60 seconds with Andrew Chang, UPS

Andrew Chang, UPS
Title: Director of corporate marketing for the industrial manufacturing and automotive segment of UPS
Location: Atlanta, Ga.
Experience: 10 years in corporate marketing
Duties: Responsible for creating and executing strategies related to industrial manufacturing and automotive segments.

Modern: Since you ship finished goods, UPS has a unique view of the economy. Looking forward, where are we and where are we going?
Chang: Because UPS moves approximately 6% of the U.S. GDP and 2% of the world’s GDP through our network, we see a number of trends. The short-term outlook is not where we want it to be. That’s mostly because of the uncertainty in the global economy. Global exports have always been at a higher rate than the GDP. We’re now seeing export growth lower than the GDP because of the slowdown in China. As GDP growth begins to climb up, we will see that trend go up to normal. We also believe the free trade agreements that were recently signed with South Korea, Panama and Colombia are going to make our imports and exports easier, which will make products made in America easier to sell and transport. Those are positive developments.

Modern: Commentators talk about uncertainty a lot lately. What does that term mean at UPS?
Chang: We look at broad macro economic indicators, like everyone else. The Purchasing Managers Index (PMI) has been below 50 for the last three months. That is an important indicator. There are also mixed numbers from unemployment and housing starts that are not where we want them to be.

Modern: Service providers like UPS enable manufacturing trends such as lean manufacturing. Are those initiatives alive and well in this economy?
Chang: They are. If you think about how lean manufacturing started, it’s to drive improvements in the supply chain. You’ll never see an end to that. One of the biggest trends we are seeing is that companies are looking for technology and strategies to reduce their inventory carrying costs. There are supply chain software solutions that can predict demand and provide more granular visibility into inventory. They are also looking to partners, like UPS, to take inventory off of their balance sheet until they use a part or component. We see a lot of opportunity for growth there.

Modern: We hear a lot about near-shoring. Are your manufacturing customers bringing some of their operations back to North America?
Chang: There is definitely a trend of manufacturers building production centers nearer to the consumers they serve. That’s happening on a global basis, and it’s happening in North America. One consulting firm, for instance, found that 61% of respondents were considering a move to better match the location of where they do their manufacturing with demand. Automotive manufacturers like KIA and Hyundai are definitely doing that with their plants in Georgia and Alabama. But we also see companies like Caterpillar building new plants in Texas and Georgia. With oil prices hovering in the mid-90s per barrel and rising wages in China, it makes a lot more economic sense to do that.