With the UK's population facing a referendum on June 23rd on whether to remain part of, or leave, the European Union, how does the so-called "Brexit" debate impact the Lubricants industry?
In my opinion, if the UK was to leave the EU, the impact for the European and Global economy would be severe. The uncertainty factor would be substantial and enduring.
This is not “a little local difficulty”. There is the potential impact of companies disinvesting in the UK. In other European countries, calls for similar referenda could become undeniable and might lead to the break up of the EU completely.
The EU is the world’s biggest trading bloc and uncertainty would damage trade and growth in a manner that could be similar in extent to the 2008 Financial Crisis, with ramifications well beyond just Europe in exactly the same way as the US mortgage debacle triggered events well beyond the US borders.
We are finally seeing recovery in the Eurozone. Manufacturing PMI is back in positive (>50) in Germany, Spain, Italy and Poland - although France remains behind the curve. Further afield, the US is just positive at 50.7, the lowest the nation's PMI has been for some time.
Meanwhile, China has fallen back to 49.2, reflecting its current economic challenges and fragility. Huge cash positions are offset by very high levels of debt, which has quadrupled since 2007. At 282% of GDP, China's debt as a share of GDP - while manageable - is larger than that of the United States or Germany and a major contributor to global debt.
Globally we cannot afford additional uncertainty. For that reason, combined with the historical peace that the EU and its predecessors have established over 50 years, I passionately hope that my fellow Britons vote to stay in.
In 2008, we saw the impact on the lubricants markets as economic activity paused. I fear the same result if there is a vote to leave. At least the oil price is rising and thus permitting some recovery for the upstream cousins of the lubricants business.
Elsewhere the emissions scandals continue to rumble on as the EU and the US will take action against VW, neatly summarised in a European Parliament briefing. Others have been found to be cheating too. Mitsubishi’s value has halved!
Strangely, this bad news for manufacturers is ultimately good news for consumers and the lubricants industry - the latter being forced to further improve products as specifications change to meet the ever more important air quality legislation.
In terms of handling lubricants product ranges, OATS' FUSiON platform is yielding benefits for customers who can now manage their products more easily. The FUSiON B2C sites can be equipped with Smart Search which rectifies users’ errors. The FUSiON Portal, with enhanced B2B facilities, will also deliver greater improvements for Technical managers.
To find out more about how OATS can help enhance product development and customer relationships, simply contact Diana Shen in China or, for global information, OATS' headquarters via e-mail or follow our updates on social media via Twitter, Facebook, LinkedIn and Google+.
Sebastian Crawshaw
Chairman