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FROMFEDEXTHE2015REVIEWOFGLOBALOPPORTUNITYTheideastrendspeopleplacesandpoliciesdefningglobalopportunityandconnectivityor2015.25ACCESSNISSANMEXICODrivingglobalandlocalchangep8TheNewNewEmergingMarketsp7TheCrossroadstoEverywherep2Megacitiesp5 ConnectwithAccess.Anytime.Anywhere.WantmoreAccessGetadditionalupdatesandsignuporemailalertspluscheckoutourreeappwitheaturesspecifcallydesignedortabletsandsmartphones.Connectormoreatfedex.comaccess. Within15yearstheglobalmiddleclasswillmorethandoubleinsizewithnearlyallothegrowthinthedevelopingworld.Andwithahostonewlyvibranteconomiespoisedorlitotheworldseconomiccenterogravityisshitingquickly.p4ShiftingEconomicPowersuperchargedINNOVATIONEXPLOSIVEGROWTHANDCOMPETITIONDigitalmanuacturing.High-resolutionsatelliteimagery.Sensor-drivensmartcities.Theseandahostootherinnovationsarerearranginghowweliveandwork.p18E-commerceandubiquitousaccesstodigitaltoolshaveloweredbarrierstoentryanduppedlevelsocompetitionacrossindustries.Andthisisonlythestart.p24ACCESSEXPLOREShowtransportationtechnologyandopenbordersconvergetolitpeoplebusinessesandcommunitiestohigherstandardsolivingaroundtheworld.Inthisissuewetakeadeeperlookataspecifctypeoconvergencetheintersectionophysicalandvirtualnetworksandthenumerouswaysitisreshapingtheglobaleconomy.p2ACCESSROUNDTABLEFedExleadersdiscusswhatsdrivingchangeandwhatsbeingchangedintodayseconomy.p32CONTENTS2015FEDEXCORPORATIONVicePresidentCorporateCommunicationsNEILGIBSONDirectorCitizenshipReputationManagementJENNYROBERTSONManagerGlobalReputationManagementNATASHIAGREGOIRECommunicationsAdvisorTRACEESMITHSeniorCorporatePhotographerSTEVECOOKHANLEYWOODExecutiveEditorCHRISMIKKOStrategicDirectorBRYANIWAMOTOExecutiveArtDirectorSANDYGIRARDProgramDirectorsLIZSCHINDLERERINWALTONKERNSProductionDirectorPAMMUNDSTOCKProjectManagerKELLIESCHMIDTWritersROBERTGIBSONMARYLAHRSCHIERGENEREBECKCONTACTUSaccessedex.comTogetareesubscriptionandadditionalAccesscontentgotofedex.comaccess.AccessisproducedbytheFedExCorporationandHanleyWoodMinneapolisMinn.Vol.920152015FEDEXCORPORATIONAllrightsreserved.BUILDINGTHEFUTUREOverthelastdecadeNissanMexicosplantsinAguascalienteshavehelpedmakethecompanyandthecountryaworldwideautomanuacturingleader.Theyvealsohelpedchangetheaceoalocalcommunity.p8 ONEINTERSECTIONprovidesmoreopportunityorpeoplebusinessesandcommunitiesthananyotherintheworld.Askmostpeoplewhereitisandtheywonthavedirections.Yoursmartphonesmapsappwontpointyoutoit.Thisintersectionisntmarkedbyastreetsignorevenatrafcsignal.WhereisthismysteriousplaceItstheintersectionovirtualandphysicalnetworksandyoucanfndatleastoneexampleineverycornerotheglobe.Forvirtualnetworksthinkhigh-speedinternetWi-Fimobilenear-feldcommunicationandotherdigitaltechnologies.ForphysicalnetworksthinktransportationsystemsandlogisticsplatormsincludingthosethatFedExmakesavailabletocustomersinmorethan220countriesandterritoriesworldwide.WheneverandwhereverthesetwonetworksconvergeromShanghaitoSheboygantheglobaleconomyisbeingreshapedataratetheworldhasneverseen.SpecifcallyItscreatingnewcentersoeconomicopportunity.GDPandstandardsolivingarerisingmeasurablyasterincountriesthatareinvestinginopenaccesstovirtualandphysicalnetworks.Itsincreasingthepaceoinnovation.Breakneckinnovationcyclesarebringingradicallyevolvedproductsandservicestomarketmorequicklythaneverbeore.Itstriggeringexplosivegrowthandbroadercompetition.Lookatwhatshappeninginretailalonewheree-commerceisdrivingthemajorityoallnewgrowth.Fewianymarketsegmentsareexemptromthislevelodisruptiontoday.OncetheexclusivedomainoFortune500multinationalsglobaltradeissuddenlyavailabletoanyonewithasmartphoneandadream.WereincreasinglyallcitizensothesameMainStreet.WherearevirtualandphysicalnetworksconvergingtheastestWhataretheimplicationsHowisthisintersectionreshapingtheworldaroundusWeaskedtheexpertsandtheresultisthisyearsFedExAccess25report.Weinviteyoutogotoedex.comaccesstoreadandwatchmoreromourreport.WhoknowsYournextbigideamightbeaclickaway.theCrossroadstoEverywhere2ACCESS25ACCESS OncetheexclusivedomainofFortune500multinationalsglobaltradeissuddenlyavailabletoanyonewithasmartphoneandadream.ACCESS3ILLUSTRATIONBYJOHNHERSEY IN1000A.D.THEWORLDSECONOMICCENTERofgravitytheaveragelocationofallcommercialactivityontheearthwasincentralAsia.By1950ithadshiftedtoapointjustoffGreenlandpulledbytheIndustrialRevolutionandthegrowingeconomicmightoftheU.S.Butbeginningaround1980itmadeaU-turnandhascontinuedtotraveleastwardataremarkablepace.AnalystsexpectittoreturntocentralAsiawithinthenext10years.Inshortitstakenonlyafewdecadestoreversea1000-yeartrendandcreatenewcentersofglobaleconomicpower.SHIFTINGECONOMICPOWER4ACCESS25ACCESS MEGACITIESDecadesofunrestrainedurbangrowthhavecreatedscoresofproblemsandinspiredsomeinventivesolutions.ANOTHERSIGNOFTHESHIFTINGBALANCEofeconomicpowerthegrowthofmegacities.Theplanetnowhas28citieswithmorethan10millioninhabitantsand19ofthemareinAsiaandAfrica.Andwhiletheyreallpotenteconomicenginestheyalsofacemassivechallengespovertycongestionpollutionstrainsonnaturalresourcesandmore.Amidthechaoshoweversomeremarkableinno-vationsareemerging.InCairotheZabaleenpeoplewhohavelongmadetheirlivingcollectingandreusingthecitysrefusehavebeengiventrainingandfundstoorganizemicroenterprisestoconverttrashintomarketableproducts.InIndiaengineershavecomeupwiththeChotuKoolabattery-poweredportablerefrigeratorthatusesathermoelectricchipinsteadofacompressortocoolfoodandminimizepowerconsumption.AndinLagosNigeriaanarchitectnamedKunlAdeyemihasunveiledanaudaciousplantobuildanetworkofhomesatopotationdevicesbothasawaytocombatover-crowdinganddealwiththeoodsthatoccasionallysurgethroughthelow-lyingcoastalcity.Theeortsaresmallbutcritical.TheU.N.projectstherewillbe13moremegacitiesinthedevelopingworldby2030.ArchitectKunlAdeyemisboldvisionforanetworkofoatinghomestocombatoodingandovercrowdingproblemsinLagosNigeria.ACCESS51 6ACCESSACCESS25Aricarepresentsamarketwithagrowingmiddleclassandabundantresources.ButmanyAricancompanieshavelongaceddifcultiesgettingproductstomarket.InresponseVitalSounouvououndedExportunity.comanonlinemarketplacethatconnectsproducersandbuyersviaanappthatworksonsmartphonesandtraditionalcellphones.Theendeavorisallowingthe23-year-oldBeninnativetoputhisinormationtechnologydegreeromUITdeCalaisinFrancetogooduse.ACCESSCanyoubriefydescribeExportunity.comVITALSOUNOUVOUWeprovideeconomicconnectionswithintheAricancontinentandalsobetweenAricaandtheworld.ManyproducersogoodsinAricadonthavewaystoaccessmarketsupto70percentoAricancropsarewastedbecausearmershavenowaytoconnectwithbuyersandgettheirgoodstomarket.ACCESSHowdoesitworkV.S.Itsverysimple.Thereare700millionmobilephonesinusethroughoutArica.Itistheworldslargestmobilephonemarketbutmorethan500millionothedevicesinusearenon-smartphones.Mostarmersdonthavesmartphones.SoourappworksonbothtypesophonesandasksourquestionsDoyouwanttobuyorsellWhatdoyouwanttosellWhatquantityWhenwillitbeavailableACCESSHowdidyougettheideaorExportunityV.S.Igrewupinacountrywithlittlejobopportunitiesatercollege.Theonlyoptionwastocreatemyowncompany.IsawwehadgoodproductsandgoodinnovationinArica.Butwedidnthaveanyconsistentwaytoaccesslocalandinternationalmarkets.SoIwonderedhowIcouldusemyITknowledgetocomeupwithasolution.ACCESSHowisbusinesssoarV.S.Thevalueothetransactionsthroughourtradeeventssincewestartedin2012is417million.Themarketwastherewejusthappenedtobethereattherighttime.WenowoperateinseveralAricancountriesincludingGabonCameroonNigeriaandBenin.Compa-niesromoutsideAricahavealsoapproachedus.WewanttohelpthemgetintotheAricanmarket.ACCESSYourecentlylaunchedacompanionprojectcalledExportunity.net.HowdoesitworkV.S.Itisanonlineplatormthatunctionslikeanoutletmall.Peoplecomewiththeirwholesalegoods.Buyerscancomeandplaceawholesaleorder.LocaltradersromAricacanuseareeExportunity.netbuyeraccount.Aterthatwewillprovidethemwitha1000membershiploantouseorayearinthehopethattheywillbecomesuccessul.ACCESSInasenseitsoundslikeanAlibabaoreBay-typeservice.V.S.Itwasinspiredbythem.ButthedierencebetweenExportunityandacompanysuchasAlibabaisthatwewanttoberesponsibleorthesaetyothetransaction.Exportunityhandlesthemoneytransersandmakescertaintheundsarrivesaely.BeoreExportunitybuyersandsellersdidntalwayshaveaccesstoeachother.Withoursystemtheycanidentiywhosalreadydoingbusinessandwhocanbetrusted.Exportunity.comVitalSounouvousawuntappedpotentialinAfricaanddevelopedasolutionthatsboostingtradeacrossthecontinent.VITALSOUNOUVOUQAManyproducersofgoodsinAfricadonthavewaystoaccessmarketS_upto70percentofAfricancropsarewastedbecausefarmershavenowaytoconnectwithbuyersandgettheirgoodstomarket.VitalSounouvou2 IstanbulistheeconomicheartofTurkeyanemergingmarketeconomyloadedwithchallengesandpotential.ACCESS7THENEWNEWEMERGINGMARKETSAmoreexpansivesetofeconomiesassociatedwithletdownispoisedforliftoff.NOWTHATYOUVEGROWNACCUSTOMEDTOTHEBRICeconomiesBrazilRussiaIndiaandChinaherecomesMINTMISTPINEandCIVETS.SoundlikealphabetsoupWellitisbutitsalsotheshorthandofeconomiststryingtodrawacirclearoundthegrowtheconomiesofthenextdecade.MexicoIndonesiaNigeriaTurkeyandVietnamareamongthemostfrequentlymentionednext-geneconomiespoisedtocreatenewcentersofopportunityduringglobaleconomicrecovery.Noneofthemlackchallengesfrominfrastructuretocorruptionbuttheyboastyoungpopulationsandadvantageousgeographyandallarevaluablecommodityproducers.3 ACCESS25NissanMexicosplantsinAguascalienteshavehelpedmakethecompanyandthecountryaworldwideautomanufacturingleader.Theyvealsomadedeepandlastingchangesinalocalcommunity.NISSANMEXICO4Building8ACCESSbyCHRISMIKKOphotographybySTEVECOOK ManuelVelzquezletandRoldelaRasaVillaftsidepanelstoaNissanSentrabodyinasynchronizedprocess.UPONFIRSTINSPECTIONitsnotimmediatelyevidentthatthisistheutureoglobalautomanuacturing.StepinsidetheautobodyplantatNissanMexicosnewA2actoryaewmilesoutsidethecityoAguascalientesandyoucouldbeinasemiconductorcleanroom.Thefoorsarespotless.Thespaceisbrightlylit.Anditsquietthemainsoundisthemufedarawaythumpotheplantshigh-speedmetalpress.Thenyouturnontotheproductionfoorandseetherobots.Therearehundredsothem.Acrossmultiplelinesbright-yellowbotsspot-weldNissanSentrabodyrameswithlightning-quickprecision.OverheadZ-shapedarmslitsidepanelshighintotheairswivelaroundandlowerthemontowaitingcarts.Thecartsthendriveoontheirownollowingmagneticstripsinthefoor.Andinbetweenhard-hattedlinetheFutureACCESS9 10ACCESSACCESS25GIUSTINIANOPORCUHASACHALLENGINGJOB.AsdirectorofaftermarketsalesforNissanMexicoheoverseesanoperationthatdistributespartsthroughoutMexicoandto57countriesaroundtheglobe.Onanaveragedayhisteamsendsoutcloseto2400partstodestinationsintheU.S.CanadaBrazilandasfarawayasAustralia.NissanMexicobecameakeyglobalpartsdistributionhubin2009.Onebigreasonthecountrysliberalapproachtofreetrade.Mexicohasfreetradeagreementswith44dierentcountriesthemostofanynationonEarth.AndasNissanMexicohascontinuallyboosteditsoutputinrecentyearstheaftermarketoperationhasgrowninbothscopeandcomplexity.WhileFedExplaysamajorroleinNissansglobalsupplychainitisalsocentraltoitson-timerepairpartsdeliveries.IfacarbreaksdowninsayLimaPeruorWinnipegCanadaandthedealerlacksthereplacementpartPorcusteamcallsinFedExExpress.Itsquiteasensitiveissuewhenacustomerhasacarthatisimmobilizedandtheneededpartdoesnotarriveontimehesays.ThatswhyourrelationshipwithFedExisparamountinimportance.FedExfulllsouremergencyordersin24to48hoursorless.Gettingaparttoitsdestinationontimeandgettingacustomerscarbackontheroadcanreallyhelpdetermineifthepersonwillremainwithorleaveourbrand.FedExhelpsusdeliveronourpromisestoourcustomers.NissanMexicoPresidentandManagingDirectorAirtonCousseauagrees.Wearedealingwithcarsandallcarssometimeshaveproblemshesays.Butclientsarentnecessarilyupsetwhentheyhaveaproblemwithacar.Theyareupsetifyoudontsolvetheirproblemquickly.ThewaythatweareusingFedExrightnowistospeedupalltheprocessestoxproblemsinaveryfastway.employeesmoveaboutpurposefullydouble-checkingweldssmoothingdownroughspotswithair-poweredgrinderspressingdoorsandfendersintoplace.Theorchestratedprocessisrepeatedthroughoutthe21-million-square-footA2plantandattheolderA1facilityafewmilesuptheroad.Theplantsemploymorethan8700workers.Theyrun23hoursperdaysixdaysperweek.Andtheyrerelentlesslyproductiveanewcarrollsofftheirlinesevery38seconds.FactorinadditionalplantsinCuernavacaandyoucanseewhyNissanMexicohasanannualproductioncapacityof850000vehicles.Thatcapacityhasmadethecompanythedominantplayerinacountrythatsemergedastheworldsfastestgrowingautomanufacturer.Wehave25.7percentmarketshareinMexicosaysNissanMexicoPresidentandManagingDirectorAirtonCousseauaddingthatthecompanyalsoexportscarsandpartstomorethan50countries.WearealsokeytoMexicosautomanufacturing.In2014wepassedBrazilandarenowtheworldsseventhlargestautomaker.By2020Mexicowillbethesixthandmaybeeventhefthbiggestautomanufacturerintheworld.ButwhilethetwoplantshavehelpedfueltheriseofNissanMexicoandthecountrysautomotiveindustrytheyvealsomadeanequallyprofoundimpactonAguascalientesanditspeople.DIRECTIMPACTAguascalientesanamesharedbythecityanditssurroundingstatesitsonahighdesertplateauinthemiddleofMexico300milesnorthwestofMexicoCity.Formuchofthe20thcenturythelocaleconomywasbasedonagricultureandsilvermining.Thatbegantochangein1982whenNissanopenedtheA1plantwhichinitiallyproducedenginesandpowertrains.Moregrowthfollowed.ThanksinparttothepassageoftheNorthAmericanFreeTradeAgreementNAFTAandtheMexicangovernmentspartialderegulationoftheautoindustryA1addedanautoproductionlineintheearly1990s.Buttherealchangehappenedin2013whenNissanMexicoopenedthe2billionA2plantadding3000newjobs.TheprojectalsoincludedanindustrialSeniorProductionSupervisorGustavoReyesGarciasayshisjobhaschangedhislifeandthelivesofhisfamilymembers.LeadingtheAftermarketFedExhelpsNissanMexicofulllakeypartofitsbrandpromise. parkthatshometothreeNissanpartssuppliersthosecompaniescontributedanadditional9000jobs.AstudybytheMonterreyMexicoInstituteofTechnologyandHigherEducationestimatestheprojecthascreatedbetween58000and74000jobsinandaroundtheregioninsectorsasdiverseasconstructionhospitalityandnancialservices.InMexicowewillhavearound2percentGDPgrowththisyearsaysCousseau.ButAguascalienteshasseen5percentgrowth.ThattellsyouwhatNissanmeanstoAguascalientesandwhatAguascalientesmeanstoMexico.Theeffectsareevidentaroundthecity.OnaTuesdaymorninginNovemberAguascalientesisbustling.ShopperscrowdthesidewalksandbrightredNissanTsurutaxiszipaboutthecobblestonedstreets.Forthepast15yearsRosaEspinoDavaloshasownedJabonArtesanalasmallshopthatsellshandmadeorganicsoapsonasidestreetafewblocksfromdowntown.Herbusinesshaspickedupinthelastfewyears.Nissanspresencehasdirectlyaffectedmycompanyshesays.TherearemorepeoplelivinginandvisitingAguascalientesnow.AndNissanemployeesandtheirfamiliesaremybiggestcustomers.AcrossthestreetGracielaRodriguezAreteworksatJugosGrandPrixasandwichshopthatsbeeninoperationatthesamelocationfor30years.TherewasaboostinsalesalmostimmediatelyafterworkcompletedonthenewNissanMexicoplantshesays.Weveseenclosetoa60percentincreaseinbusinessinthelasttwoyears.MAKINGDREAMSCOMETRUEAllofthisgrowthalongwithNissanMexicosmassiveinvestmentbegsonequestionWhyAguascalientesGovernmentincentiveshaveplayedonerole.ThestateofAguascalienteshasaggressivelycourtedbusinessesoverthelastdecadeTexasInstrumentsandCoca-Colahavebuiltfacilitiesinthelastfewyears.AndtheWorldBankhasnameditMexicosmostbusiness-friendlystate.Locationandinfrastructureofferanotherreason.AguascalientessitsinthemiddleofthecountryhalfwaybetweentheAtlanticandPaciccoasts.Mexicohasawell-developedhighwaysystem.AndthreenationalrailwaysintersectinthecityandonenowrunsthroughtheA2plant.TheresultItseasytoloadupandNissanMexicohasboostedbusinessforRosaEspinoDavalosshopinAguascalientes.ANNUALGDPGROWTHINTHESTATEOFAGUASCALIENTESANNUALMEXICANGDPGROWTH52.2GDPgrowthinAguascalienteshasfaroutpacedtheMexicannationaleconomy.Onefactorbehindthenumbersthe12000directandindirectjobscreatedbytheA2plantsopeningin2013.AndthentherestherippleeffectThestategovernmentofAguascalientesestimatesthatautoindustry-relatedprojectscreatedanother19000newjobsandgeneratedmorethan36millionindirectinvestmentsbetween2011and2014.SourceBankofMexicoestimatesthirdquarter2014StateGovernmentofAguascalientesEconomicImpactAguascalientesACCESS11By2020Mexicowillbethesixthandmaybeeventhefifthbiggestautomanufacturerintheworld.AirtonCousseau 12ACCESSACCESS25transportvehiclesandpartsaroundthecountryandtoitscoastalports.Butperhapsthemostimportantfactoristhepresenceofayoungandableworkforce.ApproximatelyhalfofAguascalientes1.1millionresidentsareundertheageof24andNissanMexicoisapowerfuldraw.AguascalientesnativeLuisUrbanjoinedthecompanyin2007afterearninghismastersdegreefromthecitysInternationalTechnologicalUniversity.HenowworksasaqualityassuranceengineerintheA1enginecastingplant.BeforeInishedtheuniversityIhadthedreamofworkingforNissanMexicohesays.AndwhenIstartedIsawthattheteamworkisstronghere.Weareallunitedwithonepurposeandweallhaveastrongpassionforourjobs.Nissangivesyouatremendousopportunityifyouwanttotakeitheadds.Ihavemovedupfromatraineetoanengineerquickly.Thathasbeenaverybigchangeformyfamily.Icantakecareofmymother.Ihaveevenbeenabletohelpmysisternishheruniversitystudies.GustavoReyesGarciaaseniorproductionsupervisorattheA2plantechoesUrbanssentiments.Ipreviouslywasasupervisoratatelecommunicationscompanyhesays.Thatwasnotabadjobbutworkingherechangedmylife.NissanMexicoprovidedmewithopportunities.EveryonemyparentsmysonsandmybrothershasbenetedfrommeworkingatNissanMexico.BackinhisMexicoCityofceCousseaubreaksintoagrinwhenhehearsthat.TherearealotoffactorsthathavehelpedNissanMexicobecomeamarketleaderanddevelopareputationforqualityhesays.Butifyougotoourmanufacturinglineyouwillfeelthatwearenotonlybuildingcars.WearemakingdreamscometruefortheMexicanpeople.BuyingacaristhesecondbiggestinvestmentofaMexicanpersonslife.Firstisahouseandsecondisacar.Andthatmakesyouputyourheartpassionandfeelingsintoyourwork.EverybodyinNissanMexicohaswhatwecalltheoneteamspiritmindsetheadds.Everybodyisghtingforthesamegoalsandobjectives.QUALITYMATTERSMorechangeslieaheadforAguascalientes.NissanMexicoisnowconsolidatingitspartsdistributionoperationstotheA2plant.AndlastyearNissanandGermanysDaimlerAGannouncedajointventuretobuildanothernewplantinAguascalientes.ConstructionwillstartlaterthisyearonlandadjacenttoA2.Whencompletein2017the1.4billionfactoryalreadydubbedA3willaddanother5700jobstothelocaleconomyandproduce300000vehiclesperyearpushingNissanMexicostotalannualoutputpastthe1millionmark.AndasCousseaunotesthosevehicleswillbeInnitiandMercedes-Benzsedans.Mercedesisaluxurybrand.AndInnitiisaluxurybrandthathasonlybeenbuiltinJapanandtheUnitedStateshesays.ThisisthersttimeluxuryautomobileswillbebuiltinMexicoandallthemanufacturingwillbeoperatedbyNissanMexicoandouremployees.Itshowswecanproducecarsatacompetitivepricewithhighquality.FromUrbansperspectivethenewprojectoffersavoteofcondenceinNissanMexicoandinAguascalientes.Thecityhasanewfacebecauseoftheinvestmentsourcompanyhasmade.ThiswillhaveahugeimpactinthecityofAguascalientesandinthesurroundingarea.TenyearsagosomepeopleknewaboutAguascalientesheadds.ButnowwhenyoutalkaboutAguascalientestheyimaginethebigmanufacturingcomplex.Itevenhappenswhenyougotoothercountriesandpeopleaskwhereyouarefrom.WhenyousayAguascalientestheyaskYouarewithNissanrightCleanandGreenNissanMexicosA2plantisamodelofenvironmentalresponsibility.TheA2plantisamassiveoperation.Itsvebuildingstakeup21millionsquarefeetofspacetheequivalentof364footballelds.Equallyeye-openingMorethanhalfoftheplantsenergycomesfromcleanandrenewablesources.Windpowerandmethanearethetwomainsources.ThewindpowercomesfromMexicoslargestwindfarm600milesawayinOaxaca.Themethaneispipedinfromalocallandll.OtherkeygreenfactsApproximately7percentoftheplantsceilingistranslucentallowingfornaturallighttooodoperationsAnon-sitewatertreatmentfacilityrecycleswastewaterforusewithlandscapingAnon-sitetreefarmsupportsareareforestationprogramsQualityAssuranceEngineerLuisUrbanrightinspectsenginecastingworkattheA1plant.ForaninsidelookatNissanMexicoanditsimpactonAguascalientesseethevideoatfedex.comaccess. 38secondsTheAguascalientesplantsproduceanewcarevery38seconds.Morethan190robotshelpautomatetheproductionfowatNissanMexicosAguascalientesplants.ACCESS13 ACCESS25ANissanMarchonthestreetsofMexicoCity.Morethan25percentofallcarsontheroadinMexicoareNissans.14ACCESSthecostsofmovingmanufacturedgoodstoconsumersareincreasing.ThatishelpingMexicobecomeasuperbnear-shoringoption.RajSubramaniam THEJOINTNISSAN-DAIMLERPLANoranew1.4billionplantinthecityoAguascalientesisonlythelatestinacascadeoinvestmentsinMexicobyglobalautomakers.InthelastyearHondaFordBMWVolkswagenMazdaandHyundaiKiaallannouncedplanstobuildnewplantsupgradeexistingacilitiesorshitaportionotheiroperationstothecountry.Costiscertainlyoneactorinallothis.Butthatalonecantexplaintherapidexpansion.SowhatelseisdrivingthegrowthFreetradehasplayedacriticalrole.Mexicosopenbordersapproachmakesthecountryidealasbothamanuacturinganddistributioncenter.AccordingtotheMexicanAssociationotheAutomotiveIndustrytradegroupthecountrysautomakersexport80percentothevehiclestheyproduceafgurethathasdoubledinthelastdecade.Locationistheotherkeyactor.MexicoisrightnexttotheU.S.theworldslargestconsumermarketsaysFedExExecutiveVicePresidentGlobalStrategyMarketingandCommunicationsRajSubramaniam.GiventherisingcostolaborincountriessuchasChinaandtherisingpriceouelthesupplychaincostsomovingmanuacturedgoodstoconsumersareincreasing.ThatishelpingMexicobecomeasuperbnearshoringoption.OntheMoveMexicanautomanufacturinghasrevvedintohighgear.WhatsfuelingthegrowthACCESS15 Western-stylesuburbanenclavessuchasthisoneinShenyangareincreasinglycommoninChina.THEDEVELOPINGGLOBALMIDDLECLASSInthenext15yearsmillionswillescapepovertyinAsiaaloneradicallyreshiftinggeopoliticalinuenceandredrawingglobaltradepatterns.THEMIDDLECLASSisgrowingfastandgrowingeast.Itspoisedtodoubleinsizeinthenext15yearsandradicallyretilttheworldseconomicscales.BrookingsInstitutionscholarHomiKharasestimatesthatAsiasshareofthenewmiddleclasswillgrowfromitscurrent30percenttomorethan60percentby2030accountingformorethan40percentofglobalmiddle-classconsumption.TheU.S.andEUmiddleclassmeanwhilewillseetheircombinedshareofglobalconsumptionshrinkfromtodays50percentto22percent.OneresultCompaniesaccustomedtoservingWesternmiddle-classcustomerswillhavetoevolveinordertogrow.16ACCESS5ACCESS25 ACCESS17NEXTSHORINGShiftsinglobalwagespurchasingpowerandenergysuppliesarecomplicatingthecalculusbehindglobalmanufacturingdecisions.Ifoffshoringwasthemanufacturingbuzzwordofthe1990snext-shoringispoisedtoreplaceitifithasntalready.ButifyouthinkrisingwagesinChinaandnewU.S.shaleoilproductionwillreversetheboatsonglobalmanufacturingnotsofastsayexperts.Itsmuchmorecomplicated.Manyindustrieslocatemanufacturingclosetodemandmakingestablishedmanufacturingecosystemshardtodisplace.ThisbenetsAsiainsomeindustrieshigh-techmostfamouslyandtheWestinothers.Whatsmore3-Dprintingandadvancedroboticsarepoisedtobecomethenextbigfactorsinnext-shoringaccordingtoexperts.AsarecentMcKinseyreportputsitNext-shoringisntabouttheshiftofmanufacturingfromoneplacetoanotherbutaboutadaptingtoandpreparingforthechangingnatureofmanufacturingeverywhere.Mexicohasemergedasanattractivenext-shoringoption.HereaNissanMexicoemployeeinstallstiresatthecompanysplantinAguascalientes.Only1.3percentofthe23millionU.S.SMEsexportwithlessthanhalfofthoseexportsgoingtotheEUaccordingtotheU.S.DepartmentofCommerce.1.3TTIPFORSMESTheU.S.-EUtradeagreementnowundernegotiationcouldhavehugeimplicationsforsmall-andmedium-sizedbusinesses.U.S.andEUrepresentativesarenownegotiatingtheTransatlanticTradeandInvestmentPartnershipTTIPanagreementtocreatetheworldslargestfreetradeandinvestmentregion.GiventhattheU.S.andEUalreadytrademorethan2billioningoodsandserviceseverydaytheagreementspotentialisenormous.AndthankstoasetofprovisionstotheTTIPitsbenetsextendtosmall-andmedium-sizedenterprisesSMEs.WhileU.S.andEUSMEsarepotenteconomicenginestheyvelongfacedadministrativeandregulatorybarrierswhenitcomestocross-bordertrade.TheTTIPaimstoknockdownthoseobstaclesandcreatearegulatorytradeenvironmentthatreectsthedemandsofmoderne-commerce.TheAtlanticCouncilreleasedanewstudycommissionedbyFedExwithsevenpolicyrecommendationsincludingeliminatingtariffsraisingtheduty-freethresholdto800andmutualrecognitionofsafetystandards.Learnmoreatfedex.comaccess.67 18ACCESSsuperchargedINNOVATIONIndiasMarsOrbiterMissionrecentlymadeheadlineswithastonishingimagesotheRedPlanet.Equallyimpressivetheprojects74millioncost.Thatslessthanthebudgetorthe2013sci-blockbusterGravity.AccordingtoNaviRadjouitsalsoanexampleoJugaadinnovation.His2012bookJugaadInnovationexplorestheessenceotheconceptwhichisaHindiwordorimprovisedsolution.HisnextbookFrugalInnovationpublishedbyTheEconomistshowshowrmscancreatemorevaluewithewerresources.ACCESSCanyoubriefyexplainJugaadNAVIRADJOUJugaadiswhenyouseeadversityyoudontrunawayorconrontitwithbruteorcebutratheryouturnitintoanadvantage.ForexamplelackoelectricityisnotanissueorentrepreneursinAricawhousebicyclepowertorechargecellphones.AndinIndiaacratsmancreatedaclayrerigeratorthatdoesntuseelectricityinsteaditreliesonevaporationwatertricklesdownthesidesotheunitabsorbingheatandcoolingtheoodinside.Jugaadisaboutturningconstraintsintoopportunities.NASAsMarsmissionMAVENcostnearly700million.InIndiatheyaskedHowcanwedoitcheaperInsteadoprototypestheycreatedvirtualonesusingcomputersimulations.Theyreusedtechnologyrompreviousprojects.TheyalsodesignedthesatellitetobesmallerandhaditorbitlongeraroundEarthtogainmorevelocitywhenpropelledwhichrequiredlessenergy.ACCESSYourbookslookatleadersromGEProcterGambleandPepsiCowhoembraceJugaadandrugalinnovation.ArethereanyotherexamplesN.R.In2004RenaultlaunchedLoganareliablecarpricedat6000makingittheleastexpensivecarintheWest.InsteadodeeaturinganexistingcarthecompanydesignedtheLoganromthegroundup.Forexampleitdesignedafatwindshieldwhichiseasiertobuildthanacurvedone.Italsosimpliedmanuacturingbyusingewercomponents.TodayRenaultslow-costno-rillscarsaccountormorethan40percentoitsglobalsales.TodatenootherWesterncarmakerhasmanagedtoproducesuchalow-costcar.ACCESSWhatisdrivinginterestinJugaadN.R.TheeconomiccrisismadeWesternconsumersrugal.Frugalityisnolongeratemporaryeconomicimperative.ItisbecominganewculturalnormespeciallyamongGenYandZconsumers.MynewbookFrugalInnovationexploreshowthisbigshitinbuyingbehaviorsandvaluesisdrivingU.S.andEuropeanrmstocreateaordableandsustainableproductsusingewerresources.JugaadInnovationNaviRadjoubelievesthisage-oldconcepthasaplaceintodaysdevelopedworld.NAVIRADJOUForthecompleteversionoftheinterviewwithNaviRadjougotofedex.comaccess.THECONVERGENCEOFPHYSICALANDVIRTUALNETWORKSisdrivinginnovationatapaceunimaginableevenadecadeago.ConsiderIn2009ittookapproximatelyveyearsoracartomoveromconcepttoshowroom.Thankstosuchactorsasrapidprototypingandstreamlinedsupplychainstheprocessnowtakes24to36months.Inashionretailingsotwareandconnectedcollaborationhavecollapsedtraditionalthree-monthproductioncyclesdowntotwoweeks.Andthoseareonlytwoexamples.Relentlessinnovationisreshapingtheworldasweknowitaectinghowindividualsliveandworkandhowcompaniesandentireindustriesoperate.QAILLUSTRATIONBYCELIAJOHNSON25ACCESS8 SMARTCITIESTheInternetofThingsiscreatingdynamicnervoussystemsinmunicipalitiesaroundtheworld.FIRSTCAMESMARTPHONES.Thensmarthometechnology.Andnowsmartcities.SantanderSpainoersatellingexample.Since2010thecharmingoldportcityhasinstalledmorethan12000sensorsthatmonitoreverythingfromtracpatternstosoildampnessinparklawnstrashindumpstersairpollutionlevelsandmore.Citymanagersusethedatatoschedulegarbagepickupsprogrammunicipalsprinklersanddimlightsinpublicbuildingsthatarentinuse.Estimatedsavingsdouble-digitreductionsinannualwaste-managementandenergycosts.Santanderisntaloneeither.ViennaParisTorontoMelbourneSanJoseCaliforniaanddozensofothercitiesnowboastsimilartypesofnetworks.Lookformoretocomeasmunicipalitiesandtechnologyproviderscapitalizeonthepossibilities.Worldwiderevenuefromsmartcitytechnologywillgrowfrom8.8billionin2014to27.5billionby2023.SourceNavigantResearchACCESS199 ACCESS25MorerelaxedgovernmenTrestrictionsenablecommercialsatelliteimagerytoreach25cmresolution_twiceasdetailedasthepreviouslimit.SourceDigitalGlobeHIRESSATELLITESNewsatellitetechnologywillsoonallowyoutoreadlicenseplatesandmailboxnumbersanywhereintheworldfromyourphone.WONDERHOWMANYCARSandwhatmakesandmodelsarepatronizingaparticularchainofretailstoresaroundtheglobeAcombinationofnewsatellitetechnologyandrelaxedregulationswillsoonmakeitpossibletogatherthatdatawithamouseclick.AttheheadofthepackarecompaniessuchasGoogleandDigitalGlobe.GooglesrecentacquisitionnownamedGoogleSkyboxplanstolaunch24satellitesby2018thatwillphotoimagetheglobeinitsentiretyinhighresolutionthreetimesadaylikelyradicallyimprovingtheinformationyoucangetfromGoogleMaps.Theprivacybattlesareobviouslyjustbeginning.InthemeantimeLookupandsaycheese.20ACCESS10 ACCESS21DIGITALMANUFACTURING3-Dprintingwasonlythestart.Itsindustrialcounterpartpromisestofundamentallychangemanufacturing.Overthelast30years3-Dprintinghasgonefromanicheprototypingsolutiontoamainstayforcompanieslookingtocreatehigh-delityprototypesandincreasinglycustomizednishedgoods.Nowsignspointtotheriseofdigitalmanufacturinglarge-scaleindustrialapplicationsof3-Dprinting.GEAviationforinstancerecentlyinvested50millioninanAlabamaplantthatwill3-Dprintjetenginefuelnozzles.OreckManufacturingusesdigitallymanufacturedxturesonitsvacuumcleanerassemblylines.Andbysomeestimatestherearemorethan10million3-D-printedhearingaidsinusearoundtheworld.Allofthisasidedigitalmanufacturingremainsinitsinfancy.Butnewandoftenastonishingapplicationscontinuetoemerge.CaseinpointAChinesecompanyWinSunDecorationDesignEngineeringbuilt103-D-printedsingle-storyhomeslastyear.Eachfeaturedpanelsmadefromacementmixturecontainingconstructionwasteandglassber.Totalcostforeachhouse5000.Totalprojecttimestarttonish24hours.EdenPrairieMinn.basedStratasyscreatedthisdigitallymanufacturedprototypeofaturbopropaircraftengine.Allofthepartswere3-D-printedexceptforthemountingframeboltsandhoses.THERIGHTTOBEFORGOTTENAnyoneisaGooglesearchawayNotsofastsaycourtsontwoseparatecontinents.LASTYEARABRAZILIANCOURTGRANTEDapreliminaryinjunctionprohibitingAppleandGooglefromdistributingtheclandestineinfo-sharingappSecretontheirplatforms.Secretallowsuserstoexchangemessagesanonymouslywithincirclesoffriendsorpublicly.ThisontheheelsofarulingbytheEuropeanCourtofJusticewhichorderedGoogletodeletelinkstooutdatedinformationaboutaSpanishnationalwhoarguedtheinformationwasnolongeraccurate.WheredoestheboundaryliebetweenprivacyrightsandfreedomofexpressionTheserulingshaveescalatedadebatethatshowsnosignsofstopping.IsthereanysuchthingasarighttobeforgotteninaworldofdigitalarchivesAndifsowhodetermineswhatandhowdigitalinformationisforgotten1211 theCircularEconomyinactionDenversStadiumAutoPartsrecyclesupto90percentofdamagedcarsandtrucks.THECIRCULARECONOMYItsthenextgreatleapbeyondrecyclingcreatingtrulyzero-wasteeconomies.NATURALRESOURCESAREFINITEbutinnovationandreusearetheoreticallyinnite.Thatsthethinkingbehindtheideaofthecirculareconomyanideawhichhastakenonnewmeaningoflate.Bysomeestimatesaglobaleortcouldyieldmorethan1trillioninmaterialsavingseachyear.Circulareconomyisthenextgenerationofbusi-nessFransvanHoutenPhilipsCEOsaidduringthe2014WorldEconomicForum.ThemovementevenhasitsownmantraWasteisjustanothertermforanunusedresource.CompaniessuchasPatagoniaareatthefore-frontoftheeort.ThroughitsCommonThreadsPartnershipPatagoniaencouragescustomerstoreturnworngarmentstoitsstoresforreuseorforshreddingandrecyclingintonewgarments.Governmentsandmajorfoundationsarealsoputtingnancialincentivesbehindtheconcept.LastyeartheEllenMacArthurFoundationcreatedTheCircularEconomy100anorganizationthatunitesbrandsasdiverseasCoca-ColaIKEAandVodafonetohastenthetransitiontoacirculareconomy.WindshieldsintheStadiumAutoPartswarehouse.Toseeavideothatdetailsthecompanysapproachtovehiclerecyclinggotofedex.comaccess.ACCESS2522ACCESS13 ACCESS23WIRELESSCHARGINGIfthisstartuphasitswaywellalwaysbefullyconnectedandfullycharged.ItfeelslikesciencectionbuttwoUniversityofPennsylvaniagraduateshavecreatedadevicethatcouldeliminatetheneedtopluginoursmartphoneslaptopsandtablets.TheircompanyuBeamusesapatentedultrasonictransfermethodsoundwavestotransmitpowerovertheair.AttachatinyuBeamreceivertoyourdeviceandyoucanchargeuponthego.ThetechnologyremainsinitsinfancybutuBeamhaspickedupmorethan3millioninearly-stagefundinganditpromisestohaveproductsonmarketshelveswithintwoyears.REALTIMEMARKETINGNear-instantfeedbacknowallowsbrandstocreateuniqueexperiencesattheindividuallevel.EVERNOTICEHOWONLINEADSoccasionallyfollowyouasyoumoveacrosstheinternetThattechniqueretargetinginwebtermsisaclassicexampleofreal-timemarketingusingcontinuousfeedbackanddatatotailorcontentandmessages.Thisisntnecessarilynew.FacebookTwitterandthelikealreadyusesocialnetworkbehaviortocustomizeadsandoers.AndwithgoodreasonFacebookgenerated2.9billioninadrevenuesduringthesecondquarterof2014alone.Butitisgettingmoresophisticated.CaseinpointMobileadnetworkssuchasNewYorkCitybasedxAd.Thatcompanywhichrecentlylanded50millioninventurefundingisoneofmanynewoperationsthatletsadvertiserscustomizemessagesbasedonphysicallocation.Stareatadepartmentstoreswindoworlingeroveranewespressomakerandacouponcouldpopuponyoursmartphone.Inshortitappearstargetmarketingisstartingtoliveuptoitsnameanditsfullpotential.UNBANKINGAwealthofnewservicesareshakingupthebankingsector.AccordingtotheU.S.governmentasmanyas68millionAmericansdonthavebankaccountsordebitcards.Thatsnotuncommonelsewhere.TheWorldBankreportsthat2.5billionpeoplejustoverhalfoftheworldsadultpopulationdontuseformalnancialservices.WhatllsthegapPayPal.Mobilemoneyservicesthatletuserstransferfundsviaphone.AndpaymentplatformssuchasApplesApplePayandAlipayfromAlibaba.WhilebothallowyoutobuyitemsonlineorinphysicalstoresAlipayalsoallowsuserstomakeinternationaltransactionsandeveninvestinstocks.TheupshotBrick-and-mortarbanksmightnotbegoingthewayofBlockbusterstoresyetbuttheearlysignsarethere.141516 ACCESS25WHATDOESITTAKEtobuildaglobalbusinessplatormthesedaysAviableideaasmartphoneandone-clickaccesstoashippingprovider.Andinaworldwhereinvestmentcapitalfowsquicklytowardthelatestinnovationslong-standingcompetitiveadvantagescandryupinmonths.TheupshotWithscrappystartupsthinkingbigbigcompanieswillhavetothinksmall.EXPLOSIVEGROWTHANDCOMPETITION24ACCESS25ACCESS ACCESS25MICROMULTINATIONALSSizeisnolongeradeterrenttoglobalcompetition.YOUVENODOUBTHEARDOFANGRYBIRDStheonlinegamethatsbeendownloadedmorethan1billiontimessince2009andwhichspawnedanentireentertainmentempire.YoumighthaveevenheardofRoviotheFinnishcompanythatcreatedit.WhatyoumightnotknowisthatRoviostartedasamicro-multinationalathree-personoperationthatcollaboratedwithpartnersaroundtheworld.Itsnothardtoseewhysuchcompaniescancompeteonaglobalscale.Lowstangandoverheadcostsmakethemnimble.Open-sourcesoftwareandcloud-baseddatastorageprovidecomputingpowerthatwasunthinkablelessthanadecadeago.Andfreeorlow-costservicessuchasthoseprovidedbySkypeandSonetelbothofwhichalsostartedoutasmicro-multinationalsenableseamlesscommunicationalongcross-bordervaluechains.PerhapsnosurprisethenthataMcKinseystudyfoundthat90percentofcommercialeBaysellersfromnationsasdiverseasIndiaChileSouthAfricaandtheU.S.nowselltheirproductsacrossinternationalborders.OrthatForeignPolicymagazinepredictsmicro-multinationalswillsoonruntheworld.17 26ACCESSACCESS25ACCESS25Adecadeagotheideaorentingsomeonesspareroomorusingasmartphonetogetridesromanunlicensedcar-sharingservicewasbarelyonthecollectiveradar.TodayAirbnbandUberarecommonaroundtheglobe.RachelBotsmantheco-authorobusinessbestsellerWhatsMineisYoursHowCollabora-tiveConsumptionIsChangingtheWayWeLivesaysthatthesetypesobusinessesonesthatinvolveorganizedsharingtradingandrentingareonlythestartoamuchlargerandar-reachingeconomicupheaval.ACCESSCanyoubrieydescribethecoreideasocollaborativeconsumptionRACHELBOTSMANItsabouttakinganunderusedassetaskillacarahomeandputtingitintoacollaborativemarketplacetoenablegreaterefciencyempowermentandaccess.Sopeoplewithcarsorhomesthattheydontusecreatemarketplaceswherethoseassetscanbesharedrentedorsoldinnewways.ACCESSArethereindustriesthatseemparticularlyripeordisruptionbyitR.B.Healthcareinsuranceandfnancialservicesarethreeexamples.Allhavecomplicatedandoteninefcientsystems.Forexampleresearchshowsthattheaveragepieceohospitalequipmentisgreatlyunderusedoveritslietime.Thatlackoproductivitycosts14billionayear.SoweareseeingtheemergenceoplatormssuchasCohealothatprovidehospitalswithsharedaccesstoequipment.ACCESSNewYorkCityandBostonhavemademovestoregulateroom-andcar-sharingservices.DoesthatthreatenthegrowthocollaborativeconsumptionR.B.IthinkregulationhascomeontheradarbecausecompaniessuchasAirbnbandLythavegottenreallybigreallyast.Mysenseisthattheywelcomeregulationbecauseitlegitimizeswhattheyredoing.Italsoputsbestpracticesinplacetomakethemarketplacebetter.ACCESSWheredoyouseeinvestmentgrowthinthecollaborativeeconomyR.B.Growthwontonlybeincompaniesthatmakeassetsshareable.Itwillalsobeinthecompaniesthatprovidemecha-nismswhichmakeiteasiertoexchangeservices.Stripewhichoersabalancepaymentsystemisoneexample.Truliooanidentityverifcationsystemisanother.ACCESSHowwillthecollaborativeeconomychangeinthenextfveor10yearsR.B.Wewonteventhinkoitasaseparatething.Itwilljustbepartooureverydaylives.Wellalsoseethatoralotobigmajortraditionalbrandsthiswilljustbecomethewayothinkingaboutcreatingvaluedeployingassetsandinteractingwithpeople.Therewillbemanyotherbillion-dollarcompaniesinthisspacethatwillhelppeoplerealizethatthisideawilldisruptthewayalotoindustriesoperate.ACCESSDoestheacceptanceosharingproductsandserviceshaveagenerationalelementR.B.Collaborativeconsumptionismoreintuitivewithdigitalnativesbecausetheygrewuparoundsharingandhaveaverydierentconceptaroundownership.Butthisisntagenerationalthing.Whenyoulookatcollaborativemarketplacestheprovidersandcustomersareotenintheover-45marketratherthantheunder-25market.Oncetheyareactuallyengagedmembersooldergenerationstendtobethemoreactiveusers.IotenhearthatoncepeopletrustAirbnbworksthentheytryLytsothereisatranserenceotrustacrossverticals.CollaborativeConsumptionWhatliesaheadfortheUbersLyftsandAirbnbsnowshakingupthecompetitivelandscapeAccordingtoRachelBotsmanthesharingeconomyisheretostayanditpromisestodeliverevenmoreprofoundchangesintheyearsahead.RACHELBOTSMANQAILLUSTRATIONBYCELIAJOHNSONITsabouttakinganunderusedassetaskillacarahomeandputtingitintoacollaborativemarketplacetoenablegreaterefficiency.RachelBotsman18 CLICKSBEFOREBRICKSE-commercefrstisthenewmantra.FIFTEENYEARSAGOagenerationodot-comsamedoutbytryingtoselleverythingrompetoodtoashionitemstocouchesonline.WhilethePets.comsockpuppetremainsinmothballsahostobrick-and-mortarretailersareembracinge-commerce-frststrategies.PerhapsthebiggestcaseinpointTheHomeDepotwhichrecentlyannouncedthatitspullingbackonphysicalstoreopeningsandplowing1.5billionintoane-commerceinitiative.Otherretailersincategoriesasdiverseasmattressesooringproductsandeyewearhavetakensimilarleaps.Alladdsuptourtherevidencethatconsumersnoweelcomortablebuyingpracticallyanythingonlineandthatretailingisblurringintoasinglecross-channelmodel.AmountthatTheHomeDepotWalmartandMacyscommittedtoe-commerceinitiativesin2014.4BillionACCESS2719 28ACCESSACCESS25Robotsarenowusedeverywherefromdistributioncenterstohospitaloperatingrooms.ENTREPRENEURIALEDUCATIONApairorecentstudiesfndstangiblelinksbetweenentrepreneurialeducationandbusinesscreation.Canyouquantiytheeconomicimpactoearly-stageentrepreneurialeducationAlong-termstudyoSwedishJuniorAchievement-YoungEnterpriseJA-YEalumnirecentlyaddressedthatquestion.ThekeyfndingJA-YEstudentswere20percentmorelikelytostartbusinessesthanstudentsromacontrolgroup.Andtheircompaniestendtodowell.JA-YEalumnibusinessesaveragedupto12percenthigherannualincomesthanonesstartedbyindividualsinthecontrolgroup.ThosefndingsechoaBostonConsultingGroupstudywhichconcludedthatCanadianJA-YEalumnimakea105millionannualimpactonthecountryseconomyintheormotaxesandworkproductivity.ThisisallgoodnewsortheworldseconomytheglobalJAprogramwhichissponsoredbyFedExreachesmorethan10.6millionstudentsin117countries.105millionABostonConsultingGroupstudyconcludedthatCanadianJA-YEalumnimakea105millionannualimpactonthecountryseconomyintheformoftaxesandworkproductivity.20 InJapanlifelikerobotssteertrafcawayfromroadconstructionhazards.BOTSOURCINGOnceagainrobotsareleadingusintonewterritory.IN1962GeneralMotorsleaptintothefuturebyusinganindustrialrobottodoassemblylinespotwelding.Robotshavesincebecomecommonplaceusedeverywherefromfactoriestohospitaloperatingrooms.Butnewadvancesaredrivingbotsourcingusingrobotsforincreasinglycomplextasks.Lowesiseld-testingtheOSHbotashoppingassistantthatscootsuptocustomersasksiftheyneedhelpandguidesthemtotherightspotinthestore.Amazon.comnowhasmorethan10000self-drivingroboticcartsthatfetchitemsinside10ofitsdistributioncenters.AndIPsoftaNewYorkCitycompanyoersAmeliaaroboticvirtualservice-deskemployeethatcanreplytoemailsanswerphonecallsandevenholdconversationswithcustomers.Ameliaalsousesarticialintelligencetolearnonthejobandcananswerupto60000callsperday.PerhapsnotsurprisinglyIPsoftsgrowingcustomerlineupincludesCiscoComcastandAmericanStandardamongothers.ACCESS2921 30ACCESSACCESS25NEINEXTBuildingonthesuccessulU.S.NationalExportInitiativetheenhancedNEINEXTwillmakeiteveneasierorU.S.businessestoconnecttoglobalmarkets.While95percentoglobalconsumersliveoutsideU.S.bordersonlyaractionoU.S.companiesexportand58percentothosecompaniesselltoonlyonemarket.Since2010theObamaadministrationsNationalExportInitiativeNEIhasbeentryingtochangethatandlargelysucceeding.UndertheNEItheU.S.hadourstraightrecord-breakingyearsoexportshittinganall-timehigho2.3trillionin2013up700billionrom2009.ThenewlyenhancedNEINEXTeortmakesndingcustomerseasierboostsaccesstonancingandlowersbarrierstoexportingincludingstreamliningreportingrequirementsandprocesses.Learnmoreatwww.trade.govneinextILLUSTRATIONBYCELIAJOHNSONTHENEWSPACERACEItsgettingcrowdedatthetop.In1957theSovietUnionmadeheadlineswithSputnikabeachballsizedorbthatwastherstsatellitetoorbitEarth.Nearly60yearslateragrowingnumberoplayersareracingtotakeadvantageothenalrontierscommercialviability.Overthepastyearahandulocompanieshavelaunchedmicrosatellitessomeweighinglessthanthreepoundsintolowearthorbittoshootimagesandcollectatmosphericdata.BothBoeingandSpaceXthecommercialspacetransportationstartupoundedbyTeslaMotorsElonMuskhaveinkeddealstoprovidespacetaxistoerryNASAastronautstotheInternationalSpaceStation.MuskhasalsorevealedthatSpaceXplanstodeployafeetosatellitestoprovideglobalinternetaccess.Andwerestillearlyinthegame.Analystspredictthemarketwillcontinuetoexpandatwarpspeed.TheFedExMobileShipCenteroersmanyothesameoptionsasaFedExOfcelocation.POP-UPCOMMERCEHeretodaygonenextweekthenewwaveinretail.Pop-upcommercehasemergedasoneothehottestretailtrendsothelastewyears.ThecategoryincludestheHalloween-themedshopsthatoccupyotherwise-emptystoreseachalltomallkioskstoretrottedshippingcontain-ers.WhilesomeexamplesborderontheoutrageousAdidasemploysa44-by-24-ootshoeboxasitssignaturepop-upthebusinessundamentalsareanythingbut.Landlordsgettorentoutunusedspace.Businessescangeneratebuzzandcreatebrandexperiencesthatcanbemovedtowherevercustomersmightgathersportingeventsconcertsconventionsandthelike.Temporarystoresareevenhelpingosterurbanrenewal.DhiveaDetroit-basedresourceorentrepreneurssponsorsaquarterlycompetitionthatoerswinnersreerentand1000toexperimentwithretailconceptsinvacantproperties.222324 FedexcustomerMushminaseamlesslyblendsglobale-commercewithcommunity-building.CROSSBORDERECOMMERCEInternationalshoppinghabitsareinforbigchangesintheyearsahead.WHENITCOMESTOCROSSBORDERECOMMERCEtheressomedisagreementoverthesizeofthemarket.Someanalystspegitat80billionotherssayitscloserto100billion.Butpracticallyeveryoneagreesthenumberswillsoaroverthenextdecade.WhyNumerousfactorsincludingtheriseofthedevelopingworldsdigitallyconnectedconsumingclass.E-commerceplatformssuchasChinasDHgatethatallowbusinessesandindividualstobuydirectlyfromfactories.Eventhecomingcompeti-tivebattlesbetweenAmazonAlibabaRussiane-tailerOzonandothers.BeforelongbuyingbootsfromBeijingorfabricsfromFinlandwillbeanentirelydierentandmorecommonexperience.ToseeavideothatexplainshowMushminahelpsempowerMoroccancraftspeoplegotofedex.comaccess.ACCESS3125 GlobalEconomicPerspectivesWhatorcesarerewritingbusinessrulesHowisthecompetitivelandscapebeingreshapedWhataretheneteectsonglobalbusinessandemergingmarketsWeposethosequestionsandmoretoFedExleadersromacrossthecompany.ACCESSWhataresomeprimaryfactorsdrivingchangeandgrowthintodaysbusinessworldFREDSMITHWithoutquestione-commerceisanimportantone.Itsexplodingaroundtheglobe.BysomeestimatesglobalonlineB2Ce-commercesaleswillreach2trillionwithintwoyears.KARENREDDINGTONE-commerceishappeningintheAsia-Pacicregiononamassivescale.TogiveyouasenseoitconsiderTaobaowhichisanonlinestoresimilartoeBay.Ithassomethinglike800millionproductlistingsanditsonlyoneoAlibabase-commerceenterprises.JILLBRANNONAtthesametimetodayscommunicationsinrastructuresarelevelingthee-commerceplayingeld.Theyallowevensmall-andmedium-sizedbusinessestoparticipateincross-bordere-commerce.RAJSUBRAMANIAMWecertainlyareseeinganexplosioninmicro-multinationals.OneexampleisNicoleSnowour2013FedExSmallBusinessGrantContestWinner.SheessentiallyusedherlaptopandFedExtocreateDarnGoodYarn.ItsathrivingcompanybasedinasmallMainetownthatsourcesyarnromIndiaandNepalandsellsitaroundtheworld.ACCESSHasthecompetitivelandscapeshiftedasaresultFREDSMITHIn1927CharlesLindberghfewromNewYorktoParisin34hours.WithataponyourmobiledeviceyoucannowshipaFedExpackagetomanymajorworldmarketsovernight.Gettingitthereusedtobeamiracle.Nowiyourenotprovidingspeedeaseandreliabilitytoyourcustomersyoureoutobusiness.BRIANPHILIPSThewaypeopledobusinesshaschangeditsmobilewell-inormedandlightningast.Andtheirexpectationsareincrediblyhigh.ROBCARTERItusedtobethatyouneededtoamassalotocapitaltobuildabusiness.NowitspossibletodeployinormationtocreatewealthveryquicklyaewpeoplewitharelativelysmallamountocapitalcancreateacompanylikeInstagramandturnitintoa1billiondollarassetwithintwoyears.JILLBRANNONNearlyeveryindustryseemsripeordisruption.Thinkaboutwhatadvancesinsel-drivingcarsnanotechnologyandroboticswilldointhenextewyears.Andthentheresdigitalmanuacturingwhichispredictedtoundamentallyreshapesupplychains.ROBCARTERTheresaGartnerResearchphrasethatgetstotheheartoitEveryindustryisbeingdigitallyremastered.Theresultisthatcompaniesneedtorethinkhowtheyoperate.ForexampleIdarguethatcabcompaniesarenttheonlyoneswhoneedtobeconcernedaboutUber.AutomakersalsoneedtothinkaboutitbecauseUberismakingpeoplequestionwhethertheyactuallyneedcars.FREDERICKW.SMITHChairmanPresidentandCEOQAILLUSTRATIONBYRANDYGLASSACCESSROUNDTABLE32ACCESS25ACCESS ACCESSWhatimpactsarethesesortsofchangeshavingontheglobaleconomyFREDSMITHOnonehandwereseeingariseinprotectionism.Overthelastewyearsalmosteverytradingnationhasinstitutedpoliciesthatpermitgreaterregulatoryinterventioninthetradeprocess.Itsdiscouragingtowatchnationsmadeprosperousbytheopeningomarketsandthegrowthinglobaltradeattempttothrottletheveryorcesthathavecreatedtheirprosperity.OneexceptionisMexicowhichhasreetradeagreementswith44countries.Thosearehelpingboostitseconomyparticularlyitsautomanuacturingandaerospacesectors.RAJSUBRAMANIAMStandardsolivingarealsorisingmeasurablyasterincountrieswithmoreopenandconnectedeconomies.McKinseyreleasedastudylastyearshowingthatconnectedeconomiesearna40percentboostinGDPversusnon-connectedones.KARENREDDINGTONAnotherkeyconsiderationistheemergingmiddleclassincountriessuchasChina.Consumerstherewillstartdictatingthenatureomarketengagement.TosucceedWesterncompanieswillhavetoinnovateinwaysthatshowtheyunderstandandaresympathetictotheneedsoChineseconsumers.AtthesametimeWesterncompaniescantunderestimatethecapabilitiesandreachobusinessesinthedevelopingworld.ACCESSHowdoesacompanylikeFedExadaptinabusinessenvironmentmarkedbyrelentlesschangeJILLBRANNONFedExwasbuiltoninnovationandwevespentthepast40-plusyearsevolvingbasedonmarketplacetrends.Wealsolistentobusinessesandworkhardtogivethemsolutionstheyneed.ChangeisinourDNA.BRIANPHILIPSHeresanexample.Preparingitemsorshipmentisapainpointwithonlinetransactions.OurnewFedExPackPlusoersdedicatedspaceinsideFedExOfcestoreswiththetoolsandmaterialsthatallowourteammemberstoaddresscustomerspackingneeds.WerealsotestingtechnologylikeFedExShipGetlockersystemsatFedExOfcestoresandthird-partylocations.AndwerecontinuingtoinvestinFedExSameDayCitybecauselast-miledeliverypointtopointwithinametroplexisotenthemissinglinkoronlineretailing.FREDSMITHOnelargerpointtoconsideristhatwereallcitizensotheworldnowandwecantprosperinisolationromoneanother.Notinaworldthatsbecomesoinfnitelyinterconnected.Nothingcanlitupacommunityasterandmoresustainablythanavibrantandconnectedeconomy.Asacompanywehavetocontinuetoorgeconnectionsandpursueinnovationgrowthopportunitiesandultimatelyabetterworld.JILLBRANNONSeniorVicePresidentInternationalSalesROBCARTERExecutiveVicePresidentFedExInormationServicesandCIOBRIANPHILIPSPresidentandCEOFedExOfceKARENREDDINGTONRegionalPresidentAsia-PacifcRegionRAJSUBRAMANIAMExecutiveVicePresidentGlobalStrategyMarketingandCommunicationsNothingcanliftupacommunityfasterandmoresustainablythanavibrantandconnectedeconomy.FredSmithACCESS33 HowfastcanabusinessgoglobalWhendigitalandphysicalworldsmeetanythingispossible.Connectionsaresetinmotionandopportunitiesspeedup.Commercenowgoesfromlocaltoglobalintheblinkofaneyeoraclickofacursor.Tolearnmoregotofedex.comaccess.