TREVOR TARRING: The baby and the bathwater

May 10, 2012 | 11:30 PM |

“Don’t throw out the baby with the bathwater” is a well-known adage. It warns those contemplating a major overhaul of a company or organisation to be sure of its core values before they start on slash and burn reorganisation. Otherwise they might close down what’s really valuable at the same time as shedding low-value peripherals. Looking at the contenders in the race to acquire the London Metal Exchange, it looks as though the baby and bathwater idea is one they would all do well to keep in mind as they contemplate how they would tweak its operations to yield more profit. True, there are potential benefits of synergy and much-enhanced footprint for all of the external bidders. But we must recognise that making money is their main aim. And, no, I have not forgotten that one of the contenders could well be the existing owner-members if they decide not to sell. For one could assume the bids would have given them a sufficient fright that they would immediately return to some of the issues about LME operations currently seen as needing reform. High on anybody’s list of such issues would be the LME’s relationship with its listed warehouses and the vexed question of load-out rates. I first alluded to this baby and bathwater concept (without actually then quoting the adage)....