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Market Outlook 2018: A Sunnier Mood with a Few Caveats

Market Outlook 2018: A Sunnier Mood with a Few Caveats

The atmosphere at VMA’s 2018 Marke...

Is it Time to Toss Those Commissions?

Is it Time to Toss Those Commissions?

It’s tough to pinpoint exactly wha...

Cybersecurity for Process Control

Cybersecurity for Process Control

Security for any process plant has alway...

Young Valve Professionals: Megan Johnston

Young Valve Professionals: Megan Johnston

In 2014, VMA's leadership created the Val...

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Industry Headlines

Crude Oil, Petroleum Product Exports Reach Record Levels

Thursday, 19 October 2017  |  Chris Guy

According to the U.S. Energy Information Administration ( EIA ), crude oil exports in the first half of 2017 increased by more than 300,000 barrels per ...

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Industry Headlines

Emerson Agrees to Acquire Paradigm

3 DAYS AGO

Emerson has agreed to acquire Paradigm for a purchase price of $510 million, reflecting a multiple of 13 times expected 2017 EBITDA. Paradigm will be joined with Emerson’s existing Roxar automation software. The acquisition is expected to close within the next 60 days, subject to various regulat...

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ValvTechnologies Receives ISO 15848 Certification

4 DAYS AGO

ValvTechnologies’ EcoPack technology has received ISO 15848-1:2015 certification from Odin Heavy Industries. To earn ISO 15848 certification, ValvTechnologies underwent a stringent evaluation process that included a series of 17 helium leak tests and eight thermal cycles on a fully assembled v...

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Crude Oil, Petroleum Product Exports Reach Record Levels

2 DAYS AGO

According to the U.S. Energy Information Administration ( EIA ), crude oil exports in the first half of 2017 increased by more than 300,000 barrels per day (b/d) from the first half of 2016, reaching a record high of 0.9 million b/d. Petroleum product exports also grew over the same period with propan...

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Energy Intensity in U.S. Manufacturing Decreased

2 DAYS AGO

Energy intensity in manufacturing in the U.S. decreased from 2010 to 2014. U.S. manufacturing overall fuel intensity decreased by 4.4% from 3.016 thousand British thermal units (Btu) per dollar of output in 2010 to 2.882 thousand Btu in 2014. According to the Manufacturing Energy Consumption Survey (M...

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Fed Reports Economy Growth in September, Early October

2 DAYS AGO

Reports from all 12 Federal Reserve Districts indicated that economic activity increased in September through early October, with the pace of growth split between modest and moderate. The Richmond, Atlanta, and Dallas Districts reported major disruptions from Hurricanes Harvey and Irma in some areas a...

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Industrial Production Up 0.3% in September

3 DAYS AGO

Industrial production rose 0.3% in September. The rates of change for July and August were notably revised; the current estimate for July, a decrease of 0.1%, was 0.5% lower than previously reported, while the estimate for August, a decrease of 0.7%, was 0.2% higher than before. Manufacturing output...

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2009 Market Outlook: Riding Out The Storm

The atmosphere at VMA's Annual Market Outlook Workshop, held Aug. 14-15 in Boston, was more somber than in years' past as attendees-primarily manufacturers of valves, actuators, controls and pumps-listened to speaker after speaker predict continued, even worsening, troubles in the economy, in the United States and around the world.

 

Still, there were a few bright spots among the gloomy news: The power industry in general will remain strong, driven globally by the world's increased need for energy and affected here in North America by the need to tap into new and existing alternative energy sources. Nuclear in particular appears poised to take off in the U.S. as the general public, legislators and other policy-makers accept that nuclear can be a safe, cleaner way to get power. And for the short term, the upstream oil and gas marketplace is actually doing better than predicted a year ago as a reacceleration plays out that may well last into 2009.

Most left knowing that darker times may be coming, but that the North American valve industry has "been there, done that," and with proper preparation and knowledge about new markets and opportunities-global and domestic-their companies can survive this inevitable downturn and come out the other side stronger than ever.

Here's what our speakers had to say:

DOMESTIC ECONOMY
Yes, the Recession is Still Coming

Many people who attended past forecasting conferences were anxious to hear what Alan Beaulieu, economist with the Institute for Trend Research, had to say-not just because he's an entertaining speaker, but because his prediction last year for the U.S. economy was rather bleak-a good 2008, but a recession by 2009.

As far as 2008: "I'm glad you've been enjoying the year," Beaulieu joked, "but the U.S. is softening. Everything you heard in the first half of 2008-all that concern-was just the band warming up."

"This time next year, we will be recognizing that we are in a full-fledged recession," he said. The same will be said in Europe and in China (whether that country recognizes it or not, Beaulieu commented).

Consumers will lead the parade into the downturn, he said, helped along in part by the fact that despite the current woes, we have had poor leadership in this country. For example: "We are a debtor nation. The richest nation on Earth but we can't pay our bills."

Inflation will be a major pressure, he added, because even though officials and experts say the core inflation rate is "only" 3 to 4%, that rate doesn't take into account energy and food. The Consumer Price Index, on the other hand, is 5.6%, which is high, he pointed out.

When people's budgets are hit as hard as they are being hit at present by food, energy and other daily needs, "they stop spending, and that brings a recession," Beaulieu said.

As far as other locations around the globe, "when the U.S. gets a cold, so does the rest of the world," he said.

Still, Beaulieu was not all doom and gloom.

U.S. industry is "doing wonderful things," he exclaimed. They are proficient in selling to the rest of the world, they have the most competitive work force in the world, and they have twice the output of the emerging giant China.

What it will come down to for industry is what's happening at the company level, he said. "If you are doing well, you have to ask: how can I prepare?"

Among his suggestions:

  • Help your margins by differentiating your company from competitors, and then let everyone who works for your company know how you're different.
  • Develop quantifiable reasons you are better than your competition. "What people want in a downturn is a metric. [They want to hear:]
  • 'I can fix this problem on the first go-around, and I can fix it in four hours, not six,'" Beaulieu explained. Clients want to know that quality is more than an adverb.
  • Consider taking on subcontract work if the backside of the cycle begins to look recessionary.
  • Begin missionary efforts into new markets.
  • Freeze expansion plans unless they are related to the logical next step for a particular company. If those plans are made just to expand the company's reach, rethink those plans.

When things start leaning into a recessionary cycle, Beaulieu suggested:

  • Begin reducing work forces. Don't tell employees that everyone will keep their jobs, but let them know most people will be okay-we've been through this before.
  • Set budget reduction goals by department.
  • Avoid long-term purchasing commitments.
  • Find a way to do business in the counter cyclical or unaffected areas (e.g. energy, travel, green, Canada/exports, higher education, healthcare, etc.).

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