Editorial The business cycle

If there ever was a classic example of the business cycle and its effect on one company, it’s the case of Inco in the 1980s.

The nickel producer is flying high now with record earnings and an increasing share of the world market. Five years ago, the future of the company was not at all certain as metal prices sank like — well, like lead. Inco suffered 14 consecutive quarters of losses and was knocked off the prestigious Dow Jones index.

The nature of the cycle — about seven years in duration in this case — is that all those losses incurred during the lean times get paid off during the times of plenty.

But the cycle swing is wider than that. It’s not simply a matter of patience when things are bad waiting for better days. It’s a necessary step, the way a forest fire makes way for new growth. Inco — and, indeed, most companies in the mining game — needed to improve productivity, re-examine methods and goals, renew its relationship with workers who had become simply adversaries rather than partners. It took the potentially crippling recession of the early 1980s to force it to do that.

The result is a company that doesn’t merely ride the waves of the business cycle, it’s regenerated by them. Inco is a stronger company for the tribulations it has endured.