A breath of fresh air1 January 2009
January has been long regarded as the darkest of months, and the current economic climate is likely to intensify the misery for many this year. But it's not all doom and gloom, according to one industry stalwart.
Andrew Pimblett, the managing director of UK firm Street Crane, says the current economic situation could impact the overhead lifting industry far less than others.
"Conservatively, we are expecting our overall sales for 2008/9 to be comfortably ahead of 2007/8 - and that too was a very good year. From April to September, we saw like for like monthly order intake up to 100% higher than the previous year and even up to November there was no noticeable fall off," he says.
"We know from past recessions that the big projects carry on. The man down the road with a small workshop who wants a 5t standard crane will put his project on hold, but long term major capital works continue. If you are building a power station or a waste incinerator that will have a working life of perhaps 40 years - this will go forward regardless of any short term downturn," Pimblett continues.
Several years ago Street Crane had a UK to export ratio of 60:40, the company has now more than reversed these proportions as export sales rise. This trend has been supported by two initiatives - new product development and active international partnering to become a supplier of high value sub-systems to other industrial crane makers overseas.
Early in 2008, Street Crane launched the ZX6 and ZX8 hoists. These hoists are the result of a £1.5million investment programme by the company and were conceived as products for world markets. The success of the new ZX hoists is already evident. New distribution arrangements have been made with two partners in the USA, two in the Middle East, two in Australia and one in India. Most of these new distributors have taken consignment stocks so that they can offer Street Crane hoists on their own locally built crane structures. These new distributors join an existing network of partners around the world that Street has developed over the last decade.
Pimblett says "the depreciation of the pound is also working to our advantage. While we have some components sourced in Euros the overall effect of the currency changes is that our product is 25 to 30% more competitive in the Euro zone. Conversely, competitors seeking to sell into the UK from Europe face a major competitive disadvantage. A similar situation now exists with North America, where the two Dollar pound was a severe handicap, but current rates make products like the ZX6-8 very competitive there."
To cope with the order intake Street has committed £750,000 to a factory extension that will increase the workshop area by around 30% and add a new steel stockyard. The new facilities will be on stream early in 2009. To meet immediate production space needs in the main factory, the company has leased additional warehouse space to relocate its parts storage and some CNC machines.
"It is clear that we do have a two-speed economy; sectors such as finance, housing, retail and automotive are certainly suffering. Our success, and that of others who are doing well, is based on three factors: facing outward to the world and not just relying on the UK, investing in world-class product development to meet world demand and, finally, chasing markets in the petrodollar economies that are keen to broaden their industrial and economic infrastructure. In the UK we expect that capital expenditure will continue from engineering companies supporting oil and gas industries, in defence, power engineering and green technologies."
It's certainly food for thought heading into 2009. What's the forecast at your company?
A full report on the UK market will feature in the February or March issue. More to follow...
Richard Howes, Editor