I'm drawing partly on the research on industries in decline or industries facing very difficult challenges. A common strategic response that's been studied by economists and business schools is that industries in decline consolidate.
We're seeing this going on in the airlines, too, where you have a bunch of unprofitable companies and you.... Let's be blunt. I'll say what I've said in my class to my students. You consolidate to do what? To reduce competition so you can put prices up. If there are eight companies in the business and you consolidate to four divvying up the same market, it's not going to be as competitive as when you have eight firms. It's going to become more oligopolistic.
Secondly, in the study that was just done by Ernst & Young—and they have a very nice study out on the world steel industry—they're also advocating going down that road. They're saying that firms are either going to have to get bigger and scale up to achieve greater economies of scale or to “go niche”, into very focused markets.