21 June 2016
Andrew Mackenzie, CEO, BHP Billiton
Asia Society 60th Anniversary CEO Series
New York, USA, 20 June 2016
It’s an honour to be part of the Asia Society’s 60th Anniversary CEO Series.
Before I start, I want to thank the Society for the leadership it has shown since 1956 – dedicating itself to building relationships through the pursuit of cultural, social and economic progress in Asia and the United States.
Asia Society New York’s founder, John D Rockefeller the 3rd, had great foresight in identifying the pivotal role that Asia would play not only for the U.S, but globally.
It goes without saying that the world of 2016 is, in many ways, unrecognisable to the world of 1956.
- the year of the Hungarian Uprising and the Suez Crisis;
- the year the Soviet Union was preparing to launch the Sputnik satellite, kick-starting the space race;
- the year Japan became a member of the United Nations;
- the year Elvis hit the national charts for the first time; and
- President Eisenhower was re-elected in a landslide.
All of which makes me wonder, if President Eisenhower were alive today, what would he make of the free world he once led? What would he say to the current generation of political leaders and candidates? I wish I knew.
Eisenhower was, like so many great American leaders, a man of the world. A man who saw not just the way things were, but the way things could be – the possibilities of progress.
That progressive vision is one of America’s great gifts to world affairs. A gift that began in 1776 when the fathers of the American Revolution made Benjamin Franklin their Ambassador in Paris.
Franklin was a disciple of the Enlightenment, a man of science and the world. A man who argued in favour of free trade and who said ‘No nation was ever ruined by trade.’
I agree with Benjamin Franklin.
I agree because despite what the current political landscape will have you think, the United States (and the world) ultimately benefits from free trade.
Let’s hope these benefits don’t fall victim to short-term populism that doesn’t always consider long-term benefits.
The world may have changed since 1776 and 1956 and no doubt will change again in the 60 years leading up to the tri-centennial of the American Revolution.
However, the possibilities and principles of progress remain the same. The world has changed, as have businesses.
Let me explain those principles, by giving you a brief history of BHP Billiton.
We started out as a silver mining concern in outback Australia in the 1880s.
The discovery that gave our company half its name was a boomerang-shaped lode of silver chloride in an area of the then British colony of New South Wales called Broken Hill. That one find was more valuable than the 1851 Gold Rush in Victoria, Australia, which in itself was bigger than California’s 1849 Gold Rush.
In the 130 years since, we have changed many times. We have changed the commodities we mine, the places we work, and the technology we use.
With a history such as ours we have accepted the responsibility to learn, evolve and adapt.
Where we have seen inefficiencies, we have fought hard to facilitate change, to enable growth and harness opportunities.
You only have to look at the evolution of the iron ore market over time to realise how far we have come.
We led the transition of iron ore trading to a spot pricing system – ultimately creating a more efficient, transparent market place. This has reduced risk for traders and customers and has also eased diplomatic tensions.
The key to all of this, we’ve learned, is free trade.
We also know that there is more to unlock from free trade and we know that it is up to nations to accept their responsibility required for further change.
The world we live in is always changing, but there are times when change accelerates.
In the 19th century it was the Industrial Revolution that accelerated change, creating the great divergence in productivity and prosperity between the likes of China and Europe and making Europe in general (and Britain in particular) the dominant global power of the century.
In the 20th century change was driven by the values, culture and economic influence of the United States.
This nation’s leadership and engagement in world affairs made the world a better place.
And now we are in the early stages of what some are calling the Asian Century. An era defined by the convergence of developed and developing economies across Asia.
The social and economic forces at work across Asia are irresistible… unstoppable!
China, India and Indonesia account for 40 per cent of the world’s population. And by 2050 those economies will be three of the world’s four largest economies (in GDP terms).
For brevity, let me focus on the ways in which China is changing.
I was in China just a few weeks ago to launch our partnership with Peking University on the use of Carbon Capture and Storage in the steel-making industry.
What impresses me every time I am in China is the enterprise of the nation and the ambition of its people. This is a country brimming with the possibilities of progress.
And with opportunity comes challenges too. Like further progress with economic reforms, debt management and environmental sustainability.
You can see that ambition in initiatives like:
- the One Belt, One Road strategy (aimed to boost infrastructure investment and trade initiatives in developing countries in Asia, Europe and Africa);
- the creation of the Asian Infrastructure Investment Bank;
- China’s increasing willingness to participate fully in the search for solutions to global issues such as climate change.
What I also love about China and the East is that they look at what’s out there and look to do better. They learn from the successes and failures of the West.
Some people think that China will be to the 21st century what the United States was to the 20th.
There will only ever be one United States of America. Just like there will only ever be one Peoples Republic of China. China and the U.S. are both unique.
China’s economy will continue to develop at a pace that will make the rest of the world envious. As China develops further, it isn’t just about goods and services.
It will play a vital role not just in physical trade, but also in a ‘knowledge economy’.
China is unique in its ability to take the best from the east, and the best from the west, and develop new products, technology and intellect. Ultimately to lead the world into the next phase of innovation across many industries and services.
China’s investment in R&D has already outstripped the EU and will match U.S. levels within four years.
What China has also been doing is using trade to make a new China.
Trade has helped lift hundreds of millions of people out of poverty.
Trade has returned China to its rightful place as a player on the world stage and there is further to go. Trade will do the same for Indonesia and India.
We need more free trade champions – especially developing nations. And we need to do this through initiatives such as the Trans-Pacific Partnership (or TPP).
The TPP promotes transparency, sets common standards, stimulates innovation and reduces commercial tensions between nations.
While China is not currently a party to the TPP, I would advocate for their inclusion in future iterations.
So what would this mean for the United States?
That depends on America.
I believe it’s in America’s national interests to stay true to the principles of progress that have guided this nation since the days of Benjamin Franklin. And that means supporting free trade through initiatives such as the TPP.
If both the U.S. and China are connected through this partnership, the world will be drawn together and stabilised. And the TPP is an enormous opportunity for American enterprise and American workers.
Let me explain why I see this as an opportunity.
By 2030, Asia is projected to have a middle class of 3.2 billion people. That Asia middle class will create a boom in the services industry.
The United States is already a world-leader in the export of services, a sector that employs four-in-five workers, and is therefore in an ideal position to capture new markets and create new jobs.
To paraphrase Benjamin Franklin, the nation will not be ruined by trade. On the contrary it will be renewed by trade.
Now is the time for the U.S. to lean in to Asia, rather than lean away.
Harmonisation of trade is the cornerstone of a world order that underpins growth, prosperity, opportunity and fairness for all.
And it is in the interests of the global economy for East and West – led by the U.S. and China – to achieve a social economic and geopolitical balance.
“Tell me and I forget, teach me and I remember, involve me and I learn.”
Again, wise words from Benjamin Franklin. We ALL need to be involved.
In conclusion, I have a confession to make. Like the Asia Society, I was born in 1956.
So, I know what 60 feels like – that time is passing and there isn’t a moment to lose!
One of the advantages of institutions like the Asia Society is that unlike Chief Executive Officers, they are timeless.
They can, therefore, be endlessly renewed by new people and new ideas. They can build on the knowledge and the experiences of those who went before. They can keep growing, so long as they keep learning and changing.
And that principle of progress is also true for companies and countries. They must learn and change in order to earn the right to grow.
Let me leave you with this thought.
I started out as a geologist. Geology has been described by some as the study of pressure and time. So too is the world of business.
Enterprises industries and economies are under constant pressure from market forces. The forces of finance, technological change competition and regulation.
Those market forces are irresistible, especially in a global market such as ours and beyond the control of CEOs or the Asia Society.
What we must focus on is that which is within our control.
That’s because the future is not fated…
The future is dreamed of…
The future is planned for…
The future is made.
And when it comes to the future, time is passing and there isn’t a moment to lose.
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For more information read the media release.