Tough road to economic recovery from Covid: GMIS

The world faces a long and difficult road towards a full economic recovery despite the benefits of advanced technology, the development of a vaccine for Covid-19, and government stimulus packages worth over $10 trillion, said experts at the Global Manufacturing and Industrialisation Summit (#GMIS2020) which is being held on September 4-5.

The heads of Mubadala Investment Company, Siemens, Honeywell and Schneider Electric joined a keynote panel on day 2 of the #GMIS2020 Virtual Summit running on September 4 and 5 to discuss and debate ‘A trillion-dollar question: in an age of digital restoration, how are leaders repurposing our economies to deal with a post-crisis era?’, reported Emirates news agency Wam.

The session was followed by a keynote speech by Patrice Caine, Chairman and CEO, Thales Group.

The panellists were all united in their praise of swift government financial actions taken to protect jobs and businesses amid the widespread lockdowns imposed around the world to slow the spread of the coronavirus pandemic. However, they warned that this would likely lead to a period of economic stagnation in 2021, and possibly even through 2022, especially given the potential threat of a second or even further waves of the coronavirus.

Khaldoon Khalifa Al Mubarak, Managing Director and Group Chief Executive Officer, Mubadala Investment Company, said: "We have seen the positive economic reaction to the financial steps taken by most governments, particularly in the large economies around the world. Getting back to a more stable period of economic activity, and visibility into business growth, will take time."

Darius Adamczyk, Chairman and CEO of Honeywell, said: "There’s been an incredible level of stimulus in the United States, the EU and other economies as well. Now governments around the world are going to have to figure out a smart way to pay for this that doesn't damage the economies going forward."

Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, stated: "Protective measures have understandably focused on vulnerable older people in our societies, but the people who are getting punished because they can’t get jobs are the youngsters, and they are the future of our world," he said. "We work closely with governments and other institutions to propose internships, and try to make sure that there is not a generation that is left behind."

Tricoire added: "Large companies like us live within an ecosystem of many suppliers and smaller companies and it's very important that we help those companies through the crisis and actually use it to help them modernise and digitise, to be more sustainable and prepare for the future."

Joe Kaeser, CEO of Siemens, agreed that it was vital for government rescue packages to be channelled into the right areas. He said: "It's crucially important that we not only have trillions of dollars of government money and stimulus, but also that this money is invested into future-oriented and not backward-oriented industries, because they are going to die anyway. And if we are not mindful about this today, we risk forfeiting much of the future."

Al Mubarak sounded a note of optimism that a recovery could be enabled by the arrival on the market of potentially multiple vaccines for Covid-19 as well as progress that is being made with numerous therapies. "There is going to be a vaccine sooner rather than later" he said.

The panellists all agreed that the crisis would act as a catalyst for accelerating digital transformation in most sectors of the economy as well as a greater shift towards sustainability. As global leaders in technology and innovation, their companies have all made significant strides down this path.

Mubadala has been shifting its portfolio focus in recent years, investing more in technology and moving away from some of the traditional sectors the company had previously invested in. Since Covid-19 emerged the company has begun to accelerate that transition.

Al Mubarak said: "The way that we've been shifting our portfolio to these areas, be it energy, renewable energy, energy storage, mobility, automation, robotics, artificial intelligence, these are all areas that we at Mubadala took a view on pre-Covid. The crisis now just confirms we were on the right path, and we will continue to invest aggressively in that space."

Al Mubarak added that one of the areas that Mubadala is now monitoring closely is hydrogen, which holds huge potential to help combat climate change through the decarbonisation of energy systems, industry, and mobility.

Siemens is playing a leading role in the development of hydrogen-based solutions and Kaeser said hydrogen would be "the next big thing in energy". However, the cost of producing ‘green’ hydrogen from renewable sources is higher than conventional hydrogen, a gap which he said can only be bridged through carbon pricing.

"The most relevant regulatory topic we have on a global level is how we are going to price emissions on CO2," he said. "Once we figure that out we can do a lot for the environment but we need to have a common understanding on how to price the CO2 and that is very clear. Physics alone will not help us going forward."

Tricoire said awareness of sustainability issues had been heightened by Covid-19 because the virus and climate change are both by-products of human activities, urbanisation, and population growth. He added that energy savings and efficiency could play a major role in driving sustainability and that digital transformation, accelerated by Covid-19, would be a key factor in that process. He said: "Everybody on Earth has realised the value of resiliency and reliability. We took this for granted in the past, and now we see that monitoring and digitising is really important because it allows you to anticipate things."

Honeywell implemented a series of strategic initiatives spanning software, digital integration and supply chain transformation long before the crisis had hit, all of which were enabled by digitalisation, which Adamczyk urged all companies to embrace. "It's undeniable that the world is going to become much more digital, and trying to resist that change is pointless," he said. "And if one resists that change, I think one is in danger of having an obsolete company that's not going to be contemporary and keeping up with the times."

Al Mubarak concluded: "The world has changed, and you have to evolve. And I think the companies and countries and individuals that are able to pivot and really look at this new world will be the ones that succeed post-Covid."

In his keynote speech, Patrice Caine, Chairman and CEO, Thales Group, said: "As the world is getting increasingly unpredictable, it’s vital that people have confidence in the ability of institutions and companies to perform their roles and successfully address the challenges ahead. What has become evident this year is that agility and resilience are at the forefront of adapting to a new normal and building a future we can all trust.

"Our investment in human capital needs to evolve and strengthen with a view to driving success. Countries and companies can continue to be pioneering only if they pay more attention to their role in education. Education leads to innovation; and we must continue to innovate to be better prepared to face any unexpected crises and to help society bounce back and sustainability move forward."




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