The walls of Dubrovnik (where the UEIL conference was held at the end of October) provide a guide to the resilience of Europe. After hundreds of years of wars, it was a pleasure to see the city rebuilt in all its magnificence after the most recent Bosnian conflict. On a less significant scale, it was also a pleasure to hear reports of the UEIL’s lobbying resilience resulting in a change of EU legislation for lubes additives.
Maintaining resilience and restoring the global lubricant market to its previous glories is the current task of many of the worlds' lubes producers and marketers. With demand tracking GDP, monitoring forecasts and responding to early indicators is an essential task for those planning the 2012 budgets.
The beginning of October has seen growth estimates from the Economist Intelligence Unit (EIU) for the Eurozone and US downsized to a contraction of 0.3% and growth of 1.3% respectively. Both are more cautious than the official forecasts, but with the German PMI moving into negative territory - falling for the sixth consecutive month to 49.1 - the latest view from the EIU is hardly surprising. Fortunately, the non-Eurozone countries should grow faster and, by contrast, the US has continued to be in positive territory for nearly 30 months.
The challenge of sorting out the Greek mess is highlighting how much power actually resides with the borrowers, not just the lenders. Germany’s economic surplus (previously a deficit before the Euro was introduced) has benefitted from subsidised exchange rates and lower borrowing rates, both of which allowed German manufacturers to sell goods over the last decade to the now heavily indebted southern European countries.
Does this scenario sound rather like China and America? Germany actually has a genuine and substantial interest in resolving the current impasse. As the rebuilding of Dubrovnik shows, Europe has substantial long term resilience – and actually doesn’t need external money – unlike the US. It just needs to manage its affairs better!
Meanwhile the flooding in Thailand, which is mirroring the effect of the Japanese tsunami, is delivering a negative shock with a -1.7% decline in GDP anticipated. Disruption to supply chains has already led to many automotive factories becoming inoperable, now and for several months to come. Of course this may lead to production being switched to factories in China and Germany. It is an ill wind…
Back at the practicalities of selling lubricants in slow growth markets, the importance of effective, innovative marketing increases. At the UEIL conference in Dubrovnik, I presented a paper, which is now available for download, highlighting the past impact of Web 1.0 on lubricants marketing and the impact of Web 2.0 and social media on promoting lubricants to the key B2C and B2B sectors.
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Sebastian Crawshaw
Chairman