(story to be published in tomorrow’s issue, March 22)
The economic setting worldwide is changing at an ever faster pace. First there were the banks, then the major telecom operators and car manufacturers. Financial markets are up next. The fresh merger between stock exchanges in Paris, Amsterdam and Brussels, although spectacular, came as no surprise. The resulting institution, Euronext, the continent’s second-largest stock exchange in terms of capitalisation, is following suit to a tendency that has become unstoppable. In this feverish battle for the top places on the world market, even the symbols of a national industry matter no more – as was the case with Italy’s Fiat – and neither do traditions. Less than a year ago – on July 10, 1999 – Fiat celebrated a hundred years of existence in an atmosphere of triumph after being decreed “the company of the century in Italy.” Only nine months later, the government in Rome and all Italians had to submit to the fact that the Turin giant would have to go under the hood of a foreign conglomerate. Never has a European company weighed so much in a country’s economy and business as Fiat in Italy. In fact, the company was regarded as more than a mere carmaker. This way of seeing things is part of a culture that is on the verge of extinction in the West. This is year 2000, the era of the new economy, the era of international mergers and alliances, and those who choose to stay out risk being thrown off the stage. The “small is beautiful” model, preached in the late ’80s by numerous analysts, today seems as ridiculous as economic centralism. Companies that were “small and flexible” – as Apple and Microsoft were called back in those days – have in the meantime become true giants, with an unstoppable appetite for growth. It would be a mistake to think that today’s race for size is only a whim. The reason is that only the strongest can survive in the jungle of globalisation. Those with enough financial resources to research and develop new products, those who can manufacture volumes so large that they can keep prices low and still be profitable, and those who manage to establish their brand name on international markets. In the car industry, significant players on the world market have already shrunk down to ten. Analysts believe that, in a few years, the sector will be dominated by five multinational conglomerates. A similar concentration is found in all sectors, from aerospace and defence to telecommunications and information technology. No matter how many jobs they can create, small and medium enterprises can no longer serve as the locomotive of a new economy in any country. Of course, a country like Romania does not have enough powerful companies to compete on equal terms even with “second-echelon” western companies. Nevertheless, a policy of intelligent alliances, with heavyweight companies, is perhaps a chance both for the Romanian industry and for the entire economy. Awaiting or lacking such agreements, local companies could at least unite their forces in sector-wise alliances. Without leading to monopolies, such groups would have the necessary means to invest more in developing new products and in making their presence felt on foreign markets. This would not even be a premiere. On a different scale, a European alliance such as the aerospace EADS began by establishing powerful national poles both in France and Germany. Doubtless, the most adapted to engage in such a race are companies in the information technology sector. As in the West, they are not only more flexible than the mammoths of the old economy, but are also more attractive for investors and enjoy a guaranteed growth potential. Beyond the tough lessons of international competition, Romanian companies wouldn’t be hurt if they learned the philosophy “big is beautiful”!