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Communities of Leadership: Lakshmi Mittal’s ArcelorMittal
2 Comments · Posted by Scott in Case Studies
Steel is the “bone” of industrialisation. As a material and as an industry, it has been at the heart of the Industrial Revolution and the development of the modern global industrial economy. Steel made railroads, skyscrapers, suspension bridges, and steamships possible. The industrial leadership of the “West” has had 150 years to get this industry right.
Yet, remarkably, the industry is now dominated by a firm, ArcelorMittal, which was built since 1975 by an Indian businessman who started with virtually nothing. Beginning with a steel mill in Indonesia, of all places, Lakshmi Mittal progressively built an empire by operating a few successful steel mills, mostly at first in emerging markets, then acquiring more, turning them around and integrating them, and repeating the process. Mittal’s successful acquistion of Arcelor in 2006 made the combined company the clear leader in the global steel business, something like three times the size of its nearest competitor.
As of Forbes’ April listing of the world’s 2000 largest public companies, Arcelor Mittal was worth $60 billion. Forbes reported about the same time that Mittal personally was worth $28.7 billion.
Mittal’s acquisition of Arcelor was big news in 2006, but surprisingly little seems to be written about the company or Mittal himself recently. Despite a drop of nearly 50% in sales in 2009 as a result of the recesssion, ArcelorMittal still managed to make a small profit in 2009. That seems a remarkable acheivement. According to the company’s annual report, headcount reductions were achieved entirely through voluntary redundancy programmes, with no involuntary layoffs.
In his most recent shareholder letter, Mittal writes
“Perhaps the most interesting outcome from the recent crisis is the increasing importance the developing economies have in the global economy. The growing influence of these economies is of course not a new trend; we have been talking about the rise of the so-called ‘BRICs’ and other emerging economies for some years now. Nevertheless their resilience in the face of financial crisis and the speed at which they have resumed their growth paths took many by surprise – evidence of the significant role they now occupy in the global economy. Whilst per capita GDP in these economies still considerably lags that of their more developed counterparts, the massive populations in countries such as India and China imply that these countries will at some stage in this century be rivals for the position of the largest economy in the world. That they still have a long journey to make only further confirms their considerable long-term potential.”
“This bodes well for ArcelorMittal, which has long embraced growth in the developing economies as a cornerstone of its strategy. We have a significant presence in Brazil, South Africa and Eastern Europe, including Ukraine and Kazakhstan. And our largest and most ambitious expansion projects are our potential greenfield plants in India.”
The company has this to say about its values:
“ArcelorMittal is commited to its promise of “transforming tomorrow” and the three values that underpin it – Sustainability, Quality, and Leadership. These values shape our behavior. We recognise that the Company has a duty to its stakeholders to operate in a responsible and transparent manner and to safeguard the wellbeing of all its stakeholders, including employees, contractors, and the communities in which it operates. ”
ArcelorMittal looks to me like the global leader in a critical if under-appreciated industry, poised to take particularly good advantage of the new, “flatter” world of the 21st century, where the old distinctions of ”developed” vs. “developing” worlds are rapidly eroding.
The growing list of Interesting Communities of Leadership is athttp://lovingwork.org/interesting-communities-of-leadership
Scott is scott@lovingwork.org and @scottdowns3 on Twitter.
ArcelorMittal · community · culture · emerging markets · global · leadership · profit · quality · sustainability · value · values
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