Distributor delegates from the 13 member federations of the European Union of Electrical Wholesalers (EUEW) and manufacturers had two major issues in mind when they gathered in Estoril, Portugal, for their 43rd General Assembly: achieving greater efficiencies through electronic commerce and preparing for the euro currency.
Several attendees reported better economies and qualified optimism, but almost all were concerned about the new pan-European monetary system.
The transition will come in stages, culminating in the replacement of 11 national currencies by the euro in 2002. Those participating are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Great Britain and the Scandinavian countries are not yet committed.
But while euro-guessing was the major speculation sport at the meeting, plenty of consideration was given to the current economic conditions and trends. Here are the most significant national developments: Belgium. After a lackluster 1996, last year saw 4% growth with strength in wire and cable being offset by a decrease in the lighting sector. During the first half of 1998, growth has continued at 4.5% and lighting figures are greatly improved. However, unemployment is high at 14% and the national debt now equals the GDP.
France. Bernard Manhes, president of the French federation, says economic indicators had begun to show more positive readings starting last fall and that trend was continuing.
Permits for construction have quadrupled in a year, and public works contracts are up 4%. Commodity product sales were up 3% in '97, and this year have advanced by more than 6%.
"We are experiencing a complete turnaround," Manhes says. He also reported major problems with price cutting in the market. Germany. The German electrical industry continues to struggle with plant relocation and capital investment abroad because of the high labor costs at home. This continues to cost jobs in Germany and business in the industrial market, says Dr. Horst Beckers, general secretary of the national federation.
United Kingdom. "The market in the U.K. is not particularly buoyant," says Nigel Ellis, director of the Electrical Distributors Association. "Sales volume is slightly up, but sales value is slightly down, so if distributors are working harder for a smaller return, the inherent problem is that there are too many wholesalers operating in a static market. Ifthe market continues to show no growth, it is difficult to see how everyone will survive."
The Netherlands. Both the general economy and the electrical wholesaling industry are enjoying a significant upturn, according to Ellen Kroese, general secretary of the Dutch federation. GDP increased 4.2% in the first quarter of this year, and industrial production was up by 6%. A mild winter brought a 10% jump in construction activity. The bottom line: a 13% sales increase for electrical wholesalers in the first quarter.
Italy. A slowdown dating back to 1996 continues to trouble the Italian industry, notes Rodolfo Bellentani, chairman of the EUEW and president of the Italian federation. "We have seen slight increases thanks to the strength of the industrial market in the north and the upgrading of electrical utility plants in the central and southern regions of the country," he says. "Our federation members saw a 2.8% average growth rate in 1997. Growth will remain modest because investment in construction and the service sector is flat, and there is an absence of state spending programs. We see no change in these trends." Norway. Acquisition activity in the first quarter reduced by four the number of wholesalers in the national federation, but overall figures are good, says Jens-Dag Vatndal, general secretary. In 1997, sales of installation materials were up 12.4%, wire and cable up 5.9%, and lighting up 8.4%. The total market was up 10% and growth continued into the first half of 1998.
Portugal. The Portuguese economy is expanding, says Jose Valverde, general secretary of the national federation. In addition, low mortgage rates have stimulated the residential construction market. Despite these positive developments, bad debt remains a serious problem, with the average payment time over 100 days.
Spain. Private sector spending and entrepreneurial investment, up 4% and 12%, respectively, were the engines driving growth in 1997 and 1998, says Pedro Torres Palop, general secretary of the Spanish federation.
The construction market, long sluggish, has turned around, registering a growth rate of 6.7%. Generally, the wholesaling industry is experiencing a growth rate of 10%. Overall the availability of favorable credit terms and reduced interest rates have combined to foster a healthy financial situation.
Sweden. Industrial expansion and government investment in both renovation and new construction are the positive forces encouraging the Swedish wholesaling community, but traditional markets remain weak. "For a long time we had low interest rates and very cheap loans," says Hans Lofgren, the federation's general secretary. "But now the rates are high. Competition is strong and in this kind of market, pricing always becomes a problem. The rest of 1998 will be a tough time for all of us."