After 9/11 businesses may have been tempted to retrench. But they didn’t.
Just days after 9/11, International Treasurer opined that companies shouldn’t be tempted to retrench after the terrorist attacks. They should keep moving forward; keep a global perspective.
As IT wrote in “Combatting Global Vulnerability,” September 24, 2001, “This domestic-oriented thinking belies the fact that recent attacks show that terrorism can hit at home as well as overseas. For global multinationals retrenchment-however tempting-is not really possible, much less desirable.”
And it wasn’t. The years since that tragic day have seen, even through the recent economic crisis, a great expansion of global business. Whereas in 2001 there were just a handful of companies with most of their profits generated overseas, today that number far larger; and it said that currently US corporations hold about $2 trillion in foreign earnings hold overseas. It’s been triumph over tragedy. And in some ways, it was with the help of a corporation’s treasury department, which worked to maintain access to cash throughout, that this expansion was able to take place.
“Given September 11’s impact on an already bleak foreign earnings outlook, it is important not to forget that providing liquidity to the financial system is not just the job for central bankers. Corporate treasurers should do all they can to provide liquidity to their enterprise’s own financial system, ensuring affiliates have enough cash on hand (perhaps literally cash) to cope with necessary business transitions and even evacuations from certain parts of the world.”
Further, although the argument is never over about centralization of treasury vs. centralization, it was one of the first instances where the benefits of decentralization – particularly as a component of business continuity planning – was hammered home.
“Even firms that lost their headquarters and a majority of their people in the collapse of the World Trade Center, were able to continue, somehow, to conduct vital business. In part, this was due to their global presence, distributed networks and the nature of key personnel making decisions from abroad. Seen in this context, we think that one of the lessons from September 11 is the benefit of decentralized business models in mitigating business discontinuity risk; particularly, when the option of having a self-sustaining centralized model is all but impossible in the context of today’s global economy.”
And taking a stab at what would happen after the calamity, IT argued that companies shouldn’t just think of their shareholders when it came to their post-9/11 existence, but customers as well.
“Looking beyond the crisis or even war footing that may be required in certain cases, treasurers must also work with business lines to again reconsider terms on vendor financing to vital credits and building longer term demand via the acquisition of assets with recycled foreign earnings. For many corporates in the US, the initial focus may be on revitalized share buybacks to support the stock price, but stakeholders and customers cannot be forgotten completely.”
Thirteen years later, that day has not been forgotten and likely never will. It forever changed people, places and things; IT would like to think mostly for the better. And as they were then, our sympathies, thoughts and prayers continue to be on everlasting offer to those who lost their lives and those left behind.