Also: Alphabet results, China forced labor, and Orbán outrage.
Good morning.
With recession talk on the rise, Fortune yesterday assembled a group of top CEOs, in partnership with McKinsey, to talk about how economic uncertainty was affecting their plans for the next 24 months. The group was surprisingly nonplussed. Their collective view seemed to be that the best companies have built balance sheets that will allow them to weather the storm, and have strategies focused on the long-term that will be undeterred by short-term disruptions. Several cited decarbonization as a driving purpose of their strategies.
Their attitudes mirrored the findings of new McKinsey research coming out tomorrow, which McKinsey managing partner for North America Asutosh Padhi summarized as follows:
“If you go back and look at history, moments of uncertainty are where we see what we call resiliency kick in. And companies that handle the moment well actually create real strategic distance relative to competitors.”
Some other excerpts from yesterday’s conversation:
“We’re focused on climate change and the role that our company can play in addressing the need to decarbonize our industry…and on how do we use that challenge to create innovation and opportunity for our business, for our employees, and for the customers that we serve.”
—Jennifer Rumsey, incoming CEO (Aug. 1), Cummins Inc.
“The focus for us is continuing to reinvest, continuing to digitalize buildings and infrastructure so they’re operated very differently than what historical has been achieved, and continuing to engage all of our constituents in their journey to get to net zero.”
—George Oliver, CEO, Johnson Controls
“Coming out of COVID, our internal target was to have the best balance sheet in the industry so that we could pursue our growth strategy. And, at the time we knew low carbon and circularity were two of the key drivers… We’re a cyclical business and we’ve gone through these cycles before, and you have to keep the long-term mindset and navigate through the short term.”
—Jim Fitterling, CEO, Dow Inc.
“If COVID taught us anything, it’s that home is probably the safest place to care for an aging society. We’ve spent three decades building a network to do exactly that… We know that we need to create an entirely new profession around home care, so we’ve really put a stake in the ground to transform how care is delivered and create an entirely new vocation.”
—Jeff Huber, CEO, Home Instead
“You’ve seen hundreds of thousands of layoffs now from technology companies… We are accelerating our [digital transformation] in the face of potentially an economic pullback because talent is available.”
—David McKay, CEO, RBC
“If a recession occurs, will we pull back? The answer’s no, we will not pull back. We have a very, very strong balance sheet and frankly we’re going to leverage that balance sheet to differentiate ourselves during a recession.”
—Kevin Hourican, CEO, Sysco
“We’re stronger than we were coming into the pandemic… We’ve been around since 1906, but the way we’re operating today, the speed that we’re operating with, is just light years of the way it’s been.”
—Joe Preston, CEO, New Balance
“[What’s] driving us is a combination of all of the turbulence in the world, as well as the push for sustainability… And innovation is really what brings the two of them together and allows us to overcome them.”
—Girish Saligram, CEO, Weatherford
“Since August of 2020, I’ve had my running shoes on, trying to catch up on capacity for our industry. So going into this this downturn, we feel a little bit more confident. We have a strong balance sheet, we understand where this industry is going, and we want to be ready”.
—Thomas Caulfield, CEO, GlobalFoundries
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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Alphabet results
Google yesterday met Wall Street’s expectations with results that showed resilience in a slowing ad market. Synovus Trust Company senior portfolio manager Dan Morgan: “I would construe this report as a sigh of relief.” Meanwhile, Microsoft also reported its results yesterday, missing analyst expectations with signs of a serious cloud slowdown. Fortune
China forced labor
Researchers from the University of Sheffield have published a damning report into forced labor in China’s Xinjiang region. The report details how the paramilitary corporate conglomerate known as the Xinjiang Production and Construction Corps (XPCC, or Bingtuan) forces Uyghurs to feed cotton, tomatoes and chemicals to the world’s supply chains. It’s a modern colonialist project with global connections and, while the U.S. sanctioned the XPCC a couple years ago, other countries are yet to follow. Axios
Orbán outrage
A longtime adviser to Viktor Orbán—the EU leader who is closest to Putin—has quit in disgust, following a speech in which the Hungarian prime minister said his people “do not want to become peoples of mixed race,” and countries “where European and non-European peoples live together…are no longer nations.” Zsuzsa Hegedüs, who stuck by Orbán through an already-incendiary hard-right premiership, described his words as a “pure Nazi text.” Politico
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2022 back-to-school, back-to-college surveys Despite financial uncertainty and rising inflation, survey results indicate that parents plan to spend more for back-to-school and back-to-college this year compared to last. From traditional school supplies to wellness products, Deloitte’s 2022 back-to-school and back-to-college surveys take a closer look at what families plan to prioritize this year. Read the report
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How are high-performance organizations attracting and retaining talent? Explore key findings from a new Fortune and i4cp global study. Download The Talent Imperative now. |
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