Europe's Best and Worst Leaders 2006
This was a huge year for European business, from reviving economies, to record merger and acquisition activity, to the fiasco at Airbus. The changing business environment took its toll in a surprising number of CEO sackings and resignations, from Kai-Uwe Ricke at Deutsche Telekom and Bernd Pischetsrieder at Volkswagen to the fall of Noël Forgeard at EADS.
Throughout it all, some European business leaders stood out in 2006 for their success—or for their failings. The staff of BusinessWeek has identified a half-dozen who topped the rest, for better or worse. Read on for our selections.
Turning Steel into Gold
• Lakshmi N. Mittal, the India-born steel king, made concessions to win his brutal takeover battle for the world's No. 2 steelmaker, Luxembourg-based Arcelor, in July. One was the higher-than-expected $38 billion price.
Another was ceding the CEO role at the new company, Arcelor Mittal (MT), to Arcelor executive Roland Junck. That arrangement lasted only until Nov. 6, when Junck stepped aside in favor of Mittal, 56. Junck will remain an adviser (see BusinessWeek.com, 11/6/06, "Arcelor Mittal's Very Stable Shakeup").
The Mittal family, which has 43.5% of Arcelor Mittal, is once again firmly in control. Mittal's son Aditya, 31, was ensconced as chief financial officer soon after the acquisition. Now, Mittal can really bring his entrepreneurial spirit to bear at Arcelor, which had more than its share of bureaucracy. "We are trying to change the culture," he said in a recent interview. "Take decisions swiftly, take risks, move forward."
It's hard to argue that such family control is a bad thing when you look at Mittal's track record. In less than three decades he has built a global steel empire from scratch and made himself a fortune of more than $20 billion. His company will produce three and a half times as much steel per year as its nearest competitor, Nippon Steel. It also is highly profitable. London broker Cazenove forecasts that Arcelor Mittal will earn $11.6 billion in pretax profits this year, on revenues of $82.7 billion
Mr. O'Leary's Cash Cow
• Ryanair CEO Michael O'Leary learned the ropes from legendary Southwest Airlines founder Herbert D. Kelleher over a steak dinner in Dallas back in the early 1990s. Now the Dublin airline is pushing low-cost air travel to new extremes—and making a bundle in the process. Ryanair (RYAAY) is Europe's most profitable airline. Earnings for the six months ending Sept. 30 soared 39%, to $422 million, on sales of $1.6 billion.
Yet Ryanair offers some of Europe's lowest fares and actually gives away a quarter of its seats, charging passengers only for taxes and fees, usually around $25. "Eventually, we see no reason why we can't give away [all our] seats and make money from selling other services," the 45-year-old O'Leary says (see BusinessWeek.com, 11/16/06, "Wal-Mart With Wings").
Crazy or ingenious? At Ryanair, passengers shell out $6 per bag to check their bags and $3.50 for a bottle of water. Flight attendants hawk everything from scratch-card games to perfume to digital cameras in-flight. Customers gripe that Ryanair gives new meaning to no-frills, but it doesn't keep them from flying.
With 42.5 million passengers, Ryanair is now bigger than established rivals such as British Airways (BAB). And O'Leary seems bent on growing even bigger. Although he has called Aer Lingus "a rip-off merchant," he recently made a hostile offer for the Irish carrier. While he probably won't win control of Aer Lingus, you can expect more bold moves from this outspoken Irishman.
• Move over, Lee Scott—there's a new contender for the King of Retail. Sir Terry Leahy, a blunt-spoken Liverpool native, has turned Tesco from a struggling British food retailer into a global brand. In the last five years, sales and profits nearly doubled, to $85 billion and $4.5 billion respectively. Tesco's more than 20% market share in Britain tops that of rivals Asda (owned by Wal-Mart Stores) and J. Sainsbury combined.
After rolling out Tesco stores across Europe and Asia, Leahy now plans to take on Wal-Mart (WMT) on its home turf. Early next year the British retailer will open a chain of upscale convenience stores on the West Coast (see BusinessWeek.com, 2/16/06, "Tesco: California Dreaming?").
Leahy, 50, spent summers as a teenager stacking shelves at Tesco and joined the company after graduating from the University of Manchester. With a flair for experimentation, he boosted sales of clothing, electronics, appliances, Internet service, and even Tesco-branded software after becoming CEO in 1997.
He pioneered online food shopping through Tesco.com, which now operates in Europe, Asia, and the U.S. And Leahy beat the boys from Bentonville, Ark., by offering financial services years before Wal-Mart.
Like Scott, Leahy is no stranger to controversy. In Britain, critics talk of Tescopoly, accusing the retailer of hurting smaller shops. Currently, Tesco's 3,000-strong global chain is just half the size of Wal-Mart's. But the ultra-ambitious Leahy is determined to catch up.
• Clothes weren't the only attraction on the catwalk during Paris Couture Week earlier this year. Fashionistas crowded into a swank Left Bank mansion for a champagne breakfast where Austrian crystal maker Swarovski showed off its latest Runway Rocks collection of high-end jewelry.
Swarovski still makes those cute animal figurines for which it has long been known, but it also has a new look these days. And that's largely the handiwork of Nadja Swarovski, 36, the great-great-granddaughter of the company's founder.
With equal parts glamour and shrewd marketing, she has relentlessly pushed Swarovski into the realms of celebrity and fashion. Notice all those crystal-studded gowns on Oscar night? That's because Nadja persuades designers such as Alexander McQueen and Zac Posen to embellish their creations with crystal. She also links up with well-known artists, furnishing them crystal to make everything from chandeliers to handbags, then displaying their work during major art shows and fashion events.
A globetrotting celebrity in her own right, Swarovski hobnobs at charity events and opens her beautiful London apartment—decorated with Swarovski chandeliers—for magazine photo shoots. She was brought up in Europe, then earned an art history degree at Southern Methodist University and worked in public relations in New York before joining the family company in 1995.
Business has boomed since then. Sales have tripled in the past seven years, to $2.7 billion, as the privately held company has doubled its worldwide network of retail stores, to almost 600. With Nadja as its spokeswoman, Swarovski looks set for a glittering future.
Swimming in It
• Lord John Browne rescued BP from financial difficulty in the early 1990s and built it into one of the world's top oil players. But the twilight of his career as CEO of the London company is proving difficult for a man long considered the industry pacesetter.
Over the past 18 months, BP (BP) and Browne have been hammered by a series of mishaps in the U.S., beginning with an explosion at the company's Texas City (Tex.) refinery in March, 2005, that killed 15 people and injured about 170. BP has admitted responsibility for the accident and set aside $1.6 billion to compensate victims and their families.
BP's shutdown of half of its premier Alaskan Prudhoe Bay field in August, to fix bacteria-corroded pipes, also dimmed the company's reputation and that of its CEO. Adding to these woes, the U.S. Commodity Futures Trading Commission announced a civil suit alleging BP fixed prices in the propane market. U.S. regulators also are investigating other aspects of BP's aggressive oil and gas trading (see BusinessWeek.com, 9/13/06, "BP's Very Bad, No Good Year").
Losing His Wings
• Noël Forgeard lost his job as co-chief of Airbus parent European Aeronautics Defence & Space in July over production snafus on the 550-plus passenger A380 jet. The problems cost Airbus two years and $6 billion, plus its hopes of edging out its eternal rival, Boeing (see BusinessWeek.com, 6/30/06, "'Major Screwup' at Airbus").
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