Economic Outlook by Peter Hall

Jun 28, 2024

Economic Outlook by Peter Hall

Introduction

  • Speaker: Jason Meyer, CEO of Engen
  • Guest: Peter Hall, former Economist for EDC, now runs his own consulting firm
  • Sponsor: Salesforce (supports manufacturing industry in Canada)

Salesforce's Role in Manufacturing

  • Modernizes commercial operations
  • Reduces revenue leakage
  • Transforms service experience for manufacturers
  • Strengthens channel partnerships
  • Platform built for agility
  • Allows manufacturers to pivot and prove new business models

Economic Challenges in Manufacturing

  • Supply chain disruptions exacerbated over the years
    • COVID-19 pandemic
    • Suez Canal blockage
    • Geopolitical tensions (e.g., war in Ukraine)
    • Inflation
  • Labour shortages and skill shortages impacting globally
  • Transition to a lower carbon economy affecting insurance premiums
  • Adoption of advanced technology presenting both challenges and opportunities

Inflation Concerns and Predictions

  • Peter Hall previously predicted inflation due to high savings and demand surpassing supply
  • Real inflation and issues stemming from underinvestment and misaligned supply and demand

Insight on Global Economic Conditions

  • Notable V-shaped recovery in retail in the US and Canada post-pandemic
  • Quick return to below pre-pandemic levels of unemployment in both US and Canada
  • Prior “bubbles” requiring corrective measures leading to exaggerated economic cycles
  • Global supply chains and production capable of rebounding if not phenomenally damaged
  • Underinvestment in productive capacity a substantial issue leading to supply constraints

Period of Under-Investment

  • Stretched business cycle (from 10 years to 20 years due to globalization and technology advances)
  • Unaddressed pent up demand (
  • Housing market trends in the US (deficit of supply impacting market sustainability)
  • Increasing technology and global communications efficiency impacting production and logistics

Supply Chain Structuring and Technology

  • Disruptions in supply chains and impact on inflation and production costs
  • Importance of investment in technology for transforming manufacturing
  • Emerging markets becoming crucial; leveraging labor-rich countries for supply
  • Decentralization of supply chains, importation of labor, and advanced tech adoption needed

Strategic Business Considerations

  • Need to balance immediate fiscal and monetary policies
  • Coordination between fiscal and monetary policies to avoid conflicting impacts
  • Mitigation strategies for supply chain risks and leveraging tech

Final Takeaways

  1. Stretched out business cycles demand new strategies in supply and investment.
  2. Inflation likely short term; main concern is the impact of higher interest rates.
  3. Supply chain restructuring crucial; companies should prepare for integrated, resilient global supply chains.
  4. Necessity of embracing advanced manufacturing and continuous investment in technology and capacity to overcome labor and supply shortages.
  5. Anticipation of changes in sectors needing automation due to demographic trends and labor shortages.

Conclusion and Q&A

  • Economic cycles remain similar, but their durations are influenced by globalization and technological advances.
  • Importance of ongoing investments for maintaining competitive advantage and addressing labor shortages through tech and smart global labor use.
  • Close monitoring of fiscal and regulatory policies to mitigate interest rate adjustments and manage inflation effectively.
  • Recognition of Canada’s unique domestic economic challenges juxtaposed with its export opportunities amidst global pent-up demand.