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Busting the Myths of Global Trade

UPS Chief Operating Officer David Abney recently spoke to a group of business leaders in San Diego, delivering his own version of the Discovery Channel show “Mythbusters” about global trade.

In his remarks, the UPS chief operating officer addressed increasingly negative perceptions in the United States about trade, focusing on three myths.

Myth #1: trade costs U.S. jobs.

David discussed the long-term trend of automation and technology driving gains in productivity but declines in factory employment, especially repetitive tasks, and he cited research supporting this point. “What’s confusing is that manufacturing employment is down in this country, and we assume it’s because jobs are leaving the United States,” he said.

 “The reality is that most of the lost jobs didn’t go offshore—they disappeared. Many businesses need fewer workers because they use newer technologies. They must invest in new equipment and processes to improve productivity and to compete globally. Over time, businesses have swapped brawn for brains—a tradeoff that causes friction in the short term but boosts our productivity and standard of living in the long run.”

David said the key to adjusting is education and training, and he noted that an important skill in today’s economy is supply chain management. “Businesses need a diverse network of suppliers and flexibility to move goods and parts, often across international borders. New capabilities in logistics make this chain more efficient and productive, and these improvements can be a game changer for global businesses.”

Myth #2: U.S. businesses can’t compete globally.

David said U.S. businesses lead the world in innovation and entrepreneurism, especially in business services. Future success should involve building on these strengths and evolving to meet global customer needs.

“It’s true that many commodity products are made in places with low labor costs. Wage arbitrage is a factor in our global economy. But wages are only a portion of production costs, especially when you’re adding value. The secret sauce for adding value – the goal of most smart businesses – is innovation. And when you add reputation and branding, you establish pricing power.”

Looking in the rearview mirror, David added, is no way to win a high speed race of global competition. “If we worry too much about protecting the jobs of the past, we may miss the opportunity to nurture the industries of the future.”

Myth #3: the U.S. market is big enough for future business growth.

David noted emerging opportunities in global markets and urged U.S. businesses to increase exports, taking advantage of new logistics capabilities to reach a huge wave of new consumers.

“Less than 4 percent of small and medium sized U.S. businesses export – that’s far less than in other countries,” he said. “For instance, in Germany about half the small and medium-sized businesses export. And, what protectionists don’t tell you is that 95 percent of the world’s customers live outside the United States.”

His points are supported by a recent report to the U.S. President on the National Export Initiative, in which the White House proposes doubling U.S. exports over the next five years.

David closed his speech with this assertion: “Global trade may well be the most important and vital component of any serious effort to get our economy up and running again. The future of business isn’t threatened by global trade—it actually depends on it.”

Category: Global Impact, Logistics
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    Comments [4]

  1. It’s exciting to hear the COO recognize the key role of
    training in the process of growth and evolution.
    Especially since I develop training for a living here at the
    Big Brown.

    Myth # 3 sure is eye-opening!

  2. Who does he think he is kidding.

    If it were not for lower labor costs overseas, those
    products would still be being made in America.

    Ok they may be made on more productive machinery, but
    there would still be US jobs, not off shore jobs.

    This UPS guy wants everyone in the US to work in the
    distribution chain!

  3. Well there are some product that are low labor cost but
    the product himself are valuable. Wage arbitrage is a
    factor in our global economy. But wages are only a portion
    of production costs, especially when you’re adding value
    “The reality is that most of the lost jobs didn’t go
    offshore—they disappeared. Many businesses need fewer
    workers because they use newer technologies.

  4. Yes that UPS guy just wants to take over the worlds
    distribution chain.
    I agree that some jobs have disappeared due to better
    technology.
    But if that was the case why have the jobs gone overseas ?

    No its just greedy capitals eg Nike, make then for $2.00
    and sell them for $100

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