Martin and United Technologies, either for making goods in Mexico or for the price of their products.

At this week's gathering of business and political elite in the Swiss Alps synonymous with free markets at the World Economic Forum, company bosses said they were now preparing to adjust to the Trump era.

"The basic message is to be more national, don't just be global," said Mr Richard Edelman, chief executive of communications marketing firm Edelman.

"Let's try and pre-empt that tweet by having a long-term discussion about the supply chain."

General Motors on Tuesday highlighted moves which it said would add nearly 2,000 US manufacturing jobs, including a decision to shift some production of axles to a US factory rather than having them supplied from Mexico. The vehicle maker said it wanted to "build where we sell".

"There is no doubt we need to adapt," said Mr Carlos Ghosn, chief executive of Renault-Nissan. "All car makers have to revise their strategy as a function of what is coming."

At the same time, companies are reviewing potential mergers and rethinking job cuts, fearing the stigma of being labelled "anti- American".

Adding to the incentive to increase US manufacturing is the promise of lower corporate taxes under the Trump administration. "It could mean increased investment in the US," said Novartis chief executive Joe Jimenez.

Mr Vishal Sikka, chief executive of Infosys, which provides IT services to large companies including banks, said his company expected more business from helping companies to localise. "The irony is that when more walls show up, it is a good opportunity for services companies to help do business across those walls," he said.

The move to go local in response to Mr Trump looks set to fuel a trend already evident in some industries, including food and fashion, which are trying to tap into consumer demand for home-grown materials and production. In some cases, technological advances are helping by making it easier for companies to shorten their supply lines.

"With 3D printing, for example, some of the supply chain will reshore and come back to the local economies," said Mr Frans van Houten, chief executive of Dutch healthcare technology group Philips. "I think we will see supply chains becoming more regional."

Such tech-fuelled localisation may be a competitive advantage for multinational companies in a world of increasing geopolitical uncertainty, but it brings fresh challenges for developing economies, which could lose out as jobs return to richer countries like the United States.

Mr Martin Sorrell, chief executive of WPP, the world's largest advertising agency, said US growth could come at the cost of nations elsewhere. "The issue on Trump is what you win on the US swings, you may lose on the international roundabouts."

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 20, 2017, with the headline 'Company bosses talk up value of local production'. Print Edition | Subscribe