“This is a cyclical industry, but the situation right now is the most extreme it’s ever been,” said Simon Segars, CEO of the semiconductor chip design specialist Arm Holdings, headquartered in Cambridge, England. “It takes months to build a wafer full of chips. So, placing an order and expecting it next week, that’s just not going to happen.”
The global chip shortage is a factor in the ongoing supply chain disruption, which combined with labor shortages and even climate change, has created some of the greatest challenges for the C-suite. During Fortune’s CEO Initiative conference in Washington, D.C., on Tuesday, industry leaders weighed in on reimagining supply chains for resiliency.
“I think we’re in a really interesting moment in the economy and markets in general, where 2020 was a year of recovery; and we’re transitioning to a period of resiliency for the supply chain,” said Katie Koch, partner, co-head of fundamental equity at Goldman Sachs Asset Management. “If you’re asking me what’s going to happen going forward, I personally think Wall Street asset allocators in general, have put too much pressure on companies to meet quarterly earnings and overly optimized supply chains,” she said. Koch added that “we expect some reshoring.” But creating a resilient supply chain will take some time. “Some of these issues are going to take five to 10 years to fix,” she said.
Location change will be costly, Segars said. “To fundamentally change the equation on [supply chain] resilience from a geographical diversity point of view, it’s going to take a lot of money for a lot of years,” he said.
For a more robust supply chain, digitalization is key, said Barbara Humpton, president and CEO of Siemens Corp. Humpton attended the UN Climate Change Conference, COP26, last week and shared some of what she learned. “This is the imperative for business leadership today—government will be able to articulate certain commitments and goals, but business is going to have to carry this across the line,” she said. “In the U.S., with this investment in infrastructure right now, I believe we have to be holding multiple goals in mind. Yes, we want to build, and we want it more sustainable and more equitable.”
A strong labor force in the U.S. is needed for supply chain resiliency, but many challenges persist. “We’ve struggled to pass minimum wage for many decades, but we actually went kind of above minimum wage in many of these industries by trying to bid labor back into the labor force,” Koch said. Currently, inflation is outpacing wage growth. There will be continued upward pressure on wages, she said. “We’re certainly seeing that from some of our portfolio companies,” Koch said.
The Great Resignation is a real issue, she noted. Among the demands of employees and jobseekers are higher wages and a focus on wellbeing in the workplace amid burnout, she explained. Such issues are “going to keep a lid on labor force participation unless we can find more ways to build resilience into the workforce,” Koch said.
See you tomorrow.
National law firm Dykema’s annual M&A Outlook Survey found a positive outlook despite key obstacles. About 75% of respondents expect the M&A market to strengthen over the next 12 months—the highest level of optimism recorded in the 17-year history of the survey, according to Dykema. The survey polled more than 260 senior executives and advisors across the U.S. including CEOs, CFOs, managing directors, and other professionals involved in M&A activity. When asked about significant obstacles to M&A in next year, respondents said the pandemic still ranks as a top challenge—49%. Less than a third said the Biden administration's tax policy, and only 26% said inflation concerns.
Courtesy of Dykema
A Gartner survey released on Nov. 16, gauged the perspectives of finance chiefs on 2022 priorities. About 72% of CFOs said they will focus on improving the flexibility of budgeting and forecasting. High on the list of priorities will also include initiatives to reallocate capital based on changing demands (60%), and 58% cited redefining the employee value proposition in a hybrid environment. The data is based on survey of 251 CFOs and other finance leaders.
Rodrigo Brumana was named CFO at Poshmark, Inc. (NASDAQ: POSH), a social marketplace for new and secondhand style, effective Dec. 1. Brumana will join Poshmark from Amazon, where he served as CFO of Amazon Private Brands, managing a team of finance, business intelligence and analytics professionals located across the Americas, Asia, and Europe. Prior to Amazon, he served as the CFO of OfferUp, a mobile marketplace for online and local transactions. Brumana also led finance and analytics for eBay Americas. He was also previously vice president of finance at RetailMeNot, where he helped execute an initial public offering, held finance executive positions with HP Inc., and began his career in investment banking.
Tucker Dearth was named CFO at Omnipresent, a global employment services partner. In his new role, Dearth will be responsible for the company’s robust global financial operations to better support Omnipresent customers. His experience includes co-founder and COO of CarePod, managing director for First Utility GmBH, and a vice president at Morgan Stanley in London, handling investments in portfolio companies. More recently, Dearth was CFO at Data Guard, a SaaS business focused on privacy and compliance solutions and headquartered in Munich with operations in Europe and the U.K.
Teri Loxam was named COO and CFO at Kira Pharmaceuticals, a global biotechnology company. Loxam will replace interim CFO Matt Gorman. Loxam joins Kira from SQZ Biotechnologies, where she served as CFO. She previously served as SVP of investor relations and global communications at Merck, VP of investor relations at IMAX supporting the company's IPO on the Hong Kong exchange, and held senior strategic roles at Bristol-Myers Squibb.
"Sadly, every prediction I’ve made has pretty much come true. I hope I’m wrong this time, but I think by March, April, May, we will have a fully vaccine-resistant variant."
—Immunologist Dr. Mark Dybul, CEO of Enochian BioSciences and a professor at Georgetown University Medical Center’s Department of Medicine, discussed the COVID-19 pandemic during Fortune's CEO Initiative conference.
This is the web version of CFO Daily, a newsletter on the trends and individuals shaping corporate finance. Sign up to get it delivered free to your inbox.