Two major engineering companies, Siebe and AEA Technology, this week expressed concern over the impact of Asia’s economic difficulties on exports.
Barrie Stephens, Siebe chairman said `emerging markets were generally strong but recent uncertainties arising from the financial turmoil in Asian and South American economies may cause some softening in demand.’
Peter Watson, AEA chief executive echoed this view, particularly in relation to South Korea.
`Korea had been going great guns and appeared to have excellent potential, although our involvement was still at an early stage. Now, I’d have to say that we wouldn’t expect to see major returns for some time,’ he said.
AEA’s environmental engineering subsidiary, ERG, had just won a £2.8m contract to design facilities for the Hyundai Space and Aircraft Company in Korea.
UK engineering firms have had high hopes for Asia, particularly in the environmental management and general consulting areas, because of the boom in plant development and construction.
This kind of capital expenditure is now being frozen,if not cancelled altogether.
Siebe and AEA were however more upbeat about China, where both are developing business. Much of their environmental work is grant-aid funded so less susceptible to a downturn.
AEA’s plans to develop a lithiumion battery cell facility in the UK with Japanese partners will be unaffected.
Siebe reported pre-tax profits 16.4% up at £221.7m for the six months to 30 September against £1.71bn turnover, up 16%. The company said the strong pound wiped £189m off sales.
AEA unveiled half-year pre-tax profits to 30 September of £7.6m, up from £1.1m in 1996, against turnover of £126.7m.