Stanley Black & Decker, Inc. (SWK) Earnings Call Transcript & Summary

Well, good afternoon, everyone, or good morning, depending on where you are in the world. I'm Francine Lacqua, and I could not be more delighted to be with you on this final panel to look at the global jobs recovery plan. I was looking at some of the wonderful actually research that they put together. An estimated 255 million full-time jobs globally could have been destroyed because of COVID-19. So the point of the session, of course, try to understand how countries can pivot towards investment into emerging high-quality jobs of tomorrow. And we have really a star-studded panel to help us along: Allen Blue, Co-Founder of LinkedIn; Sharan Burrow, General Secretary, International Trade Union Confederation; James Loree -- Jim Loree, Chief Executive Officer, Stanley Black & Decker; Jeff Maggioncalda, Chief Executive of Coursera; and Guy Ryder, Director General International Labour Organization. So thank you all for joining us on a very important topic. And I remind everyone that you can also ask your own questions. So please feel free to do it often.

When you look at exactly the last 12 months and how it's changed the way we work, technology having displaced all of the workers, Guy, maybe kick us off in trying to figure out how you think technology and the pandemic has changed it? Has the pace of change accelerated? Or has it just changed the course for the jobs of tomorrow?

Well, for most people, we've gone backwards at a very high velocity. I mean that's to be very frank about it. That figure of 255 million full-time job equivalents lost in 2020 is the most dramatic figure we've seen in this -- in modern industrial history. And we're just looking now trying to project forward from that deep, deep hole in labor markets, by the way, which has brought massive increases in poverty, increases in child labor, increases in forced labor. This is a big story. And the rest, frankly, has to be viewed in the context of that reality. Now we're looking forward from that deep hole of 2020, what do we see? Well, the report we've just launched today shows that by the end of next year, 2022, we won't have got back, in quantitative terms, the volume of jobs lost through the pandemic. We reckon the world will still be down by about 23 million jobs. So this is a very grave crisis. Now how has technology affected this? And the interesting thing is this drama has been superimposed on ongoing processes of change, those brought about by technological innovation, also those that have been brought out with much more to come on the road to climate neutrality, demographic change, much else. My view is technology has really helped us through this pandemic because very obviously, and others I'm sure can speak to this with great authority, it's enabled other people to continue [Technical Difficulty] is to continue to function. It seems to me inherently probable that, that experience has accelerated and will make permanent [ unprecedented ] change that were already underway. But I would warn, as I habitually do in these conversations, about any sort of falling into a notion of technological determinism, that because technologies are becoming available, that's where we're going, that is what were going to happen. Are we on the road to generalize remote working? I don't know. I'm not even sure that, that's a desirable outcome. But what it does offer is choice, I think. It enables us to construct ways of working, which haven't been available to us before and which could be highly beneficial. But we're in a bad place. Let's please start from that understanding. The world of work is in a very bad place right now.

Allen, what kind of -- I mean, not all sectors are created equally like Guy Ryder was saying, right? Some jobs have gone, I guess, new ones have been created. From your point of view, what's been, I guess, the biggest legacy of the pandemic in the last 12 months?

So before the pandemic, we saw this substantial shift towards the world of technology-focused jobs. And basically, the pandemic has accelerated that. So we're seeing probably the addition of 150 million technology-enabled jobs over the next 5 years worldwide. And that's a huge opportunity for people because these jobs are much in demand, tend to be very high paid. So it's an interesting transition, but a difficult transition for most people to get through. That's an acceleration. If I were to point to one of the things which has been a lasting impact though, I would say it's a lasting impact on the progress for equity in the economy in 2 ways. First, we think that internationally, women have lost 1 or 2 years of progress in terms of their ability to participate fully in the workforce. We know for sure the pandemic hit women much more -- much harder than it did men. Secondly, the pandemic is receding unevenly around the world. And that unevenness, unfortunately, is going to -- or has the potential to very substantially increase in equity globally. If we recover at 6.5% in the United States, while Africa is beset by the virus for 2 more years, that's a huge amount of potential lost ground.

Sharan, where do you see -- I mean Guy started by painting a really pretty bleak picture. Do you see anything that's horrific at the moment, but actually as economies reopen, you get jobs back? Or do you really worry about the futures of all workers?

Well, we certainly worry about jobs because Saadia has said that we need a social as well as an economic recovery, and you can't have one without the other. And we know that if we were to go back to the heart of a social contract, which is the security of having a job, then full employment would mean we needed about 575 million jobs at a participation rate of 75%, which is a little below the EU target. And the majority of those jobs have to be for women. So we do believe that investment in the transition for climate, that technology can create jobs, but it will only create jobs in a net drive towards full employment, if we're conscious of where we've lost and will continue to lose jobs and how we repair what is basically a broken labor market. So we've said that, first of all, when you're talking about the formal economy, we need 575 million new jobs, the majority of them for women have to be inclusive of young people. But we also need to say that the informal economy is indeed formalized to the extent we can. So if we're going to reach the SDG target of goal [ light ] by 2030, we also need to add to that job's target a formalization of 1 billion jobs on the planet that are currently informal. Now Guy presided over the ILO's Centenary Declaration, and it was very clear in a tripartite negotiation that all workers, irrespective of their employment arrangements, had to have a basic floor of labor rights and protections, fundamental rights, of course, a right to freedom of association, collective bargaining, to be free from discrimination, child or forced labor, but also occupational health and safety. COVID has shown us just how vulnerable workplaces can be. And we needed a minimum living wage or an adequate living wage evidenced by so people can live with dignity and of course, then share prosperity through collective bargaining. But we also need some control over maximum hours of work. And those of you who've watched the explosion in telework in your own workplaces, while Guy's right, it's still the minority nevertheless, you know that the right to disconnect, the right to actually manage a sanity between work and life is really important. So jobs have to be at the heart of it. We've called for every government to have a jobs plan. And I was thrilled by the launch study of the partnerships because we need those targets. We also should recognize that in the context of those targets and the figures Guy used about the loss, the massive loss of working hours, 18 million people actually left the labor market, no hope. Many of them, the majority of them are women, and we need to look at what it will take, indeed, as Allen said, to speed up the participation of women to get even back to where we were but certainly to get to equal participation, which is the policy aim of everybody. So this is the critical area. And I would just remind people that having a job, a secure job is about trust and opportunity and optimism for the future. So that's what we talk about as the dignity of labor.

I am actually getting quite a lot of questions that we'll get to in a second about how to address the issue that women and minorities have suffered the most from the pandemic. Jim, what can global businesses like yours actually do to help workers transition? I think you need to unmute. Very 2021.

Sorry about that. This whole concept of job creation is necessary and very real and very relevant. However, there's another twist to it, which corporations are facing related to skills mismatch. And we have, in the United States, over 1 million open jobs, and we cannot find people to fill the jobs that have the requisite skills. So this whole concept of how do we change that imbalance in the countries that are coming back from an economic meltdown into a robust environment, and we have labor shortages and so on. And so there are short-term solutions to it, but there's also -- there also has to be long-term and medium-term strategies to go with it. And corporations do have a role to play. And we're a very socially responsible company. We have a corporate social responsibility strategy. It has 3 elements. The first element is to empower 10 million makers, and this is by 2030. And then second, innovate with purpose. And then the third is to positively impact the environment. And we have quantitative carbon-neutral, carbon-positive goals and other goals related to packaging and recycling and so forth in that leg of the strategy. But leg #1 is all about skilling and reskilling. And for us, we have over 100 plants around the world, and this is very much a local issue because many of these plants are in locations that are not -- that don't have access to the type of talent and skills that are required to fill those jobs. So we essentially have to take the existing workforce, which is great because that is socially responsible, and we have to upskill them. And the way -- the solutions to this generally need to be local in nature. So local public-private partnerships at plant locations for the hourly workforce are definitely a solution and one that we're pursuing in the vast majority of our plants. Now when we get to this challenge to empower 10 million makers, and that essentially means upskilling them for our company, we are in the process of defining a 5-year challenge, if you will, series of challenges, which I think will be funded in the $20 million to $30 million level, and every year, we'll be releasing grants and funds to empower a 501(c)(3) nonprofit organizations and NGOs and even start-ups to go out and find ways to help upskill the maker community, the labor community, if you will. And we're very excited about that. We'll probably be launching that in a couple of months, maybe October. And then finally, when it comes to the salaried workforce, interestingly, so the acceleration -- the accelerating pace of technological change has created this environment where salary workers and hourly workers need to constantly be upskilling themselves, and the company needs to be supporting that. And so we have established relationships with Jeff's organization, Coursera, and we've trained -- we have given our people thousands of courses, they're self-administered courses through his platform, another platform called Precipio, another one from PwC that does digital awareness training and as well as internally curated platform as well. So very, very intensive upskilling program for the -- both workforces, hourly and salaried, as we go here, but it's essential. And it's not -- it's essential within the company, and it's essential to do what we can for society, and that's that empower 10 million makers by 2030.

Jeff, what are some of the jobs that the workers are actually trying to reskill for?

Well, so I think when you asked about the legacy of pandemic looking back, I think right now, it's been a lot of suffering and a lot of inequality has had a huge impact on certain populations more than others. If we went out 5 or 10 years and then look back, hard to say what it's going to look like, but I think there are 2 major features that will be remembered as being fundamental. That really starts with what Allen said. There will be 150 million or so, Microsoft estimates, jobs that require digital skills. There's a couple of things I think are very promising about that. If we recognize -- not every job is going to require digital skills, but there will be a larger and larger share of jobs and job opportunities that will be based on digital skills. The couple of things that are very, I think, important to note, digital jobs can often be learned on digital platforms, okay? So the ability to get learning opportunities, no matter where you are, at a very affordable, very accessible, often administered through institutional collaborations I think is, to some degree, something we see now post pandemic or in the early stages that we didn't see before. And not only the ability to get job opportunities where you learn to do the skills of the job, but also with remote work. And at Coursera, over half the people we're hiring now are not near an office. Now that's not going to be true for every company. It's not going to be true for every job. But increasingly, more and more job opportunities will be available to people even if the job opportunity is not in their city or their state or their country. If we can have learning opportunities for anyone, job opportunities increasingly for anyone, I think it does create an opportunity to have much more fair distribution of learning and work. And I think that to a large degree, digital is part of what's going to create that kind of opportunity, and we're seeing really great institutional collaborations to seize this kind of an opportunity.

Guy, do you see any opportunity anywhere? I mean you painted a pretty bleak picture at the start, 255 million full-time jobs globally lost that have been destroyed. When economies get better, we fully reopen, how many of those jobs are actually back? And how many will be people that don't -- cannot reskill that won't be able almost to find a job in their lifetime?

Yes. Yes. I mean the fact of the matter is despite that perhaps overly bleak start I gave to the conversation, recovery is underway, and we see in certain economies great job creation. I mean the world is creating jobs again, and that has to be good news. And there, I think, can be no doubt whatsoever that those who are able in a position to acquire digital skills are going to be very well placed to take advantage of them. But I want to come back to what Allen said, and I admitted to saying it in my first comments, incomplete as this recovery is, it is also extremely unequal for reasons which have been referred to already. And this is dramatically important because it will add to the burdens of existing inequality. I think there are 3 factors that we need to look at here. You might say I'm looking too short term in the conversation, but I'll say it anyway. One is the simple issue of vaccine distribution. Vaccine -- health policy is now economic policy. The way vaccines are rolled out and where they're rolled out has a massive importance for the contours of economic recovery, and we know the story there. The bad news is that, that first factor is compounded and exacerbated by the unequalness of fiscal space available to our different countries. The IMF tells us that USD 60 trillion has been spent in trying to mitigate and get out of this crisis. But we know where that money has been spent, by and large and fully understandably, it's being spent mostly by rich countries, which are now on the bounce-back for their own folks. If you go to a lower income country, it looks very, very different. And the third compounding -- and the problem is it all goes in the same direction. The third compounding factor, and it comes very strongly out of the conversation that we are having is that connectivity -- this ability to take advantage of digital opportunity is where we're going. Well, some of the world is connected, but a hell of a lot of the world is not connected. Our estimate is the number of jobs that can be done remotely in the global economy is 18%, 1-8 percent right now. That goes up a lot more in some economies than others. But put those 3 factors together. Unless we act on those 3, push some buttons to make those 3 variables change, we're not on the road to a benign recovery. I'm fearful that we're on the road that will work for some but simply will not work for others. And then we have this unequal, unfair world and I wish I could share -- I hope Allen's right about women's exclusion and the bounce-back there. It looks pretty grim right now. 9 out of every 10 women have lost their jobs in this pandemic. They've left the workforce. They haven't become an employee. They've become inactive, and pulling them back is really quite a big job to do. And I won't go into youths because I've spoken too long already, but it's pretty similar there.

Yes. And Jeff actually made the point right now that actually childhood education will be critical to mitigating inequality, which is actually the question that we have from Patrick. So thank you, Patrick, for sending that question in, how can we address the issue that women and minorities has suffered the most. Before I go to Jeff on this, are you proposing, is it debt relief? And do you see a willingness amongst leaders of maybe more developed economies to try and help the whole world out for this jobs recovery plan? Or does it feel like it's each to their own?

The answer to your first question is yes. The answer to your second question is no. That is to say we are going to find a lot of countries under -- particularly if inflation ticks up and we get interest rates moving, we're going to find a hell of a lot of countries in situations of debt stress. And that's going to absolutely damage their possibilities of moving forward. Do we see international leaders reacting? Well, we've had a little bit on debt service relief coming out of the G20. I think STRs in the IMF could be a big story. But I think we've got to look a bit more broadly at how fiscal space is attributed around the world. We've got some big issues around taxation to have conversations about in the future as well. But that's how I think I can respond to the point you make, Francine.

Jeff?

Yes. Well, I think that the possibility that inequality gets worse for a lot of the reasons that Guy mentioned are absolutely right there. On the one hand, the opportunity to have the ability to learn new skills digitally and to do jobs remotely is incredible. But if you don't have connectivity, neither will you be able to learn those skills. Generally speaking, I mean, access to physical education infrastructure, if you're an adult, is limited, especially in the countries that have the surging population growth. But also increasingly, if job opportunities require connectivity because those job opportunities might not be domiciled in your country, if you don't have connectivity, you're going to be basically shortchanged on the learning opportunities and the job opportunities. So I think governments really need to be focused on connectivity like electricity and water and basic needs. And then childhood education, the basics of reading and writing, literacy, mathematics, the basic building blocks are requirements if you want to be an entry-level, almost any digital job. You know -- you have to know how to write and read and some basic mathematics. So I think that the underpinnings of connectivity and education are going to be requirements of harnessing this digital future to create more rather than less inequality.

Allen, you -- yes, Sharan, go ahead.

Well, I wanted to pick up on that because I think there are what I call scaffolding factors we need to pay attention to. Education and skills is clearly one of them. And I'm so pleased to hear Jeff start with early childhood. We all know it's actually the best economic investment for the long term, but it's also one of the best human investment. And if you had childcare, and we absolutely talk about investment in care as one of the key sectors of getting those jobs because you not only get a huge multiplier impact for the economy, you take the burden of care off women and allow them to participate either in good jobs in child care, aged care, health, education or indeed in the broader economy. But education more broadly, we have to think of in 3 tranches. One is the early years through formal schooling. The second is indeed the school-to-work transition. And here, again, you have a gender discrimination [ pay ] study is huge, right. I've sat on skills councils in my own country with employers and workers, and we absolutely revere apprenticeships in the curriculum, but have a look at what happens to women who never get a chance at an apprenticeship. They're often, if any, skill based in the transition to work in low-level traineeships without qualifications and so on. And then in the workplace, and I want to address Jim's point on this because I was pleased to hear the discussion in the last round about how efficient it is to actually retrain or lifelong learning or upskilling or whatever term you want to use, rather than hiring and firing and wanting ready-made skills. Now I know Jim's company. I've worked with him before, and I suggest to all of you that he's one of the people conscious of decent supply chains because he's got a model of actually producing for the domestic economy, not just relying on low-wage jobs to produce for developed economies. But I do think we have to really think through where is the responsibility for both reskilling and indeed lifelong learning that gives you those that skills flexibility, but also where is the income mix. And if we don't have social protection, that is a broader concept, obviously, at a floor for resilience, for personal or national or global shocks. But also, if you need a period out reskilling, Sweden's got one of the best models, employers and workers say they will fund with government support, but with their own contributions appeared. Now in the developed world, that's possible. In the developing world, we have to look at what just development models mean. It does start with connectivity, Jeff, but it also is really about how we finance social protection and education. So there are the opportunities there and business can, in fact, build on.

Allen we started the conversation with you saying women and minorities have fallen back maybe by 2 years in terms of the glacial progress that we've made. And yet you speak to chief executives, you speak to world leaders and they say, "We're rebuilding better." A number of Chairman at banks have also said, "Maybe it's time that a female takes my place." Do you see a catalyst? Are we going to rebuild better? Even if now we've taken a back step, is it going to get better quite quickly? Or is it just talk?

So I know that the last 18 months have been an opportunity for companies to think about the ways in which they want to contribute to a more equal future. So just listen to what Jim was saying earlier. I think it's a -- training makers, I think it's a fantastic contribution. I know literally hundreds of companies which have plans, ideas, things that they want to put in place. A lot of those things are, relative to the size of the need, just a small piece. However, I will guarantee you that there are a bunch of companies out there with only a little bit of encouragement will invest very heavily in making those changes happen. I want to -- I'm saying it that way specifically because we're in the position right now where we have some parts of the economy and some parts of job creation, which are growing very, very fast. And I think we should all take as much advantage of those things as we possibly can. If I'm -- I mean putting myself in the shoes of a member of government is really hard. But if I'm in government, I want to have something which is going really, really well to allow me then to invest in the things which are going less well. So what I would love to do is say, "Wow, we've got a bunch of corporate partners. They've signed up for a bunch of stuff. We know that if we participate, at least to a small extent, in this massive growth on technology jobs with the gigantic economic benefits which come from them, maybe I've now got a part of the work that we're doing, which is working great." And now I can say, "All right. Now let's do it in a way which is more inclusive. Let's do it in a way, which thinks more about the long-term future in development." At LinkedIn, we've always called these rivers, places where the water is flowing fast. Let's take advantage of that water in order to power the entire economy. To be clear, I'm not trying to say that it's easy, and I'm not trying to say that it's just simple to focus on these things. But there is strong motion and opportunity for power there. So I think people need to take advantage of it.