In spite of everything, the market moves ahead

Date: 21 April 2011
Source: Newsletter Vitrum
It looked like this would be the year of the big turnaround, that the tough times were over and that the soft breezes of recovery had finally blown across all global markets, albeit with differing degrees of intensity.

Instead, during this first quarter everything that could go wrong, did, and continues to do so -- from the wave of uprisings and revolutionary demonstrations in North Africa to unabashed speculation on raw materials, and the spike in oil prices; not to mention the disastrous earthquake, tsunami, and nuclear emergency in Japan. Plenty to worry about, and the pages of the newspapers are already filled with dire predictions.

After the brutal recession of 2008/2009, the recovery of Italy's machinery manufacturing industry for the glass market sector seems to have been shielded from the effects of the political turmoil in North Africa and the Japanese earthquake tragedy, as confirmed by Michele Gusti, President of Gimav's Flat Glass Group.

But is it all true? Casting a broader view, doubts arise and become more solid in one-on-one conversations with industry professionals. For example, let's take a look at hollow glass, and allow ourselves a quick exchange of remarks with Michele Gusti, President of Gimav's Hollow Glass Group: "Certainly, it's been a bumpy ride, but we have stayed on the edges of it. Our projects are spread over the long term; they are complex and require lengthy completion times – he interjects as soon as we broach the subject – while events and temporary fluctuations, no matter how dramatic they are when they occur, only have a limited effect on major investments. Our client firms plan their futures well ahead of the completion dates, which are typically rather far out in the future."

A recent study by Intesa SanPaolo (the leading bank group in Italy) maintains that the level of earnings for Italy's machine-building industry as a whole, by the end of 2012, will be only 90% of that attained in 2007.

"As far as we are concerned, the recovery already took place, completely, several months ago. Realistically speaking, there was a slowdown during the two-year period of 2008/2009, but it was only a recession, not a full-blown crisis. Anyone with technology worth shouting about is not in trouble at all; orders are coming in that easily fill the production quotas for an entire year."

The markets in the Middle East and Asia are demonstrating increasingly impressive vitality; that’s where the greatest demand for Italian machinery comes from.

"That's true, but only partially; demand not only comes from there, or at least there are some important considerations to be made. In China, for example, there's a certain saturation of systems and plants; they've been big spenders up until recently in order to maintain the rapid pace of their exports. Things have begun to slow in the last few months; the domestic market should begin to expand, but the qualitative level of Chinese consumption is still a far cry from that of the West. However, in India they've reined-in spending due to increased inflation, in its own turn caused by excessive demand."

So?

“So, all in all, we can’t complain. Let’s say that we’re doing better now than in 2010; there is currently a slight downturn in orders, which I believe is only temporary, but production continues at a steady pace”.

600450 In spite of everything, the market moves ahead glassonweb.com

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