Of strikes, job cuts, the recession and his vision
You were moving ahead with the integration of Arcelor with Mittal quite nicely even after a slump gripped the steel market. What was the flash point that led you to shift gears and go as far as to cut production?
For many business people the collapse of Lehman Brothers was an important moment. I remember this moment very well, it happened a few days after the ArcelorMittal Leadership Conference was held in Delhi. It was a meeting of the 650 top executives of the company. The atmosphere was normal, but the collapse of Lehman Brothers was a first really strong warning bell. The world is witnessing the worst global recession since 1945. Most people will not have witnessed anything like this during their careers so far.
How is the present slowdown different from the earlier ones?
While the slowdown in 2001 was a steel crisis, now we are facing a global economic crisis that started in the financial sector.
We have seen the severe problems of some of our customers – most notably in the automotive sector. This is the backdrop against which we are operating today.
Not unsurprisingly this has had an impact on the steel industry as well. We had face a deep decline in demand and an accelerated fall in steel price.
We must accept that businesses need to ensure they are operating in the most efficient, productive and cost-conscious way to manage this shift into what will continue to be a challenging period.
Despite the fact that steel demand has fallen as economies have slipped into recession, I remain confident in the fundamental demand for steel. Steel is not only an intrinsic material for building the infrastructure of the world, but also the most recyclable, and this will not change.
What has been done within the company to keep the different sections of employee well informed of the ground situation? The fact that the workers and employees are from different cultures and time zone, how complex is the issue?
Communication between different cultures and time zones can be complex indeed. We have a presence in over 60 countries.
Internal communications play a very important role and management puts in a lot of effort into improving this on a daily basis. We have regular conference calls with CEO’s, management and employees, send out news up-dates, hold proximity meetings, etc. We want all our employees to be well informed.
Decisions that need to be taken in times like these are never easy. The absolute priority of the management is to protect the company and as many of its employees as possible. We are in constant dialogue with our stakeholders, including the unions. They understand that we are living in exceptional times that require strong decisions. It is very important that we are all aligned, understand the severity of the situation and are focused on protecting the long-term sustainability of the company and its employees.
Sometime last year, you had mentioned the target of reaching a capacity of over 200 million tonnes. Does it still hold?
As mentioned earlier, for the long-term we remain committed to our 3 dimensional growth strategy based on Geography, Products and Value Chain – and of which the creation of ArcelorMittal has been a success.
However, in the current environment, there is no point in continuing to add new capacity given the current economic climate. This would only serve to further deteriorate the market at a time when our priority is to conserve cash. Therefore we have paused our growth plans until the scenario becomes clearer.