President's Perspective
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What is America’s Challenge in the 21st Century?

Special Note: Recently, I spent some time in Washington listening to a variety of governmental and business leaders as to their views on the overall competitiveness of our country and steps that we need to take right here in our back yards, so to speak, that can offer us viable solutions to the problems that we face. In the coming issues of Hosiery News, I will address a variety of areas that impact all of our businesses, regardless of what and where we manufacture, who our employees are, and the resources that are available to us today and tomorrow. I invite you to review these articles and share them with your colleagues.

As Americans we are continuously searching across borders to discover what is truly happening with the rest of the world, why is it completely transforming our socioeconomic environment, and no, this situation is not our fault. Sure, it can be easy to assume a reactive position, thus playing the role of the victim. I’m sure you’re familiar with the saying “You’re either part of the problem or you’re part of the solution…ultimately the choice is yours as to which group you’d like to belong.”

Maria Bartiroma, anchor/editor of MSNBC recently moderated a panel of some of America’s leading business professionals to more specifically address our biggest challenge here at home. According to Dr. Michael Porter of Harvard Business School, there’s a real paradox occurring….while our economy is growing and we are the engine behind that growth, our country has low employment. Many traditional jobs have been pulled away for the US, Japan, and Canada and moving to other parts of the world. The whole process of adapting to a global economy has created a sense of stress. The US creates 30 million jobs a year and loses 30 million which heightens the sense of insecurity. Developing the right skill sets commands training which in turn makes one more vulnerable in the workforce. Health care, pensions and inefficient training systems cause a degree of unrest. America led the process of globalization with company restructures and outsourcing. Some may find it ironic in that while we’ve been the most open with the rest of the world about our changing business practices, we have also felt the pressure the most.

“I believe we are rising above the storm,” commented Chad Holliday, Chairman and CEO of DuPont. “We are over warm waters and gathering strength, yet we must keep the following factors in front of us while moving forward.” The first is the free flow of capital; secondly, the rule of law…noting specifically to avoid overregulation as well as lawsuits gone wild; and thirdly, there needs to be more leadership in the areas of science and technology. Holliday believes that not only should we be efficient in applications, there is a tremendous opportunity for leadership in biotech, nanotech, and climate change technologies. He also emphasized the fact that there needs to be a partnership between government and the private sector in order for us to ultimately lead.

“Our competitiveness advantage is the fact that we have 20 year-olds in this economy which is not that common outside US,” added Floyd Kvamme, partner emeritus of Klein Perkins. “Technology transfer is in the heads of these 20 year olds.” This particular segment of our population doesn’t know what can’t be accomplished and perhaps is not tainted with a history of failures. He emphasized that research and development remains a key component and that we need to continue caring about manufacturing as someone needs to maintain it. Policies on tax procedures, however, need to be communicated more clearly and we need to be better educated on them. According to Kvamme, 70 % of off shore manufacturing is tax driven. It is important to remember that consumers ultimately pay product taxes, not the corporations.

While all agree that innovation is America's core strength, in many cases it is being forced thus resulting in flaws. Holliday believes that we are a resilient nation, yet we are missing a generation of people in the energy field. Access to development is limited and subsequently, cost structure is high. We need to focus on the efficiency of renewables. Venture capital has found it and is therefore investing in the energy section. “Who knows, the next Google might be an energy alternative,” he added. “It is important to re-learn what combustion is all about.” “We’re encumbering unnecessary costs and regulations,” added Porter. “We haven’t talked enough about human resources; we’ve lost our lead in k-12 education and our access to higher education. He also believes that the international trading system needs to be improved; we need to do a better job of protect our intellectual property and have access to subsidies.

So, if we are aware of our challenges, flaws and ways in which they can be resolved, how do we make it happen? The panelists agreed that it is important to maintain a good working relationship with China as it is quickly changing. India is also a growing factor and we need to be cognizant of the fact that different countries have different strengths. While we may see the acceleration of costs in both of these countries, they are most concerned at the seemingly waning focus on education and human resources in the US. Not only are we losing expertise, but also the number of service jobs as globalization has unmasked people without an education. All agree that higher education is accessible, but it needs to be more affordable as well as improve the k-12 learning segment. Movement toward a multi-disciplinary education is growing, i.e. for every 7 students who enter engineering only 2 graduates with the degree. The private sector can help by implementing retired professionals in teaching in new talent.

Energy security is also a big issue for this country. By bringing China and India into system, many believe their large and flexible markets are key to energy stability and a primary cause for companies currently relocating in China. We need to recognize production, access, efficiency, alternatives in energy along with consistency. We need to transform innovation into implementation.

So, how can the government be more productive and what is the number one move businesses can make? The government needs to be more attentive to not allowing mindless regulation but rather make it smart, simplify bureaucracy, and take a fresh and strategic look at international trading. Businesses need to question the necessity of quarterly performance reviews, move faster, open up educational opportunities and fix the health care system as everyone needs insurance. While America does have its challenges, it also has solutions…we can make a difference one step at a time…keep moving forward.