June 11, 2009. Shanghai campus -- CEIBS welcomed Emerson CEO David N. Farr to the Shanghai campus today for an exclusive presentation and Q&A with MBA students, faculty and staff. Mr. Farr has served as CEO since 2000, the culmination of a 28-year career with the company. Emerson is a leading manufacturing and technology company specializing in a range of products including: network power, professional tools, appliances, motors, industrial automation, climate technologies and process management. In 2008 and 2009, Institutional Investor magazine rated Mr. Farr among “The Best CEOs in America” and the top CEO in the electrical equipment and multi-industry category.

Emerson CEO David N. Farr

Displaying his high-powered, hard-driving speaking style, Mr Farr delivered an engaging talk detailing Emerson’s phenomenal recent growth -- from revenues of US$16 billion nine years ago to US$25 billion last year. Much of this expansion, he explained, is linked to the company’s increase in international sales from 20% to 54% of total revenue. Revenue from Asia alone has increased from US$1.2 billion to US$4.4 billion during Mr Farr’s tenure as CEO -- roughly half of which now comes from China. In explaining the Emerson strategy, Mr Farr says: “We saw that China, India, and Southeast Asia would explode with growth, not only as a manufacturing base but as an emerging marketplace.” About one decade ago, the company began investing in R&D, engineering and manufacturing specifically for the Asia market -- a move that Mr Farr says is paying off. “The Asia market will be larger than Europe (for Emerson) in a few years,” he told CEIBS.

Turning to the outlook for this year, while Emerson’s 2009 sales will likely end the company’s long run of steady sales growth -- due to the global financial crisis -- Mr Farr remained distinctly positive. “We are facing downward sales pressure like we’ve never seen before. We are all navigating new waters,” he said, while adding that Emerson will use the current downturn as a productive period of change. “I look at times like this as a time to fix bad investments, to innovate, and to even create some chaos within the company,” Mr Farr said. “Sometimes I like to create what I call chaos ? new ways of working and stretching our goals within the company -- because this creates opportunities. People think creatively when they are under pressure. We will have a much stronger company coming out of this.”

Among the advice he shared with CEIBS, Mr Farr listed “strong cash flow” as one of the key weapons necessary to survive the crisis. Cash is critical to Emerson’s strategy of reacting to the crisis by innovating and investing in technology. “We are now changing the business mix of the company, investing in technologies that are different from those I had thought were priorities just 12 months ago,” he said. “As a CEO you have to anticipate change.

Looking ahead, Mr Farr said Emerson is now focused on four main strategic goals: strengthen business platforms, globalize assets, drive business efficiency, and pursue technology leadership. Emphasizing the final goal, he said: “Technology is what makes Emerson special.” Mr Farr stressed that the downturn is the ideal time to develop “game-changing products and technologies,” that will allow Emerson to “explode out of the downturn” when the economy picks up and customer demand returns. Emerson used a similar strategy in the last downturn of 2003 and 2004, introducing new products that fueled rapid sales growth from 2005 to 2008.

Stressing Emerson’s dedication to innovation, he said the company now employs an increasing number of engineers in the Asia-Pacific and Latin America regions. Emerson’s strategy of innovating during the downturn will pay off well in two years time, he believes. “A lot of people will wait until the recession ends, and then start investing in new technologies and innovations. But that’s too late. We want to be all ready when our customers are ready. We are banking on a global recover in 2011 -- and by 2011, we will have new technologies ready to go to market.”