Friday, March 18, 2011

FedEx's CEO On Japan

OBAMA WEAKEST, MOST FECKLESS PRESIDENT IN HISTORY?
IN A CONFERENCE CALL YESTERDAY FOR STOCKHOLDERS, FEDEX Chairman Fred Smith spoke on the effects of Japan's triple catastrophes on its business, and global business in general. I like Smith---he's savvy, smart and successful in a way that's stood the test of time and countless trials--and think what he says is worth a read. Of course so much is happening in Japan, the situation is so fluid, that none of us really know where this whole thing is going. Add to that, events in the Middle East, Libya, Bahrain and all points in between, and we have an even greater concoction of unknowns.

Anyway, here's what Smith said yesterday on Japan via conference call transcript:

Frederick Smith

Well, this is Fred Smith. I’ll ask Dave to comment further. It’s very difficult to ascertain what the effect is going to be. I don’t think in the scheme of things, with a company the size of FedEx, at about $10 billion a quarter, that the net effect of Japan is going to be significant. Now that doesn’t mean that there couldn’t be a lot of money in human terms, but in relative terms to FedEx’s operation. And secondarily, while this thing has been horrific and one of the worst things we’ve seen in a long, long time, the reality is it’s fairly localized. And assuming that there’s no great effect from the nuclear power plant issues, the Japanese are very resourceful people and we’re carrying a lot of traffic out of Japan as we speak. And the trade balance from Japan and to Japan was always much more export oriented there. So there will be more traffic going into Japan from reconstruction purposes than would otherwise have been the case. And of course, there will also be humanitarian relief, and as I mentioned in my remarks, we try to stand up and help people do that because we have a unique capability to do it, and other people in the industry also do that. So I don’t think that Japan will be significant overall. There may be some pinch points in various supply chains and have some effect on automotive or high-tech production. But the Japanese are very able folks, and I think the way ‘they’ve handle this thing is also very admirable. I might add, and on our board, we have Doctor Shirley Jackson, and Doctor Jackson’s the head of the Rensselaer Polytech. And she was also the head of the nuclear regulatory commission, and we coincidentally had our quarterly board meeting on Monday. So one of the most interesting things we’ve had in a long time was to listen to her educate us with about the situation in Japan. And I think the likelihood is that the effects of the nuclear situation there are more probably less rather than more, unless there’s some drastic, unfortunate convergence of events takes place. Read More.

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