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VOL. 126 | NO. 85 | Monday, May 2, 2011

Panel: Globalization Will Shape Economic Future

By Andy Meek

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Dexter Muller, senior vice president of community development with the Greater Memphis Chamber, has a tongue-in-cheek quip at the ready to describe the manufacturing plant of the future.

Muller shared it with a roomful of business professionals when The Daily News hosted its seminar on globalization and the local economy Thursday at the Memphis Brooks Museum of Art, sponsored by Butler, Snow, O’Mara, Stevens and Cannada PLLC.

As globalization continues to flatten the business playing field, pit economies and markets from around the world against one another and hasten continued technological advancement, Muller said the manufacturing facility of the future will be a $400 million plant – with two workers.

And those two workers will be a man and a dog.

“The man’s job will be to feed the dog,” Muller said. “And the dog’s job will be to make sure the man doesn’t touch the equipment.”

It was an obviously exaggerated reference to the need for fewer workers to do the work that will take place at ever bigger, pricier and more advanced manufacturing facilities.

Banter aside, Muller’s point – and those of his peers on a four-person panel that also included David Waddell, president and CEO of Waddell & Associates; Olin Atkins, partner with Atkins Capital Management LLC; and Chad Cunningham, principal with IronHorse Capital Management – was not lost on the audience.

The seminar’s takeaways included the idea that one of the biggest economic stories in play right now is the undeniable rise of emerging markets and the muscle-flexing that goes hand in hand with rapidly improving standards of living in places such as China.

To that latter point, Muller said he was at a presentation a few years ago at which FedEx founder Frederick W. Smith said he could distill the concept of economic development into one word: China.

“Congratulations – you are the envy of the rest of the planet,” Waddell told the roomful of business professionals who also, of course, are American consumers.

His point was that countries around the globe increasingly want what they believe Americans have. And they’re shucking off old political and economic constraints to try and get it.

“What’s really driving everything that’s happening on the planet right now is the convergence of global living standards,” Waddell said.

Over the last decade, Waddell said, emerging markets have contributed to more than 70 percent of growth on the planet – a slice that’s only getting bigger.

And he said that should cheer American companies and investors for at least one reason: Such growth will bring profit opportunities.

“This growth creates tremendous opportunity for us to sell and export into that demand,” Waddell said.

For the individual investor, it means a lot has changed from the old stock-picking days of deciding between, for example, Coca-Cola or Pepsi.

Now, thanks in large part to the trend of globalization, Waddell said the choices are, “What company do I want, what country do I want and what currency do I want.”

International investing might give some investors pause because of fear of the unknown and because of having a greater comfort level of putting their money into U.S. opportunities. But, Atkins said, “International is where you ought to be.”

Atkins, though, said globalization also cuts the other way. And he said if the U.S. as a whole does the things it needs to do on the governmental and economic fronts, it could create a deflationary environment down the line.

That is, an environment with the hard-to-break negative economic feedback loop of less consumer spending, leading companies to cut prices, which eats into profit margins.

“We see some dislocations coming (in the economy),” Atkins said. “They will be investment opportunities. I’m not pessimistic. I am cautious.”

PROPERTY SALES 97 418 8,253
MORTGAGES 112 508 9,293
BUILDING PERMITS 194 1,059 18,126
BANKRUPTCIES 46 208 5,367