I was watching Fareed Zakaria‘s GPS program aired at CNN last 28 December. He held a roundtable talk with John Stiglitz, Nobel Laureate in Economics; Jagdish Bhagwati, Adviser to UN and WTO; Hernando de Soto, Peruvian Economic Minister; and Carlos Rodriguez, US Secretary of Commerce. From what I surmised from the discussion, all of them agreed that the economic crises we are facing now was brought by either trade and finance regulations or the lack of it under globalization.
Of course, some of us read it in the papers, saw it on the news, but apparently the economic percussions were seemingly unnoticed because many employees were battling with other mundane problems. Thus, by November 2008, most were caught off guard, or as the saying goes: caught them with pants on their knees!
During my thesis writing, although I was already on the final edit of my paper, I continually read on economic issues relevant to my research, as well as gathering additional information on the effect of the Asian Financial Crises to the Philippine steel industry. My research deliberately ignored the financial aspect because the thesis panel thought that discussing it would make the thesis more focused on economics rather than on production, which I was majoring.
As early as 2007, moreover, I have been reading about differing views on financial globalization. One school of thought espoused greater financial cooperation while the other an incoming financial crises. Mauro (2007) wrote that "In principle, greater financial openness holds promise: gains may come from greater risk-sharing, a more efficient worldwide allocation of capital, and broader technology transfer." Frankel (2007) stated "As of November 2006, the stock market is again unusually high. A sudden correction there goes on the list of possible crises." then worried about a [US] bond market crash. Frankel even cautioned of a global recession brought about by "A decline in the housing market has long been prophesized due to the magnitude of the preceding run-up. It is now [February 2007] already well underway."
Without a proper corporate venue to air what I know, read and surmised; I let these ideas slide. At GSPI, there was no tangible corporate publication where one could contribute his own view of things; neither was a corporate email system could be used to publish one’s theories or apprehensions. Not that I claim to have the expertise on financial globalization or corporate strategy, for that matter; but still, these facts were in the recesses of my mind and was remembered recently after seeing Zakaria’s roundtable.
I can’t help but wonder whether the GSPI management even knew of the coming economic crises. With corporate strategy centralized at the Ispat Industries Ltd. [not Ispat International Ltd] or Global Steel Holdings’ home office, purportedly based in either Dubai or Isle of Man, as some news reports noted; and the dissolution of the local Business Strategy department last December 2005, there were no official statement given by the company on what actions were done to prepare for it as the company was always business as usual until November 2008.
Most employees did not see it coming, either. Maybe, complacency set in or the extraordinary became ordinary after years of being injected with the same excuse: steel market is down! Apparently, after four years of waiting for promises that were eventually broken—compensation review; hiring of the best possible minds; application of new technology; or synergy of competitive advantages and best practices among GSHL companies;—people grew tired of waiting or just accepted their fate and hoped for the best?
Then came the news of freeze hiring. . . forced ranking . . . 5-day work week until GSPI declared forced leave for the whole of December. Wasn’t it rather late that GSPI only dabbled in SWOT analyses, this time including its frontline supervisors whereby before only those at the helm did that, when everything broke loose?
Ignorance maybe bliss, but ignoring facts as if they do not exist is blatant inaction bordering on stupidity, as the saying goes. But sometimes, silence is more eloquent than words.
Notes:
Mauro, Paolo (2007). Reaping the Benefits of Financial Globalization. New York: International Monetary Fund. 28 June 2007. 50pp. back to text
Frankel, Jeffrey (2007). Responding to Financial Crises. New York: Harvard University John F. Kennedy School of Government. February 2007. p. 5. back to text
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