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Friday, January 24, 2003
Schumacher: Waiting for movement? Perspectives for 2003
By Henry Schumacher
Europe Notes
NEW CHALLENGE. For more than a year now, market analysts have predicted an upswing. They did it again during the last quarter of 2002. People have been waiting for movement, possibly for some time.
Managers who trimmed their companies for rapid growth for years are faced with new challenges: they have to excel during a longer bad weather phase. The ideas of the ‘90s, when global expansion had the highest priority, have to be thrown overboard. The slogans have changed.
It has to be realized that the big drivers of the last few years—globalization, the financial markets and deregulation—have lost their push. Reverse thrust! What has happened?
Liberalization seems to be coming to an end. Governments are moving toward
intervention. That goes for the US as much as for Europe.
Bush protected the ailing steel industry and made “gifts” valued at billions to the American farmers. Blair announced to raise taxes in order to increase government spending. Schroeder kissed his saving strategy goodbye, talking about the need to increase taxes to support selected groups. The German labor market remains over-regulated.
Globalization appears to be coming to an end. World trade shrank in 2001. Foreign investments have become much more selective. The globalization process stalls; governments are talking about bilateral trade agreements; the influence of the World Trade Organization seems to be waning.
Stock markets have moved from bull to bear, and there will just be less money around.
Consequence: Complaining does not help. Roll up your sleeves, and get going.
Remember the ‘70s? Oil crisis with exploding oil prices, terrorism in some parts of the world, including the red brigades in Germany, growing unemployment, stock prices were down, confidence loss in the functioning of markets, state intervention. Same as today. However, then and today, there were entrepreneurs and managers who did not complain but took advantage of the challenges.
A few German examples come to mind: SAP, formed in 1972, became a respectable medium-sized player during the ‘70s and laid the groundwork for today’s global presence; Bosch developed its anti-blocking system, which it has sold 80 million times since 1978, and which still is a cash-cow; Allianz created its international business, expanding to the UK, Brazil, Spain, the US, the Netherlands setting the stage for today’s world market leadership.
As difficult as the present situation and possibly the immediate future may be, some managers will not be stopped by a “bad weather” phase.
Resignation achieves nothing. Whether the future is worth living depends on what we want and what we do.
(Henry welcomes comments at Schumacher@eccp.com.)
(January 24, 2003 issue)
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