Corporate Leadership

Megatrends reflect long-term processes, ones that span decades. That’s why the shortage of resources and continuing globalization have been on our agenda for a long time now. Individual trends can be pinpointed more precisely now than 15 years ago. And there has also been a shift in their relevance.

Three megatrends are currently shaping society – the proper stewardship of the environment, particularly climate protection, the accelerated globalization brought about by the development of emerging markets, and the scarcity of natural resources. Other key trends include the increasing lack of qualified specialists and the consequences of demographic change.

For a long time, discussion about climate change, its causes, and its effects was exclusively the domain of scientists, futurologists, and environmental organizations. Today, this issue has come to dominate public debate like no other. The forecasts of the Intergovernmental Panel on Climate Change have found an audience around the world – if greenhouse gas emissions remain undiminished, the average global temperature will rise, causing floods, heat waves, and droughts. The consumption of fossil fuels – particularly oil and coal – must therefore be reduced drastically and without delay. The principle of using finite resources economically also makes sense in terms of security of supply, costs, and our responsibility to future generations.

The scientific findings and the increasing awareness of the related problems in the public at large have prompted governments around the world to respond. The 20/20/20 formula devised by the European Commission points the way forward. It encompasses the goals of the European heads of state and government for 2020 – to cut carbon dioxide emissions (CO₂) by 20 percent, to increase the share of renewable energies to 20 percent, and to improve energy efficiency by 20 percent. The Climate Change Conference in Bali showed that the governments are moving closer to defining mandatory targets on an international level. Although there is still dispute in the business world as to which limit values are justifiable or indeed feasible, our task as a technology company is to face up to the major challenges of our time and use the technological expertise we have built up over more than 120 years to help solve the world’s complex and pressing problems. And we believe that high-quality technical innovations are needed now more than ever.  We rely on the know-how of our more than 270,000 highly trained associates, who have already made technological advances in the past.

Worldwide economic growth continues to be driven by the rapid development of the emerging markets. As a consequence, raw materials are becoming ever scarcer. The focal points of growth are shifting from industrialized countries to Asia in particular. Asia’s share of global GDP is set to rise from 27 percent today to almost 35 percent by 2015. In this period, Asia will shoulder more than half the total growth of the world economy, catching up with western Europe, presently the world’s strongest economic region.

The industrialization of the emerging markets is leading to a serious shortage of raw materials. Today, 25 to 30 percent of all industrial metals mined worldwide are being used to expand China’s infrastructure. Prices in virtually all raw materials sectors are rising steeply. The price of copper, for example, doubled between 2003 and 2005, while the price of tungsten and titanium rose by 200 percent in the same period. As the world market price for coal increases, so, too, do energy costs.

We have prepared for these developments in our long-term business plan. By 2015, we want Asia Pacific and the Americas combined to account for half of our global business volume. To counter the price and supply risks we face with raw materials, we are cutting down on the use of very scarce resources and looking for alternatives in our product development operations. By remanufacturing used car parts, we are saving on raw materials, cutting back on material costs, and passing on these benefits to our customers. To counter rising energy prices, we are focusing on developing energy-efficient products and processes in all divisions. In addition, we are promoting the use of renewable energy.

Global demographic developments are one of the greatest challenges of our age. In the twentieth century, the earth’s population grew more quickly than ever before. This development is also leading to a steep rise in the proportion of older people in the global population.

The rise in the number of the elderly (aged 60 and above) goes hand in hand with a decline in the number of young people (younger than 15). In 2050, for the first time in history, there will be more older than younger people worldwide. However, these demographic developments show strong regional variations. For example, the population of countries in southern Africa and the Middle East will double by 2050. It will also grow in India, Indonesia, the U.S., Mexico, Great Britain, and France. In contrast, Germany, Japan, and many countries in central and eastern Europe will experience a population decline. As a result of this imbalance in population development, the “demographic weight” of the emerging and developing countries will increase considerably compared to industrialized nations.

Shortage of skilled human resources
The tangible change in global demographics will have serious consequences for the working world and the HR policies of industrial companies. The declining birth rate will heighten competition in industrialized countries for specialists and young talent. On the other hand, the demand for training and education will rise considerably within the emerging growth markets. Both developments will lead to a lack of skilled staff and of highly trained executives. Opportunities for women will increase as they become more numerous in the workforce. The same applies to the employment of foreign workers.

Globalization has improved the standard of living in nearly every part of the world. However, serious structural differences still exist and new conflicts are emerging.

One of the major entrepreneurial challenges of our age is how to establish a workable relationship between the global economy and local structures. Such a relationship must be equipped to overcome the polarization emerging ever more clearly between global markets and globally available know-how and capital on the one hand and local interests, resources, and socio-political structures on the other. This polarization has to do with the differences that exist worldwide between the dynamic regions and the still very poor developing countries, where the gap in income between the poor fifth and the rich fifth of the world’s population is widening. In Europe, there is also such an obvious and widening gap between booming regions and structurally weak areas. Even on the individual level, the winners of the knowledge society stand in stark contrast to the losers, i.e. those who are incapable of dealing with change.

Promoting education
Providing better access to general and professional education is one of the ways of defusing this polarization of society. Investing in education is the best way to prevent unemployment. If glaring differences in income and the risk of poverty are to be limited, a special effort is required in areas where educational opportunities are unequal due to social backgrounds. Where people are unable to participate in the global knowledge society because they do not have the requisite level of skills, social responsibility calls for measures designed to encourage such people to take the initiative in acquiring requisite skills, as well as to provide a social safety net.