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Globalization and Trade
David Abney, UPS Chief Executive Officer

April 4, 2014 - Delta State University - Cleveland, MS: UPS Chief Operating Officer David Abney and an alumnus of Delta State University, spoke at the school’s annual International Business Symposium. David calls for today's graduates to consider a career in international trade. Globalization has slowed down in the last few years and the need for supporting global trade is important because easing trade restrictions can increase the global economy by $600 billion.

Driving onto campus earlier today, I was excited to see the progress being made on the new Grammy Museum next to the Alumni–Foundation House.

The first Grammy Museum outside of Los Angeles. Right here in Cleveland, on the campus of Delta State. Who would have thought it?

Not a kid from Greenwood, Mississippi, who arrived on this campus four decades ago wide-eyed and curious. That’s for sure. 

But as much as things change on my favorite college campus and in the Delta, they also stay the same.

This time of year, I know I’ll see all manner of crops taking root in the Delta’s rich alluvial soil. I know I might spot white-tailed deer and rabbits in the fields and woods. And I know there’s a good chance I’ll see a familiar face as I pull in off of Highway 8.

Sherry and I don’t get back here as often as we would like. But when we’re here, we enjoy every minute.

I especially enjoy the fact that Cleveland’s cultural elite continue to appreciate my southern accent.

So I welcome the opportunity to come home and to be part of the ninth annual International Business Symposium.

But I don’t want to dwell in nostalgia tonight. I want our focus squarely on the future, not the past.

To do that, I’m going to talk about two words, two words that were considered dirty words by some people in these parts not so long ago.

The two words are globalization and trade.

And for the purpose of our discussion here tonight, they might as well be the same, because they have been painted with the same broad brush.

Some of you are old enough, as I am, to remember comedian George Carlin and his bit about the “seven words you can never say on television.”

If Carlin had visited this part of the world following NAFTA approval and asked many of the local farmers, manufacturers and business owners their opinion of globalization and trade, he might have added those two words to his list.

Now I’m not going to turn this into a history lesson. That’s better left to DSU professors more learned than me.

But I will just remind everyone that the early knocks on globalization and trade went something like this:

  • Globalization makes the rich richer and the poor poorer.
  • Globalization ships jobs from our communities to other countries.
  • Globalization and trade creates multinational corporations that encourage all manner of social injustices, unfair working conditions and ecological damage.

Now, I will acknowledge that the opponents of globalization and free trade won over a few converts in that day. 

But I’ll argue that with the passage of time, the proponents of these two megatrends have made their case far more convincingly.

I’m convinced that global free trade is one of our world’s most important megatrends.

The evidence that trade is a powerful force for good, promoting economic growth, creating jobs,making companies more competitive, and lowering prices for consumers is seen around the world, in both developed and developing economies.

We all know about China’s meteoric rise among the world’s leading economies.

But did you know that in the next three decades emerging economies led by India, Brazil, Russia, Indonesia, Mexico and Turkey are projected to grow faster than the U.S., Japan, the UK, France, Italy and Canada?

What’s more, infusions of foreign capital and technology, the result of more robust trade, are lifting some of the world’s poorest countries out of poverty.

As trade and investment have ramped up in the last two decades, the poverty rate in the developing world has dropped by half, from 42 percent to 21 percent.

We firmly believe that additional trade will help the World Bank meet its goal of bringing the last one billion people out of extreme poverty by 2030.

Of course, this same period coincided with the decline of communism and the spread of capitalism.

But I believe the spread of free trade during that same period was equally important for companies hoping to expand their operations.

It also made it easier for a farmer, a manufacturer or a business person in Mississippi to sell their goods and services not just in the Delta but around the world.

I’m going to date myself again here, but does anyone remember the famous New Yorker magazine cover that showed midtown Manhattan as the world’s only civilization?

The tongue-in-check illustration depicted the rest of the world as distant afterthoughts. It was pretty funny, if you lived in midtown Manhattan.

Much of our nation, the Delta included, was probably guilty of that same perspective back in the day when a backlash to globalization and trade was taking root.  

That sentiment has largely been turned on its head. The preponderance of evidence is just too overwhelming to ignore.

In addition to the growth of emerging economies, we’re also seeing the benefits of trade much closer to home.

According to the U.S. Department of Commerce, total exports from Mississippi contributed in 2013 to the nation’s record-setting exports of goods and services.

More than 2,000 companies exported from Mississippi locations in 2011, the last year those statistics are available.

More than 75 percent of those companies were small- and medium-sized firms with fewer than 500 employees.

I bet some of you work at some of those businesses or know someone who does.

Those businesses send petroleum and coal products, chemicals, transportation equipment, computers, electronics and paper to the world’s markets.

The state’s largest trading partner last year was Panama, which received $2.2 billion in exports from Mississippi. That’s from a total $12.4 billion in exports from this state.

Mexico, China and the Netherlands followed Panama as the state’s leading trade partners in 2013.

It’s also interesting to note that Mississippi, the only state with both Nissan and Toyota plants,increased exports by 52 percent to Japan last year.

These exports helped Mississippi move into the top 10 U.S. states in which to do business.

You needn’t have followed the economic fortunes of Mississippi for half a century, as many of us have, to declare that big-time progress. 

Just as globalization has changed how the world sources materials, shops for goods and services and collaborates on breakthrough innovations, it’s also dramatically changed our business at UPS.

For decades, UPS moved goods, information and funds along independent pathways because that was our only choice.

But in a smaller, flatter world, and with the help of technology, we have integrated all three of those flows so they now move together, in sync.

A single flow has replaced three separate ones. We call it synchronized commerce.

You’ve probably seen that term on the side of our brown trucks and in our TV commercials.

Synchronized commerce incorporates sourcing, manufacturing, order entry, fulfillment and returns into one continuous and unified business process.

In combination, these capabilities have transformed UPS from a company providing a transportation service to one providing a business solution.

The reinvention of our company as a synchronized commerce solution is the most dramatic of the several companywide reinventions I’ve experienced in my 40 years at UPS.

When I went to work for UPS during my freshman year as a part-time employee, loading packages onto trailers at night, we had just been authorized to deliver our customers’ packages across state lines.

After graduating, I drove package cars, that’s what we call our brown delivery trucks, for a year before getting a break to enter management.

Since then I’ve seen several other dramatic transformations.

I’ve relocated eight times in my career as I took on new responsibilities.  I can still remember my first move away from the Delta, to Nashville, in 1984.

On Friday morning, I have another chance to speak here on campus before we head back to Atlanta.

My audience on Friday will be made up of mostly students, and I’m going to encourage them to consider a career in trade.

I’ll tell them that the international trade industry is a major driver of the U.S. economy.

tell them that international trade supports millions of jobs in the United States in nearly every sector of the economy.

I’ll let them know that exports in particular are generating significant new employment opportunities.

As a matter of fact, in the last research I saw, jobs supported by exports grew three times faster than job growth in the rest of the economy.

In fact, globalization has led the worldwide surge in economic activity for the last three decades.

It has created hundreds of billions of dollars in shareholder value. Productivity and standards of living have risen significantly because of it. And companies large and small have competed as never before.

But globalization has lately shown signs of slowing down.

We’ve seen those signs from investors, from some of the world’s largest banks and from companies themselves, who are increasingly reluctant to invest in factories at home and abroad. 

Our belief is that trade needs some help if it is to continue to provide the glue that connects the global economy.

Specifically, it needs some help from policymakers and lawmakers who influence trade impediments.

Tariffs, customs fees, tariff codes, customs regulations and voluminous documentation requirements add time and confusion to the process of moving goods from point to point. 

These are all hurdles that slow the efficient and affordable flow of goods and services for an untold number of businesses.  

Line them up around every curve in the road and they make international shipping far more complex and frustrating than it needs to be.

These obstacles to global trade concern me for a number of reasons.

They concern me because many of the companies affected by these obstacles are UPS customers.

Our 400,000 employees worldwide come to work every day with one goal in mind: giving our customers an advantage in the global marketplace.

So, obviously, our futures and the health of our businesses are closely aligned.

But barriers to global commerce should concern all of us. Including everyone in this room who wants to see this state’s economy continue its steady climb.

Overall, the World Trade Organization estimates that reducing trade barriers by one third across agriculture, manufacturing and services would add $613 billion to the world economy.

But for that prediction to become real, political leaders, NGOs and others will need to work together to make tough decisions.

I’m pleased to say that we’re making progress.

The most tangible signs of that are in significant and far-reaching trade agreements designed to address the trade obstacles just mentioned.

We estimate that a comprehensive T-TIP agreement could boost UPS volume by 131 million packages and support an additional 24,000 jobs, some of them in Mississippi, I’m sure, over the next 10 years.

There’s also something called the Trans-Pacific Partnership.

The TPP is a regional free trade agreement involving the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Japan.

If implemented, this is a trade pact that would cover nearly 40 percent of the global economy and make it the world’s largest free-trade agreement.

In both cases, with TTIP and the TPP, the stakes are high.

It’s not overstating to say the agreements could be game-changers for international commerce.

Trade being considered would make it easier to move goods and services across borders, directly impacting any business, large or small.

Removing impediments to trade opens new opportunities for growth.

But if you pay attention to the quagmire that is our political landscape these days, you know any agreement will not come easily or quickly.

So at UPS, we’re encouraging lawmakers, but we’re not waiting on them.

We’re bullish about a future built on the untold possibilities of global trade.

So we’re continuing to invest in technology, in systems and in people to accelerate trade and support our customers.

We have miles to go, and we’re anxious to get there.

I’ll close with just two more words, the same two words we began with a few minutes ago: globalization and trade.

I hope I’ve given you some additional reasons they should no longer be part of anyone’s list of forbidden words.

Instead, I hope you consider them the keys to a brighter future, here in the Delta and elsewhere.


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