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11/09/2010

Editor�s note: Alan Elkin, CEO and the co-founder of Active Media in 1983, made the following keynote speech at this year�s International Reciprocal Trade Association�s 31st Annual Convention. Active International is the world�s largest corporate barter company and has scores of offices worldwide.

Alan Elkin Addresses Peers With IRTA Keynote Presentation

There are so many people to thank and to acknowledge today and I know I�ll miss quite a few of them. But let me thank Dave Wallach, President of IRTA�s Global Board, for inviting me and of course the other members of the board. I�d like to welcome the other corporate trading companies who have come to this event as well as all the exchanges who made the trek here too.

I am pleased to help kick off an event with a theme as impressive and as purposeful as �Modern Barter, Leading the Way to Economic Recovery.�

There are more people at this event then we�ve seen in quite a while. People continue to come to this prestigious convention from all over the world and I want to welcome those companies who have traveled great distances to be here. It�s hard to believe it is our 31st convention.

I am humbled by the thought of being asked to speak as a representative of my industry. For my entire career, I sought to do the best I could for my own company, our employees and first and foremost, our clients. I always wanted to learn from my colleagues and was happy to help when somebody needed it. I count my years with IRTA as part student, part educator, part teammate, part realist and part optimist.

This is a very good time to speak to this group. So much has taken place over the past few years that it�s difficult to know where to start. It is as if we walked into a tunnel as one species and came out as another one.

Over the past couple of years we have all found challenges in our businesses. These challenges did not discriminate if we were a retail exchange or a corporate trading company. They didn�t care if we were a large company or small company. They didn�t care whether we employed just a few people or hundreds.

Wherever we were, regardless of the kind of company we were, the challenges of the marketplace were like dust storms, laying waste to all that were in front of them.

Two things happened over the past couple year � two things that could have been crippling to any one of us but certainly had an impact on all of us. The first thing was that money seemed to disappear, shattering both consumer confidence and corporate movement.

It wasn�t that clients went away. The just stopped doing business. Consumers went behind the bunker walls and wouldn�t come out. Fear of the future grabbed everybody. Company after company laid off employees and those people certainly were no longer capable of spending and those who remained on the job had to feel fortunate and began to save money at dramatic rates.

Secondly, businesses stopped advertising. Instead they preferred to sit on the sidelines until they knew which way the recessionary winds would blow and would take steps only when there was some assurance attached. They were reluctant to trade their underperforming assets and sat with them in the event they needed emergency cash.

These years have been difficult for both the retail exchange side of our industry and the corporate trading side as well. It has been said by some that our industry does better when the economy is down. However, when the economy literally stops moving nobody does particularly well. We have had a couple of years of unreliable growth, if we have been lucky enough to grow at all.

As difficult as things have been and still are, I believe it is a time of possibility once again. The two parts of our industry have much to gain from creating the new, �Modern Barter.� It�s easy to see where we are different � exchanges are locally targeted and work more in a retail environment. Corporate trading companies work in a wholesale environment and cross borders all the time to move credits or provide fulfillment.

I believe the Modern Barter industry travels on two parallel paths and it�s our job to make those paths converge. We both face the same challenges in modeling our companies to assure that the consumer is king. There is much to gain for the exchanges by working with corporate trading companies. It can be very profitable for an exchange to help a larger client with underperforming assets work with corporate trading companies while maintaining their own relationship with them. The services we provide could add to your revenue when relevant to do so.

The same holds for locations where the exchange can help the corporate trading company serve their clients on a more local level.

Our skills may be different, but our goals are the same � generating more profit for our companies and helping to move our industry forward.

Today, we are at a point where the global economy is resetting itself. What that means is basically we have rebooted and must see ourselves in a new and different way. Each of us has to accept the fact that things are different now and that there are new criteria for success. Unemployment remains at about 9.5% these days, but when you factor in people who are underemployed or have stopped looking, that number doubles.

The first action in the reset is that we need to accept that the past is just that � the past. Then we must adapt to what has happened in the marketplace and realize what the new expectations of us are. In short, we must change. More than ever before, we need to listen to our clients. We must understand that their needs have changed and it is our job to make sure we are clear on what those needs are and are experts in providing them. The way to do that is to listen to them.

We can no longer be simple service providers. We must be partners on their economic stage and be prepared to do the things that make them successful. They all want more from us and want to pay us less for it than they had in the past. The erosion of margins cannot be ignored and we are all fighting to defend the pricing we�ve been working under. The entire concept of procurement is under attack. Our clients want to pay less from us and we want to pay less from our suppliers.

It is through our clients� success that we will find our own. Our place on the economic stage is different from what it once was. Customers are buying only what they need � there isn�t enough money for most clients to splurge, so we need to be sure we are hearing what they really need.

What makes things more difficult is we don�t know where any help is coming from, or even if it�s coming at all. What has come out of Washington has been either misguided or as of yet ineffective. There are a host of new laws being implemented and each implementation breeds uncertainty so in reality nobody moves. In my state of NY, the Metropolitan Transit Authority, or MTA, has introduced a levy so egregious that companies are having great difficulty paying it.

As business owners, we do not know the impact or the ultimate cost of health care changes and cannot say with surety how we will be affected. But I can tell you one thing that I do know. Much of the road to relief from the malaise of the marketplace will be paved by us and others like us. We can lead the way to economic recovery.

Entrepreneurs have always been the pioneers for the economy and continue to be so right now. We know what we are capable of doing. We understand that we ARE the future and we don�t ask for much. Many of us are simply saying to Washington and to our state capitals, �Get out of the way. We can do it. Leave us alone and we will make this right.� Entrepreneurs can find a way to re-cast the economy. We�ve done it before and we will do it again. As this convention maintains, modern barter will leading the way to economic recovery.

But where will it really lead us? Will it lead us to some new morning of hope and inspirational economic leadership? Perhaps. But unless we understand the economy�s reset and how to work within it, we will lead ourselves to the same place.

And remember, it�s not just a domestic issue, it is an international one. All around the world, people still look to America for the clues as to where we are headed and what we are likely to do when we get there. But presently the view in some circles is that our best days are behind us. Our lead in the global economy diminishes as the economies of others appear to be on a fast track.

I recently returned from a trip to China, now the number two economy in the world. I was very anxious to go and see for myself what this growing, pulsing, lively economy looked like. Would China surpass our economy? What was at the core of its marketplace and what could I learn about the nature of doing business?

Despite everything we have read about China, let�s not lose sight of the fact that China has an unemployment rate of some 16% and is clearly suffering from changes WE have made here in America. Our new frugality, our new goal of making things last longer or having greater life spans and greater sacrificing on our part is making it tough on manufacturing in China. Decreasing demand for consumer products coming from the United States is not helping to power the manufacturing force that nation has created.

The middle class in China is being squeezed as their own, newfound consumerism takes a hit from unemployment and the shrinking of their own discretionary income. That�s with the understanding that if China could elevate only one quarter of its population to middle class status, they could surpass the buying power of the U.S.

The U.S. economy, our supposedly shrinking economy, our allegedly approaching midnight has everything to do with all the economies around the world. At the end of the day, it is still America that sets the pace. But in order to maintain our leadership position and overcome a perception that we are fading like an autumn flower, our thinking must change. The resetting going on is global in nature and the world is still looking our way for clues. The global economy, which is established by the economies of nations, relies so heavily on its individual parts that a change of mood, spirit, the weather, political activity or most of all, the internet, can have a real impact on what happens thousands of miles away.

It is a challenge for us here in the U.S., because over time we have lost some of what has made us great and we have to get it back. We have let the notion that hard work and sacrifice will pay off slip away. We have to return to that kind of thinking, otherwise we will lose the momentum and then the leadership. But how do we find a way to recapture an attitude where solid ethics and hard work guided our paths? First we need to understand why we moved away from it.

It�s understandable that we�ve lost some of that attitude. In our zeal to make things easier, we�ve created tools and behavior that moved us away from that sold work ethic. It�s natural for people to want their lives to be better than the lives of those who came before them. It�s even more natural to want better lives for our children and grandchildren. We want them to have a better life than we have.

We don�t want our kids to live with fear and concern for their day-to-day activities. We want it to be easy for them. We want to relieve the stress they feel. We have the tools to do it, so we might as well make it easier on our kids.

Some may say we are creating a spoiled generation. I believe it�s worse than that. I believe we have created an ill equipped current and future generation that will run the risk of handing our tomorrows to others around the world.

I read a story not long ago in the New York Times about a family that was transferred to China. When they arrived, their kids had to drop back a grade because they were not in a position to compete with other children their own age. The kids did the best they could with their new classmates and pushed to achieve along with them. When the family was transferred back to the United States and went back into schools here, they were advanced a grade because of their edge in education.

We need to be motivated by that and return to the way we once thought about things. We need to go back to a time where preparation was the key and where performance came first followed by leisure or fun. The more we educate, the more we innovate.

But it�s not only our children that must develop this attitude. This is a lesson we should teach ourselves as well. We, as adults and the current holders of our economy, must adapt and adopt that attitude. Don�t avoid doing something because it is hard or stressful. That is nonsense. Whatever it takes to achieve on behalf of our businesses is what we ought to be doing. Remember, the reward is in the sale, not in the presentation.

What we are seeing now, in whatever part of the world we seem to look, is evidence that our runaway consumerism cannot and will not be sustained. Our economies can�t handle it. Here in the United States, it doesn�t matter where on the political spectrum you stand, you understand that we can�t stay here. Our system has become clogged. We are bottlenecked and extremely partisan in an environment that relies on compromise for its success. Regardless of what happens in the elections next week, we have to know that we have to work with one another.

And I don�t just mean politically. I mean the components that make up the barter industry � all of us here. We know we are sitting on top of an engine that pushes our economy and creates jobs. We believe there is still an opportunity to pump $12-$14 billion in trade into the economy. We can create 50-70,000 jobs per year � and we know we can act as a parallel capital system.

Because of the reset in the economy there is now great opportunity for us to work together. Regardless of whether you�re a corporate trading company or a retail trade exchange there are ways we can overcome the space between us. We can share capacity. We can help each other provide services to our clients. We can try to utilize a universal currency that helps all of us. We can steer clients to each other when our services are right for them. Let�s buy from each other, sell to each other and accept each other.

The one thing we cannot do is remain stagnant. Our customers and clients are expecting new ways from us. We must provide those new ways. My company is privileged to do business in 44 countries around the world and we have had to change our thinking in order to successfully work in each one of them.

I believe in the global economy. I believe we play a role in how a family in London spends its money on the kids or how a business in Indonesia gets the raw materials it needs. That gives us an opportunity and a responsibility. We can be one of the great and dynamic forces of this century. We can create jobs, we can move goods, and we can put billions into economies all around the world.

The blistering two years we�ve all endured have forced many of us to change already. We ARE Modern Barter and we ARE leading the way to economic recovery. With each step we take, the Retail Exchanges and Corporate Barter companies are bringing the global economy, filled with opportunity, closer to each of us. It is within our grasp now. Let�s embrace what we can do together in order to bridge the gap between where we have been and where we can be going.  

I look forward to working with you to make our industry the dynamic force in the global economy we know it can be.

Thank you.



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