Auto firms will be in defensive mode: Ghosn

By Mohammed Rasooldeen, Arab News

RIYADH: Participants at the Global Competitiveness Forum (GCF), which opened yesterday in Riyadh, focused on the current global financial crisis which has affected many countries.

More than 100 leaders and 1,000 delegates from all parts of the globe gathered in the capital here to discuss solutions to the global financial crisis under the theme entitled “Responsible Competitiveness.” The forum sponsored by Saudi Arabian General Investment Authority (SAGIA) also provided foreign participants to get an insight into investment opportunities in Saudi Arabia. Around 20 panel discussions have been scheduled to take place during the course of the three-day forum.

The GCF was founded in 2006 by the SAGIA. It is an annual meeting of top business leaders, international political leasers, and selected intellectuals and journalists, to be held in Riyadh.

Carlos Ghosn, president and chief executive officer of Nissan Motors said that the world is in the middle of a financial crisis which is expected to continue for the next two years. He added that it would continue till the end of 2010. The problem could be gradually overcome provided the countries maintain a regular cash flow in cooperation between the public and the private sector. “Such measures could greatly reduce the impact of the crisis,” he stressed. He predicted that oil price would be increased to $80 as the financial crisis improves and such improvement would be conducive to the development of auto industry.

He also said that cash bailout alone will not help a company to come out of the crisis. “Governments must introduce regulations to facilitate such companies to come out of the crisis.”

Speaking about the automobile industry in the world, he said that the global car market has been affected a great deal. “During the year 2007, 69 million cars were manufactured and in 2008, the number was brought down to 63 million and in 2009, he predicted that it will be further reduced to 55 million cars. “It will be almost 14 percent reduction in 2009, after a 9-percent fall last year, due to the global financial crisis.”

Ghosn hoped that auto manufacturers will be in a defensive mode for the next couple of years to cope with the economic meltdown. “Manufacturers will reduce their investments and inventory as car sales continue to fall.” Ghosn noted that the car industry is already under a lot of stress from three sources: The economic recession, the credit crunch and foreign exchange volatility. “The combination of these three factors make the task more difficult,” he stressed.

Commending the organizers for organizing such a forum at a time when there is a need for meeting of economic experts to exchange ideas, Airbus Chief Executive Thomas Enders said: “Countries must gear themselves to meet the economic challenges of the time.” He predicted that the world demand for new aircraft could plunge 50 to 60 percent in 2009 due to the global economic crunch and tight credit.

Earlier this month, Enders warned that the number of deliveries this year would surpass the number of orders for the first time since 2003. According to the company’s website, Airbus delivered 483 aircraft in 2008, and won 777 net orders valued at $100 billion.

In July, when oil prices reached record prices, Airbus struck deals to sell eco-friendly passenger jets worth $15.2 billion (9.5 billion euros) to GCC (Gulf Cooperation Council) countries.

In his speech, Mohammad Hassan Omran, chairman of Emirates Telecommunications Corporation stressed on the importance of responsible competitiveness in supporting national economies and encouraging investment in infrastructure and trade. “Etisalat has been operating responsibly and competitively across the Middle East, Africa and Asia for over 30 years. Developing human resources and operating transparently and in ways which reduce our impact on the environment are key components of our business strategy. This strategy is helping to position Etisalat as a valued participant in the development of economies across the region and also helping us to achieve our ambition to be one of he largest international telecommunication companies in the world,” Omran said .

While addressing a press conference in the afternoon, Omran said that his company has been selected as the third mobile operator in Iran. Answering a question, he said that the company stepped into Iran since the volume of investment was not so huge as in other countries. However, he added that his company believes more on local resources for its businesses than relying on foreign funds. He noted that the company has got 3G license to operate in Iran. Describing the oil crisis as unhealthy for the global economy, Paolo Scaroni, head of the Italian oil company Eni SpA said that the time has come to look for ways and means to ensure certainty and stability. Scaroni said that increasing stability requires several issues to be addressed. He said there should be a rapid, precise and transparent global reporting system for production, consumption and inventories. He called on consumers to “Save energy and use it efficiently.” He also pointed out that the world has to concentrate on developing solar energy. “More research should be carried out on developing portable type of solar energy which is renewable too.”

In welcoming speakers and delegates to GCF, SAGIA Gov. Amr Al-Dabbagh, commented: “We are delighted to welcome so many highly regarded speakers to GCF 2009. This is our third GCF, and perhaps most important, given the current economic climate. The discussions and speeches at this year’s event will encourage lively debate as to how the World can address the economic downturn which it is currently facing.”

Other participants at the summit would include business leaders and political figures, including; Shinzo Abe, former Japanese prime minister, Mary Robinson, former Irish president, Mahathir Mohammed, former Malaysian prime minister, Jean Chrétien, former Canadian prime minister, and heads of many international companies.