Tenaris, Creating A Global Leader From An Emerging Market
2004
| Case No.
IB60
In December 2003, Paolo Rocca, Chairman and CEO of Tenaris S.A., could look back on a momentous first year for the company. Much had been accomplished since Tenaris, a leading global supplier of seamless steel pipe and related services, had been formed in December 2002 via an exchange of the shares and American Depository Receipts of three separately listed pipe companies—Siderca in Argentina, Tamsa in Mexico, and Dalmine in Italy – for shares in the new company (Exhibit 1). The new company had eight manufacturing facilities variously located in South and North America, Europe and Asia and distribution and sales centers present in over 20 countries. It enjoyed annual sales of $3.1 billion to the oil and gas, energy and mechanical industries, a market-leading 19 percent share globally in seamless OCTG pipes (sold to the oil and gas industry), with particularly strong market shares in a number of national OCTG markets where it had local manufacturing. Despite the pride he rightly took in all this, Rocca was focused on the challenges ahead as Tenaris sought to transform itself strategically and organizationally. Faced with a mature seamless steel pipe market, Rocca looked to further geographic expansion and a move into service provision to maintain growth and consolidate its market position. Both of these would require new skills and new ways of managing, especially on the human resources side. Building upon the legal unification to transform Tenaris’s 14,500 employees from eight heritage companies into one centrally aligned, unified operation—“a global business with solid local roots”—was also proving to be a major managerial challenge as the company sought to realize the potential advantages of a sophisticated new organizational design. Further, the new organization needed to generate significant cost savings from the consolidation. That the share price had doubled in the year following the exchange was heartening, but it meant market expectations were high, and this added to pressure on management.
Rocca had always expected a lot of himself and his managers. What should be expected in the face of these changes? How they would need to manage differently in a unified global organization was a vital question for Rocca and his top managers.
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