Earlier in the year, I commented that expected result of the four-yearly Presidential election cycle would be a steady expansion of the US. Now, according to the OECD, the forecast is 2.3% by the end of 2012. While this has not produced a massive surge of activity, it is worth considering how things are today, compared with where they were.
When Barack Obama arrived at the White House the US economy was in free fall, losing 800,000 jobs per month. However, the maintenance of government expenditure, let alone the support for GM and the banks, has allowed the US to weather the worst. Recently it had been adding 150,000 jobs per month. While the August sub-100,000 figure is a cause for concern, it was balanced by car sales up 20% on 2011. Faster growth appears constrained by the European malaise.
In Europe, SuperMario, (the Governor of the European Central Bank) has returned from holiday with a package to buy bonds and to do whatever it takes to save the Euro. It seems remarkable, but it may also buy a bit more time for the politicians to make further adjustments. Growth is still hard to come by in the Eurozone, which is expected to shrink by a further 0.6% this year.
“Extraordinary Methods” may be deployed in the US to get the economy moving more firmly in an upward direction although some analysts are not in favour of taking this step for the third time, given some of the already positive signs of growth. However, some form of easing may yet be needed to outweigh the European drag and the China deceleration.
Overall, we are well over halfway through the change, or confirmation of Governments. The US election and the 10 year China handover is underway, although the China succession issues are certainly distracting from the country's focus on the economy. Once that is out of the way, we should expect to see further moves to rebuild the pace of economic growth there. At present, the situation does not look good. But how many other economies would love to have the problem of just 7% growth?
With the US and Chinese authorities pursuing increasing Environmental and Fuel efficiency legislation (eg CARE in the US the performance of lubricants will become ever more critical. In a specification-driven market place, the consumers must have confidence in the fluids they are using to protect their investment.
In many lubricants markets around the world, the challenge remains keeping up with the pace of change. Yet, many suppliers compete with products that do not meet OEM claims or regulatory standards. At a conference in Moscow earlier this year, one Russian speaker said “Russians cannot trust Russian lubricant brands."
However, the challenge of ensuring and assuring quality is not just an Eastern European one. In the US, the PQIA is taking action ensure compliance. While Europe's EELQMS has been tried as a Code of Practice, it has not really gained traction. Now the Germans have started a group - FSQ - to test lubricants found in the market place. Other initiatives are also taking place around Europe.
By encouraging - or perhaps enforcing - the relatively modest investment required to meet globally recognised standards, these initiatives represent genuine weapons to combat the value-sapping effects of sub-standard lubricants and should be welcomed at all levels of the industry.
At OATS, as one of the leading provider of lubricants specification data to the industry, we fully endorse and encourage plans to ensure a level playing field across the lubes market.
As always, if you would like to comment on this, or anything else you have read in our monthly OATS Bulletin, please don't hesitate to contact us.
Sebastian Crawshaw
Chairman, OATS