Glimmers of light but major suppliers hit by slowdown

A recent survey claims that 77% of the UK’s SMEs are finding business booming and only 23% are seeing declining order books.

In stark comparison to current media headlines, a recent survey claims that 77% of the UK’s SMEs are finding business booming and only 23% are seeing declining order books.

Perhaps more encouraging is the news that of a sample of 1600, results showed that 95% of respondents had a website for marketing purposes and that 75 % were either using e-commerce or planning to use it within the year. However, only 8% of manufacturing users were already trading over the Internet. The survey, conducted by K3 Business Technology Group, was conducted to identify the attitudes of the company’s 1600 ERP customers.

The hard news from the control engineering sector is less optimistic. Invensys, ABB and Rockwell Automation are the latest casualties in a spreading economic slowdown in manufacturing. Invensys has announced it will be cutting 2500 extra jobs on the back of what it claims is the worst recession in US industrial production since the 1970s. The company also claims Europe is weakening rapidly, with Invensys shares dropping 25% to 75p on announcement of the news.

Invensys had already cut 3500 jobs earlier in 2001, though it is not yet known whether this latest bout of employment cuts will take place in the UK.

The loss of jobs at Invensys coincides with the retirement of the company’s chief executive, Allen Yurko. Rick Haythornwaite will be appointed chief executive on 1 October 2001.

ABB is to cut 12,000 jobs, including hundreds in the UK. The Swiss-Swedish group, formerly known as Asea Brown Boveri, will be cutting 8% of all staff, as it turned first-half profits well below expected levels. ABB president and chief executive, Joergen Centerman said: ‘Our results reflect uncertainty in the investment climate as the US slowdown spreads in to Europe and Asia, yet our underlying operational performance is improving if you look at earnings excluding one-time capital gains. Our goal to grow the business remains unchanged.’

Rockwell Automation has reported fiscal 2001 third quarter earnings continuing operations of $18 million compared to third quarter 2000 earnings from continuing operations of $92 million. Sales in the third quarter were $1021 million, compared to $1189 million in the third quarter of 2000.

Don H Davis, chairman and chief executive officer of Rockwell Automation, said: ‘As previously documented, third quarter sales and earnings were significantly below last year’s result due to a rapid and pronounced deterioration in business conditions in the US.’