Massive overcapacity in steel

Sull, described as a global expert on strategy and execution in turbulent times, is a senior lecturer at the MIT Sloan School of Management in the US. Before that he was a lecturer at Harvard University and the London Business School.

He explained that “the Chinese government takes money from citizens and gives it to local banks which invest in local industries to stimulate growth in jobs because that is how the governors are promoted, without any view of Chinese or global demand, so you just have massive degrees of overcapacity and then you couple that with an economic downturn and it’s just the economics of the steel industry. It’s extremely tough when you have overcapacity in a downturn.

There aren’t that many options — you simply have to reduce capacity.” During his presentation to the conference he spoke about boxing and the relative advantages of agility and absorption against the background of the historic 1974 heavyweight fight between Muhammad Ali and George Foreman, dubbed the “Rumble in the Jungle”, because it was fought in Zaire, the country now known as the Democratic Republic of the Congo. He said the big and heavily muscled Foreman had absorption, the ability to take blows from his opponent and continue to fight, while Ali had agility and strategy on his side.

Sull said in the case of TT the source of absorption would be this country’s real assets, particularly its natural gas.