Competitiveness

Company information

	Key points

• HP supports enhanced education and retraining initiatives designed to maintain updated skills of the labor force in the localities, states, provinces, regions and countries where HP conducts business.
• Global access to technology necessitates an openness to maximize these technologies through common standards and policies.
• Fostering a strong climate for business investment – favorable tax treatment, appropriate regulations and research & development in both private and public sectors – will enhance HP’s competitiveness.
• With significant globalization in the last 15 years, increased services outsourcing and international demographic changes, labor laws need to be reformed. Reforms need to provide business’ flexibility, encourage specialization and outsourcing and provide a framework for temporary employment. These changes will result in a market-driven labor model with more voluntary compliance of standards balancing the needs for social security that are driven by local political considerations.

	The issue

Around the world, the competition between companies and national economies is rapidly increasing. Strong governments create infrastructure and provide a robust economic platform on which to enhance its citizens’ quality of life. Key drivers are the growing international integration of production and trade, the emergence of new economic players, and pervasive information and communication technologies. For example, China today has a GDP of $2 to $3 trillion growing at double digit rates, passing Japan last year to become the world’s third largest exporter. By mid-century, China and India together could account for 50 percent of global output alone, competing on cost and quality.

Macro-economic conditions around the world are critical to fostering sustainable growth and global competition. This includes market access, labor skills and cost, intellectual property protection and the regulatory regime determining the operating framework for companies. It is crucial to competitiveness to build a business environment that rewards risk-taking, attracts public and private investment and encourages value creation through low cost and high quality technology.

As economic and employment structures evolve around the world, sustainable growth requires continued investment of resources (human and capital) toward forward looking research. Research and development are critical to securing dynamic, high-quality competitive growth. HP spends $3.6 billion annually on R&D and advanced research to improve the way people live and work in developed and developing economies.

Global competition is rapidly changing the employment structure of developed nations, reducing simple manufacturing and service jobs while boosting the creation of new delivery hubs and highly skilled professionals. Against this backdrop governments are sometimes tempted to resort to protectionism to prevent changes in the employment structure, which harms the creation of jobs of the future. Nations must enhance their contributions to the development of an educated, entrepreneurial workforce to fill tomorrow’s jobs, while also creating the right conditions to encourage companies to create employment.

	HP’s position

In order remain competitive in an open and fair global marketplace, HP supports the following policies:

• Promote a regulatory and business environment that encourages entrepreneurship, investment and sustainable growth.
• Support efforts to reduce regulatory burdens for small, emerging businesses in a variety of geopolitical environments and promote the “rule-of-law” in emerging markets as a growth economy depends on the stability of core infrastructure.
• Encourage governments to provide R&D funding, especially for physical and engineering sciences, and have a strong R&D development plan including tax credits and incentives.
• Encourage governments to achieve transparency and resist the temptation to protect national economies against global competition and actively support investment in new jobs.
• Increase investment in accessible, broad-based education (including a focus on the science, technology, engineering and mathematics -- STEM fields), as an effective lever for growing countries of diverse, highly skilled workforces and prosperous future customers around the globe.
• The U.S. needs to fully fund the U.S. National Science Foundation, the U.S. Department of Energy's Office on Science and the U.S. Commerce Department's National Institute for Standards and Technology. Investments in these agencies, and other such government agencies around the globe, fund basic research in government and academia. These expenditures hire scientists and innovators who develop new IT innovations and create classroom capacity to train future generations of inventors.

	Impact on HP

Encouraging a climate for sustainable growth:

• The expansion of the European Union and the U.S., and the future accession of Bulgaria and Romania, will likely prove a significant stimulus to Europe’s economy, spurring the need for a transparent public procurement regime, thereby making government contracts open and fair for potential vendors/contractors.
• The U.S. has only maintained – not enhanced – a climate for sustainable growth and risks being at a competitive disadvantage in the global marketplace due to the need to reform basic infrastructures, including better education and transportation systems.
• The growth of China and India creates a new network of production and services and sharp increases in intra-regional transactions – opening new markets as well as more cost effective and more efficient supply chains for products and services to HP.

Investing in innovation and R&D:

• The U.S. R&D tax credit does not reflect today’s business models that have evolved from a tax formula based upon measurements and instruments to a focus on PCs, printers and IT solutions.
• In Europe, the Networked European Services & Software Initiative (NESSI) encourages the development of software and service-oriented architectures designed to help companies develop flexible business models to compete in the global environment and widen the range of user friendly services available to citizens, while guaranteeing privacy and safety. This is also an initiative HP government affairs supports in other countries as well in terms of adaptive standards for building a tight coupling between business/service process needs and IT through the adoption SOA.
• Governments should encourage R&D activity in physical and engineering science in both the private and public sectors. Full funding of basic research should be a public priority for countries' and states' major scientific agencies and universities, such as the U.S. National Science Foundation.
• Governments should also create favorable tax incentives for private R&D spending to help commercialize important IT innovations, such as the local, regional and national R&D tax credits.

Investing in future jobs and education:

• The continuing loss of manufacturing and service jobs in many Western European economies has led to an ever-rising surge of political populism and protectionism, hindering the growth of innovation and job creation.
• In order for companies such as HP to stay competitive in the global marketplace, the U.S. and other countries must avoid isolationism and work together to embrace new opportunities through trade liberalization to achieve greater economic growth and prosperity.
• An immigration system that welcomes non-U.S. personnel is fundamental to the ability of employers to compete in the global market and to maintain a mobile workforce
• China and India are heavily invested in R&D, and math and science education and present significant challenges and opportunities for the global community.
• HP would like to encourage countries like India which are emerging centers for the future employment in the global marketplace to transform their higher education policies through innovative models of collaboration with the best education practices in the world to achieve the full potential of their human resources. HP would also encourage adoption of education practices that encourage creation of the mix of appropriate skills needed in the knowledge economies of tomorrow.

	HP actions and outlook

• Global: From 2004-2006, HP has contributed a total of $36 million in Technology for Teaching grants to more than 650 schools worldwide. During the 2006-07 academic year, projects through this program will impact nearly 45,000 students. The program is designed to improve student achievement through the innovative uses of technology in the classroom while encouraging student interest in careers in science, technology, engineering and math. Over the last 20 years, HP has contributed more than $1 billion in cash and equipment to schools, universities, community organizations and other nonprofit organizations around the world.
• U.S. National Science Resources Center (NSRC): Through the HP Science Leadership Grant initiative, HP support has assisted over 80 school districts in implementing hands-on, inquiry-based science in K-8 classrooms that has reached more than 1 million students. The majority of these students are from low-income families.
• China ‘e-learning’ Model School Project: HP and China’s Ministry of Education have partnered to bring technology-based education resources, distance learning and improved teacher training to middle schools in Beijing, Guangdong, Sichuan, Shanxi, Hubei, Xinjiang, Hunan and Jiangxi.
• Europe Grid Computing Access: HP partnered with UNESCO to provide grid computing access to Eastern European universities. The joint project improves scientific research in Croatia, Bosnia Herzegovina and Serbia-Montenegro. The initiative will help universities to harness the power of grid computing.
• Jordan: To create a knowledge-based economy, the Jordanian government launched an initiative to introduce IT inside 100 “Discovery Schools” to allow access to e-learning for remote communities and to develop public-private partnerships. HP and companies such as Microsoft Corporation and Cisco Systems contribute by developing e-curricula, providing technology support and equipment, and working with local companies, to enhance the country’s ICT industry.
• Africa: HP participates in the Nepad e-Schools project, an initiative which aims to connect all secondary schools across 20 countries in Africa and improve the standards of education delivered within a five year period.