Also, we never look for a quick shot of financial energy to bolster the bottom line, balance sheet, or the P&L. A lot of companies buy companies just so they can get a P&L boost. We don’t think that’s a very good thing to do.
Finally, even as we expand, we don’t need to buy other companies. We have more opportunities today to buy distressed assets than we’ve ever had. Because there are so many undercapitalized and badly financed companies out there right now, we are presented with four or five opportunities every day, around the world. Although 90 percent of them aren’t worthwhile, there are still some serious opportunities on that list. And that means a lot of distressed assets.
S+B: Do you see changes coming in the nature of supply chains around the world?
ELMAN: Chinese companies are eager to acquire raw materials or to buy the assets to produce the raw materials to meet the country’s large and growing demand. I was concerned when the Australian government turned down China Minmetals Corporation. [The Australian government blocked Minmetals’ bid for OZ Minerals Ltd. in March 2009, but later agreed to a revised offer.] But I was equally disturbed by China’s rejection of Coca-Cola Company’s bid to acquire China Huiyuan Juice Group Ltd. These deals struggled for different reasons, and they may be right or wrong. But in the reaction to them, I see protectionism creeping in. In the United States a controversy erupted early in 2009 over “Buy American” provisions in the stimulus package. If the leader of the free world starts to be protectionist, others will follow.
I’ve also noticed other changes. We have 10,000 people working at Noble, and we have 100 offices in 45 countries. We like to move people around. But my HR department has told me that it’s getting more and more difficult to get visas. Things that took two weeks to handle are now taking four weeks and are being scrutinized in greater detail than ever before. I thought the world had been well on its way to globalization, but there is a danger that fear-based policies could cause the pace of international trade to stall, or even to reverse. That wouldn’t just be a problem for our company, but for everyone’s prosperity.