The press have just reported the completion by ArcelorMittal / Nippon Steel & Sumitomo Metal Corporation of the purchase of ThyssenKrupp’s North American Calvert plant. For full report, visit http://uk.finance.yahoo.com/news/arcelormittal-completes-acquisition-thyssenkrupp-steel-211100386.html.
This Calvert plant comprised a state-of-the-art hot strip mill with tandem cold rolling and further coating capability and some 4.3 million tonnes of installed capacity, and was commissioned around November 2007. The facility apparently cost $5 billion to set up, and was reportedly sold for $1.55 billion.
Now – what does this episode tell us about the quality of strategic thinking at ThyssenKrupp? I ask this question, because as a steel industry adviser I am forever being asked to comment on upside and downside scenarios. We do of course also live in a world where the number of tools available for a risk assessment is greater than ever before. The question thus arises: how did ThyssenKrupp’s management allow this disaster to happen?
Were the management of ThyssenKrupp so sure of their own views that they did not want to listen to any cautionary voices? Do ThyssenKrupp not like using external consultants? Is the German model of corporate governance perhaps suboptimal is some rather fundamental way?
This episode should not only teach managements a lot about how to properly manage large investment decisions, but perhaps also remind us all about the value of independent external perspective.
Dr Andrzej M Kotas
Metals Consulting International Limited