Online Extra: Q&A with Lakshmi Mittal
Lakshmi Mittal, 56, pulled off one his most daring deals last year when he acquired Arcelor for $38 billion after a long, hostile takeover battle. It was the biggest move yet in an extraordinary career that began with a small steel mill in Indonesia in the 1970s. Starting from that humble spot, Mittal has snatched up about 10% of world steel capacity and built a $90 billion empire.
Over the last few months, BusinessWeek London bureau chief Stanley Reed talked to Mittal at his home in London and his office on Berkeley Square about the steel industry; the new company, Arcelor Mittal; his career; and his family. Here are edited excerpts from their conversations.
On the strengths of the new company:
As I always said, there is a very strong industrial logic to this merger. We are now the No. 1 producer in five major regions of the world. For example, we have 46% market share in autos. Mittal Steel had a very lean organization; Arcelor did not have a lean organization. We needed to strengthen our middle management at Mittal Steel. Arcelor provided the opportunity to strengthen our middle management. Arcelor had very good people with a lot of experience.
On the need to change the Arcelor Eurocrat culture:
It is the culture of the organization that has to change, not the people. There is no need to be bureaucratic. We need to make decisions swiftly, take risks, and move forward. If some people cannot change, we will have to change them. We cannot allow strong bureaucracy in our organization. We are a public company; we have to deliver results every day.
On choosing a new management team:
I interviewed the top 50 people on both sides to understand their mindset. Surprisingly, I noticed that hostility (from the takeover battle) was concentrated among a few people. It was not really down the line. I interviewed the senior managers on both sides, and I recommended this organization. I had ideas coming in from all of the people, but finally I decided.
On his first plant in Indonesia:
My father bought some land there (to build a steel mill) but decided to abandon that project and wanted me to sell that land. I was going on vacation with friends and I dropped by Indonesia (in 1976) to finalize the sale of the land. At the time, I was very new; I wanted to know why my father wanted to sell the land. I said, "Let's spend a couple of days understanding the issues." When I found I could resolve the issues, I said I want to stay in Indonesia and build this project. So I picked it up and built it. It started with a rolling mill in 1977, and then we put in a Japanese electric arc furnace. At the time Indonesia was growing very well. There were a lot of oil dollars. By the time I left in 1985, we had the largest steel company in the private sector.
On his knowledge of steel mills:
I can still manage the control panel. I built a steel plant from the grassroots, so I learned all the nuts and bolts. When there was a problem, I would be able to guide them, though I am not a technical person.
On how he branched out:
I worked in this company for almost 13 years. In 1987 or 1988 I met [a German steel expert] who was managing director of a company in Hamburg that had the most advanced mini-mill in Europe. I met him at a conference where I was making a presentation on mini-mills. We got together and I asked him to travel with me to Indonesia, and we became friends. His company had a management agreement with a company in Trinidad and decided not to continue with that contract, so he asked me if I would like to work with that company in Trinidad. We went there and we found that we could take over. Our contract was a lease agreement with an option to purchase after five years. This was the first international experience for me. Success in Trinidad gave me a lot of confidence.
On why he could make a success of mills where others failed:
We always looked at it fresh. We never looked at the traditions of these companies. We always looked at things out of the box, We did not carry any baggage. We had not been working at these companies for 20 or 30 years. We would ask what is wrong, how can we make changes? I like to find a solution, move on, look to the future.
On his son Aditya:
I am happy people like him and that he is well accepted. People clearly see the role he brings with ideas. I don't think that he is young. He has 10 years of official experience and a lot of unofficial experience. He understands the subjects well, and he is very thoughtful.