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Going from Green to Red

4 minute read

Ireland pounced on the global economic boom of the 1990s, luring billions of dollars with low taxes, cheap labor and an English-speaking workforce. The boom’s collapse also hit close to home — perhaps most dramatically in the case of the troubled Irish drug company Elan, which has seen share prices plunge 90%, is the subject of an accounting investigation and is struggling to raise $1 billion from asset sales to stay afloat. But as Elan’s chairman and CEO Donal Geaney stepped down last week, along with deputy chairman Tom Lynch, their gloom had not really spread to the rest of Ireland’s economy. Danny McCoy, economist at Dublin’s Economic and Social Research Institute, notes that the troubles of multinationals like Elan “haven’t been that destabilizing because there isn’t a huge public exposure to the stock market,” and because Ireland remains a destination for firms eager to service the European market. Ireland’s GDP grew 6.8% last year, and though it is expected to slow to 3.6% this year, prospects look better for 2003. Even more importantly, Ireland still has near-total employment, with joblessness at a historically low 4.4%. Price inflation, which averaged 4.9% last year, is always a concern, but so far it seems to be moving toward convergence with the rest of Europe rather than sparking a wage-price spiral. If those trends continue, Ireland might not exactly roar, but it looks set to purr along quite nicely.

It’s a Quick Trip Down from the Top
“so long, it’s been good to know yuh,” Woody Guthrie wrote in a 1935 song about migrants during the Great Depression. But now the refrain applies equally well to ceos, whose stays at the top are getting shorter. The career of Luc Vandevelde, 51, right, the Belgian ceo of Marks & Spencer, is a typical case: after joining the company two years ago and helping reverse its decline, he stepped aside last week. A study by consultancy DBM shows that the median tenure for a CEO in the U.K. is now only 2-3 years and that 68% of European CEOs hold office less than five years. Globally, the median corporate captain’s term has dropped from nearly four years in 1999 to less than three today. The clamor for shareholder value, which pressures ceos to post good numbers quick or get out, helps drive the turnover rate. Yet shorter stays raise questions about how effectively ceos can launch long-term plans for their companies’ growth and development. But at least if they get lonely at the top, they probably won’t be there for long.

More German Troubles
Rescue talks to save Germany’s bankrupt Babcock Borsig broke down. The 111-year-old engineering firm may now be broken up.

Corporate Raiders
In the latest twist in the Vivendi saga, French investigators launched a probe nto the indebted media company’s accounts, seizing documents from its headquarters.

Rolling Into China
Honda, Japan’s No. 2 automaker, is building a plant in China by 2004 as part of a major effort to boost sales by 700,000 and globalize production.

Unhealthy Insurance
Germany’s Munich Re, the world’s largest reinsurer, has pumped $2 billion into its struggling U.S. unit, and has set aside another $500 million to cover loses from Sept. 11.

A Flemish Gold Rush
Remember when your mother told you to be an accountant instead of an artist? Tell her Rubens’ Massacre of the Innocents broke a British record when it sold for $77 million at Sotheby’s. It was expected to fetch only $9.3 million.

Time To Waste
After 24 years and $4 billion in studies, the U.S. Senate approved Nevada’s Yucca Mountain as the nation’s first permanent nuclear-waste storage site. The controversial facility will hold 77,000 tons of waste from 103 reactors.

April in Beijing
Forget Paris: China will be the world’s top tourist destination by 2020, according to the World Tourism Association. With 76 million visitors yearly, France is easily today’s top holiday spot, but Asia should reap dividends as international tourist numbers climb toward 1.5 billion.

By jingo, buy American
The S&P 500 stock market index dropped all foreign companies to focus exclusively on the domestic U.S. market. Although ousted firms like Unilever expressed disappointment, the long-term impact on their prices is expected to be minimal.

“Egoism at the top is not enough to provide lasting economic success.”
Gerhard Schroder, the German Chancellor, on U.S. corporate scandals

“America is great, France is great. But they make a bad couple.”
Daniel Toscan du Plantier, president of Unifrance, on Vivendi’s U.S. acquisitions

“The monetary policy of the European Central Bank, while suitable for Ireland, is completely inappropriate for Germany.”
Milton Friedman, U.S. economist, predicting that the euro zone will fall apart

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