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MD's Musings
Welcome to the December Issue of Update
How full, or empty, is your glass looking in 2009?
The Australian Press love to dwell on the negative – this is not the half full or half empty
glass syndrome – the glass is unquestionably EMPTY. Whether it be economics, sport or
politics – always gloom and doom!
Well, I don’t share this view. No doubt, the Global Credit Crisis has created a
‘commercial headwind’, but how does this affect us?
Will Christmas 2008 be the defining moment as the beginning of the end of Annus Horribilis,
the start of a brave New World, or simply be another milestone in a journey that the whole
world is on – a Global Correction?
No one seems to know. The half empty glass people say the situation is going to get worse,
much worse. The half full glass club members maintain that we have seen the worst, and
recovery is in sight.
How full, or empty, is your glass?
What is apparent is that the process measurement business is steaming along very nicely.
Since instrumentation is at the tail-end of all capital projects, we still have a tailwind
from the boom times of late 2007, early 2008. In tough times, improving efficiency and
reducing wastage is paramount, so the C&I industry can expect a number of cost-cutting
initiations in process plants to require more measurement and management.
Ironically in this climate of doom and gloom, the engineering consultants and contractors have
full pipelines – in some cases even ‘too full’. Have you tried to find experienced
instrumentation technicians, or process engineers lately? Not available!
With the country’s strong focus and dependence on resources, mainly mining, but also oil and gas,
will the demand for coal and iron dry up? Has there been an overproduction and now the Chinese
steel mills are sitting with vast stock piles – possible, but at the most one or two months worth.
In a recent article by finance and economics commentator, Michael Pascoe, he states, ‘The
(lowest forecast) game is being played by various economists about what China’s growth rate
might be next year. The IMF says nine-and-a bit per cent, someone else says nine if they’re
lucky. Then the next couple of forecasts break below that to 8.5% and now I’m hearing 8% and
figures starting with 7.
Most of the people bidding the growth rate down and nearly all those reporting their claims
actually have no idea. They’re just feeding off the self-reinforcing whirlpool of anecdotes
and guesses. It has ever been thus’.
Pascoe continues, ‘Understanding what China’s real growth rate might be is hard enough when
just trying to figure out what happened six months ago, let alone what might happen in the
next six. That’s why I take more notice of what BHP is saying about China than any academic
or financial markets economist. The Biggest Australian has people on the ground constantly
taking the temperature and blood pressure of major customers, rather than reading what someone
wrote after talking to an analyst who spoke to a CFO who expressed either his fear or greed
about the way ahead’.
In conclusion, Pascoe states, ‘Over the next 20 years, we believe Chinese cities will grow by
another 350 million people. We note that the China National Bureau of Statistics has just
released the latest gross domestic product data which shows that third quarter growth came
in at 9 per cent on year. Sounds like the China story is holding strong to me’.
So considering that most engineering company’s order books are full, that the demand for skilled
instrument people is high, that the Chinese industrial demand is simply taking a breather, that
process owners will strive to increase efficiency and need more automation, we can conclude that
going forward into 2009 will be business as usual, but will require increased effort and customer
service.
I take this opportunity to wish everyone a safe and peaceful Festive Season, and thank you for
your support during 2008.
In memory of a great entrepreneur:
Georg H Endress has passed away in Arlesheim, Switzerland, at the age of 84.
The Endress+Hauser Group is mourning their founder Dr Georg H Endress. The entrepreneur died
on 14 December 2008 after a brief, grave illness a few weeks before his 85th birthday,
surrounded by his family in Arlesheim, Switzerland.
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