United States

Good morning, everyone!

It's great to be here in Jackson with leaders of the state's manufacturing, government, and economic development communities.

Over the past few years, I've enjoyed spending some time back in Mississippi.

• In Starkville, where we have a small home and attend Mississippi State football games;
• In Cleveland, working with my alma mater, Delta State University; and
• In Greenwood, visiting with friends and family.

I'll be the first to admit I'm very proud of my home state.

For me, Mississippi holds many special memories. I married here. My kids were born here. And, I started my career here.

Mississippi holds many friendships.

And, it holds many great possibilities.

That's why I do what I can to ensure that today's and tomorrow's generations of Mississippians prosper and thrive.

To that end, I'm very encouraged by the work of Governor Barbour and his administration.

I'm glad to see the Governor remains firmly committed to investing in education and to growing the industries of the future like: renewable energy, broadband communications, healthcare, and advanced manufacturing.

That's a vision which puts Mississippi on the right path to long-term growth and to creating and sustaining good jobs.

This morning, I'd like to comment on a few of those important goals from my perspective at UPS.

One of the distinctive things about UPS as a business is its wide-ranging view of the ebb and flow of global commerce.

Each day, UPS handles the equivalent of two percent of world GDP through operations in 200 countries and territories.

In essence, we serve as a conveyor belt for global commerce.

From that point of view, I see three focal points that will be crucial to the economic future of our state and to manufacturers.

They are:

• global trade,
• education as a life-long endeavor, and
• fine-tuning our businesses to grow in a world of increasing risk.

Let's take them one by one.

I want to start with a question about exporting and jobs.

Between the three-year period of 2005 and 2008, how many new jobs do you think exporting was responsible for in Mississippi?

Would you say 5,000, 10,000, 20,000?

The answer is 45,000.

That's the equivalent of more than twice the population of Greenwood - my home town.

It's a good illustration of the power of trade in our global era.

How did I get that number? Here's the math.

The U.S. Department of Commerce estimates that every one billion dollars in increased export sales results in 15,000 jobs created.

In 2005, Mississippi exports exceeded four billion dollars. By 2008, state exports had grown past the seven billion dollar mark.

Three billion dollars more in exports times 15,000 equals 45,000 new jobs over just three years.

And those aren't ordinary jobs. Export jobs tend to pay 15 percent more in wages and 33 percent more in benefits.

As recently as the first two months of this year, our state ranked a lofty second in the nation in increased exports - a 12 percent gain year over year.

This was during a two-month period when 46 states were showing decreases.

So, in my mind, one of the state's bright economic indicators has been this recent impressive record of export growth.

Also encouraging is that nearly a third of this expansion came from small and mid-size companies - the state economy's growth engine.

When it comes to jobs at UPS, for every 40 new international packages that are imported or exported by our customers, a new U.S., UPS job is created somewhere in our system.

There are also international growth stories here in Mississippi at Viking, Peavey Electronics, Indianola Pecan House and others as well.

Of course, the global recession has put the brakes on global trade.

But there's every reason to believe that just as the regions of the world went into this global recession together, they'll emerge from it together as well.

A resurgence in trade could become one of the "green shoots"that economists are talking about.

Trade could lead us out of the downturn and spark a robust recovery.

The biggest "yellow weed"we see is the human emotion of fear in the form of protectionism.

History teaches that protectionist measures in the 1930s worsened the impact of the Great Depression.

We don't need to make that mistake again.

Yet, there's cause for concern.

Even though the G-20 leaders of the world's top economies signed a pledge last November to spurn protectionism, 17 of them have implemented 47 measures that do the opposite.

The U.S. is no exception. There is proposed legislation that would limit cooperation between U.S. and foreign airlines.

There is the "Buy American" rule in the stimulus package. It would require that only U.S. iron, steel, and other goods be used for public buildings and public works funded under the bill.

A study earlier this year by the Peterson Institute for International Economics estimated that "Buy American"provisions could save 9,000 American jobs, compared against 650,000 jobs supported by foreign government procurement of American exports.

Steps like these add barriers to global trade. They invite mirror-image trade restrictions abroad that threaten U.S. exports.

They risk prolonging the global recession.

And they threaten to slow the pace of a healthy recovery.

On the other hand, the World Trade Organization estimates that cutting trade barriers across agriculture, manufacturing, and services by one-third would add more than $600 billion dollars to the world economy.

That's the equivalent of adding an economy the size of Canada to the world market.

The U.S. and Mississippi have a lot to gain from open trade.

The U.S. is still the world's leading manufacturer, and the world's largest exporter of goods and services.

For our state's part, the impact of a single bi-lateral trade agreement - the U.S.-Chile Free Trade Agreement of 2004 - has made a significant economic impact.

Prior to this bilateral trade agreement, exports from Mississippi to Chile were six million dollars.

In an eight-month period between January and September of 2008, exports to Chile - arguably one of the best-fiscally managed Latin American economies - had grown to $177 million dollars.

Of course, trade is also good for UPS.

But it's become increasingly attractive to manufacturers of all sizes.

One of the most dramatic changes I've seen in my career is the tremendous boost technology now delivers to the smallest as well as the largest of exporters.

Shipping technologies have greatly simplified the logistics complexities of cross-border commerce.

And there are also a number of feet-on-the-street resources available to help exporters.

One way UPS brings these resources to manufacturers is through a partnership with the U.S. Commercial Service.

The agency has seasoned business development pros deployed across the world to help U.S. firms establish solid offshore relationships.

Now, what about the often-voiced argument that the global economy has caused disruption and lost jobs?

There's some truth to that argument. But productivity gains have eliminated many more jobs.

That leads me to my second discussion point - lifetime education in a transforming world.

Job changing and job shifts go hand in hand with transformation.

And transformation is not new. It's been a part of my life. It's been a part of our ancestors' lives.

In the 19th century, Mississippi and the South saw an exodus of workers to the factories of Northern cities like Pittsburgh and Chicago.

Some of our ancestors worked on massive projects like the transcontinental railroad.

Post World War II, we saw a lot of manufacturing jobs coming back to Southern states due to right to work policies.

That's a huge factor in the location of operations of overseas automakers like Nissan and Toyota locating in Mississippi and other Southern states.

We live in a world of comparative advantage.

Tiger Woods is going to play golf globally, and someone else is going to paint his house!

What role will Mississippi play in this new world?

So much depends on the Governor's priority of education - from elementary, secondary, university, and retraining of displaced workers.

Our school systems must prepare our citizens to compete under today's rules.

Nearly 20 years ago, Viking Appliances launched an innovative education initiative in Greenwood.

Viking converted a closed Medart (Me-Dart) Locker Plant into a manufacturing facility making ranges. In doing so, Viking retrained many of the former Medart metal workers.

Since then, a lot of ranges have been sold worldwide and along the way the company has taken advantage of state workforce training programs.

And along the way, Viking has created a new middle class in one of the state's poorest counties.

One of Viking's newest local ventures is a charter school to serve the community and children of employees. I spoke at the school a couple of years ago, and it's a high-energy learning center!

The lesson learned through the Viking experience is that new opportunities often accompany transformation.

And a human variable accompanies it as well.

It's the will to learn, and the chance to learn - education.

It's especially important to manufacturing's future.

I know all of you appreciate the increasing requirement for technology literacy in manufacturing.

For a manufacturing worker armed with technology skills, the door is wide open to a high-paying, rewarding job.

Too often that perception doesn't get through to many young people and those outside the industry.

They may still think of manufacturing in 20th century terms.

In overcoming that perception, I applaud the "Make Things Happen" communications campaign now going on in south Mississippi and the Gulf Coast.

It informs the community on a local business need - a shortage of metal workers - and the opportunity for individuals to train for some great career opportunities in that field.

It links to training programs at three community colleges in the area - Gulf Coast, Pearl River, and Jones County.

This is a perfect example of matching private sector need to community college resources to create attractive jobs for citizens.

A personal focus for me has been to provide future leaders across Mississippi industries a global perspective on business.

That's one reason I've enjoyed working with Delta State's School of Business to establish an annual International Business Symposium.

This year is the fourth of a 10-year commitment.

The Symposium brings together leaders from the business, academic, and non-government organization worlds.

These professionals share their views and experiences with Delta State students.

We've learned that nothing expands students' horizons more than hearing firsthand from the experiences of global business leaders.

So far, I've talked about the importance of trade and education in a world of comparative advantage.

But what about some of today's pressing challenges you have to manage in growing your manufacturing firms?

That brings me to my final discussion point - fine-tuning for the road ahead.

One of the things we've done recently is pick the brains of many of the world's largest manufacturing and global supply chain leaders.

In a recent UPS and Economist Intelligence Unit survey, we asked 350 C-level and senior executives who oversee worldwide supply chains about the subject of risk.

Just one in six said they were comfortable in their ability to manage risk.

Perhaps that's no surprise given the events of 2008.

• We had defective toys from Asia early in the year,
• Four dollars a gallon gasoline prices at the pump in the summer,
• Pirates later in the year - in the Indian Ocean and on Wall Street, and
• The collapse of credit and housing markets.

In addition to such blindsiding events, I know I don't have to tell you that manufacturers face all sorts of other risks in their day-to-day operations.

Risk could come in the form of natural disasters, warehouse fires, flu epidemics, navigating political and regulatory hurdles here in the U.S. and offshore, or complying with impending environmental guidelines.

Many of our Economist survey C-levels said they're looking for business partners who can help them manage risk, and who can bring fresh thinking to position them for sustainable growth when the "green shoots"sprout.

They said they were interested in aligning with financially stable, resourceful, and globally experienced partners who can help them re-engineer their organizations to be more resilient to work smarter.

Here are a few strategies that customers tell us are key and that have guided our own energies and investment:

• One is establishing flexibility and redundancy in warehousing and inventory management. They want to be able to work around a "single point of failure.”
• A second key is using technology to achieve 360-degree, order- to- cash visibility. All of an operation's systems are optimized when they're tied together. That's one of the reasons we at UPS have invested more than a billion dollars a year over the last 15 years on technology.
• A third key is getting help in navigating unfamiliar cultures and regulatory climates in expanding to offshore markets. You don't have to re-invent the wheel. Seasoned partners can assist with best practices and in building relationships.
• Fourth, we all need strategies to meet impending environmental compliance requirements. In many cases, we can also achieve efficiencies through conservation measures that are green and lean.

At UPS, we've developed a Carbon Footprint Analysis that provides customers with a greater awareness of their company's overall impact on the environment.

That wraps up the three areas I see from a UPS viewpoint that can make a big difference for Mississippi manufacturers and for our state.

If we can take advantage of trade, commit to lifetime education, and engineer flexible solutions within our businesses, we'll be well positioned to compete in today's world of comparative advantage.

Thank you.