Chairman [Joseph] Sandmeyer, President
[Howard] Burnett, graduates, parents, guests, what a pleasure
and honor to appear before you today.
Some offer advice on occasions like
this, and I might be drawn to this just at the back end of
my remarks. Instead, I want to make the case for amazing optimism
as we draw close to a new millennium. That it happens in the
Year 2000 is an accident of timing. The case for optimism
is not.
Three things have happened in the
last decade: boundaries among nations and peoples have dramatically
lessened if not even collapsed; income disparities among nations
are reducing and wealth generation globally is accelerating;
and American companies have learned the most important lessons
of our lives in how to build products of high quality at low
cost.
You will see in a few minutes that
this is not a speech about dry economics, it is a speech about
ideals.
The briefest comments on United Technologies
Corporation will make these remarks more believable and therefore
more useful.
We are our country’s 21st largest
manufacturing company. More importantly, we generate nearly
60% of our business outside the United States. We also employ
125,000 people overseas, about two employees in three. We
build aircraft engines (Pratt & Whitney), elevators (Otis),
air conditioning (Carrier), helicopters (Sikorsky), and aircraft
and space systems (Hamilton Sundstrand).
This is why these comments today
are important to us. The world’s GDP, or total value of production,
right now is about $30 trillion. Most of this has been created
in the post-War period, in fact about 80%. And most of that
wealth generation has been by a comparatively small number
of people.
To be specific, three quarters of
the wealth of the world today is in the hands of only about
15% of the population: the inhabitants of the United States,
Japan, and Western Europe. The other five people in six in
our world make do, on average, with incomes only about one
twentieth, per person, of our own.
But this is all changing, and where
we had wealth generation in the post-War period by really
only about 750 million people, the inhabitants of those fortunate
advanced societies today, tomorrow will see wealth generation
by billions of people across a newly opened world.
Think about this. A little less than
two billion people, about a third of the world’s total, have
lived for most of this century behind the closed and hostile
borders of the formerly Communist world, from the former Eastern
and Central European satellites across the Soviet Union and
to the People’s Republic of China and Vietnam.
In these nations, and everywhere
else too, economic liberalism is afoot, and vibrant to a stunning
degree: deregulation, privatization, reductions in tariff
and non-tariff barriers, borders open and more open every
day to technology transfers and information flows. There is
an explosion of creativity, process improvement, wealth generation,
betterment of living conditions, advances in human rights
broadly although not yet everywhere.
And although we may see this only
dimly here at home in the US, I say to you that this is the
single greatest change underway ever in our world and affecting
more people by large, large margins.
And we see and will continue to see
these forces back home too, and in powerful and beneficial
ways, provided only that we maintain tight, tight engagement
with this huge scale world.
I want to be persuasive for a moment
about a second topic, productivity and just plain getting
better at the things we do.
For example, we as UTC report a bunch
of things to governments regularly, among them environmental
impacts and employee health and safety. And on every one of
these measures, we report today 80% improvement now as compared
with only a few years ago.
The good news is that this is not
just me bragging, it’s true all across America and even across
the world.
Here’s another one. For obvious reasons,
we don’t like to see our Pratt & Whitney engines shut down,
ever, in flight. Thirty years ago, at the dawn of the 747
era, we saw about forty shutdowns per 100,000 engine flight
hours, which works out to about once per engine per year,
which is maybe why we typically had three or four of them.
Today, the shutdown rate is about once per engine per forty
years, which is more or less once per life. And, lest you
be nervous, one of those big Boeing 777 twin engine airplanes
will not only fly for hours on one engine, it will also take
off with one engine, not that you would ever want to try.
We have had gains comparable to this
in productivity, too. You will have heard in your classes
and in the media about the possible overstatement of the Consumer
Price Index, and the associated understatement in productivity.
And the argument is over about a single percentage point.
What I confirm to you is that it’s not a percentage point,
it’s more, and that we are already in the midst of the greatest
gains in productivity we have seen since the Industrial Revolution,
and there’s a huge amount yet to come.
There are reasons for these gains,
and they are clear and understandable. In America in the post-War
period, we invented everything: from lasers to semiconductors
to digital communications to digital control to materials
to space to the health sciences, and much more too.
But we never worked on process, and
the Japanese did. Often they took our products, our innovations,
and re-engineered the processes by which we made them and
then built these products better and cheaper, much better
and much cheaper.
About ten years ago, we in America
figured out that we could do the same thing, and we have done
it, with stunning results. And we are not done yet, by any
means.
So we have today an open, and a much
more open world. We have the prospect of substantially accelerating
wealth generation, and we have the prospect of doing this
with not just improved environmental impact per thing we produce,
but with enough improvement that we are actually gaining ground,
and significantly, on the badness we generated out of ignorance
in prior periods. And we will build safer and better, and
higher value products, always.
There is one important condition
for us as Americans to participate in this goodness ahead
of us, and that is to remain engaged and aggressively so with
our world.
Not everyone agrees with this engagement
reasoning. There is a contrary view; it comes with various
labels, and for convenience I mention one of them, “globalization
is pauperization,” which is the notion that there will always
be some person out there somewhere, as well or even better
qualified than you, willing to do your job. And the result
of open borders is therefore that we chase each other’s wages
to the bottom of the barrel and everybody winds up impoverished.
In other words, close or partially close our borders, Fortress
America, Fortress Europe, keep the wealth in and the poverty
out.
Nothing could be more wrong headed
nor further from the truth. The facts are that the wealth
and the job creation in emerging markets are going to happen
whether we like it or not, and we can choose to be players,
or not, to benefit along with the gains of others, or not.
We do have the case for amazing optimism.
It’s a factual case and a good case, and it’s important to
you as graduates. And most Americans agree about this. Going
back six years to February 1992, the Consumer Confidence Index
was at 47, its lowest level ever. Yet in six years, this hope
index has nearly tripled. At the end of last year, the CCI
broke 136 for the first time since Neil Armstrong was on the
Moon, and the latest monthly readings are better still.
With hope, we build always for a
better future, we invest for ourselves and our families and
communities, and we are generous and gracious and giving.
With hope, we accept setbacks, for
we know that the next event, the next fact, the next uncertainty
will go our way. With hope, we educate ourselves, we accept
a lower net wage and well being today because we know it will
be better in the future. And with hope, we let the other win
from time to time, and with grace and no malice, for we know
that it will be our turn next time.
And this is exactly where you are
today, as graduates really fortunate in your timing: right
smack in the middle of the best conditions in this century.
I promised some advice at the end
of these remarks, and you have already heard my most important
comment: be optimistic always, no naysaying, no doomcasting,
never.
The second advice is to work relentlessly
to be good at something. Too often, we are consumed by self
doubts, by lack of optimism and conviction, and we let years
slide by without engagement. Always, always engage.
Third, be an idealist, and, by the
way, prepare yourself for a big surprise: it works, and works
big time.
Fourth, don’t ever think you can
politic your way into goodness. It may work a time or two,
but it’s just not a reliable strategy. For those of you headed
into business, one of my phrases is that I like to see the
back of your heads, not your bright, shining faces. In other
words, understand that what we need and what you want are
just plain good work, not your help in judging that work.
Let me add one more: relationships
and diplomacy. Realize that most of what you will accomplish
will be with and through others. Learn to give in these relationships,
learn to value consensus even though alone you might have
a somewhat different solution. And never get caught in the
“fight or flight” syndrome. There is a third path, and that
is simply diplomacy: not escalating, but then again not giving
up.
There is one common theme in these
words, and that is hope and optimism. Especially in our world
today, you are on a rock hard foundation with these feelings
and convictions. And it is on these convictions alone that
you will build a rewarding, satisfying, successful life: educating
yourself, broadening yourself, giving to others, inventing,
developing, contributing and, along the way, just having a
rewarding and really good time.
Thank you.
