Recent financial results in the control and instrumentation sector have thrown up few clear trends, at least that we could identify here in the luxury of the C&Ioffices. To try and get a view `from the coal face’ we talked to a number of industry figures in an attempt to make some sense of it all.
Although the pound is strong against other currencies, especially the Euro, exports appear to be holding up well. Alec Robshaw sales director of instrument specialist Beka Associates suggests that to achieve this export success, British manufacturers are having to offer customers and agents incentive discounts. Once overseas customers have negotiated substantial discounts, British suppliers will find it hard to return to list prices if and when international currencies strengthen against Sterling.
“Exports are particularly good in Germany and France,” said Robshaw. “But as the Euro has slipped around 15% since its launch, we are having to offer discounts.” According to Robshaw the first quarter of 1999 was dismal but the second quarter picked up. The third quarter of the year is looking better and the forecast is most encouraging.
The recession that nearly was has left an impact on the process control sector, however. The supply chain has changed. Preferred suppliers lists have been cut and there is now a definite trend for small companies to sell through distributors. The big end users have centralised their procurement activities to reduce inventories with the result that distributors are now carrying more stock.
Derek Farmer, managing director of Omega suggested that the recent spate of mergers and acquisitions has led to uneven investment and suggested that a tendency to downsizing/costcutting with one eye on the bottom line has meant that companies investing heavily for the future are not necessarily those with the best financial figures. Omega is one company detecting the first signs of a recovery, largely as a result of the press and Government talking up the economic outlook according to Farmer.
John Bailey, managing director of Pantek, distributors of Wonderware FactorySuite 2000 noted: “The automation software market is undergoing dramatic changes in the run up to Year 2000. Companies are deciding whether to progress new projects now or after the Millennium and there is an increasing awareness that the factory floor needs to be more tightly integrated with ERP systems such as SAP.”
Steve Chilton, applications engineer with Omron said: “Business has been difficult for the last nine months; we have made smaller profits (not losses) and are just growing more slowly.”
Bourdon Sedeme’s managing director, David Price suggested that even though sales volumes are increasing year on year, unit prices are dropping in the mature pressure and temperature marketplace. Price noted that the best profits are coming from solution rather than product providers and that he suspects that companies experiencing the biggest problems are those tied in closely with the oil and gas industries.
So confidence seems to be at a high point – it will be interesting to see if the bubble bursts at the first sign of bad news from the treasury or if the high is sustainable. Time will tell!