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It’s a Different World, Forecasters Proclaim

market outlookWhen speakers at the VMA Market Outlook Workshop walked into the presentation room in August of this year, they faced a situation where federal budget battles, a wildly fluctuating stock market, the first-ever downgrading of U.S. credit standing and other developments had pulled the rug out from under an already sluggish economy.

But although speakers admitted that a few predictions may need to be revised, their overall forecast was the same: the valve, actuator and pump market is doing well and poised for a brighter 2012. Most presenters also agreed that while no double-dip recession is in sight, this recovery is nothing like recession recoveries of the past—strategies may need to be different.

“There is still force in our sails … it just might be time to adjust those sails to the prevailing winds,” Alan Beaulieu, economist and president of the Institute for Trend Research, emphasized.

 

The workshop was August 11 to 12 in Boston. A few themes that emerged during presentations included:

 

What to expect: Beaulieu told market outlook attendees that his original prediction of a depression 20 years down the road remained the same unless leaders are able to get a grip on deficits, job markets and other economic problems. For the short term, speakers pointed out that the stock market volatility will remain, unemployment will take a long time to climb out of its hole, and inflation and interest rates will rise. “Instead of having this cycle [of past recessionary periods] where households spend more and employment rises, we are in a more stagnant position” with a loop of weak hiring and weak spending, Sara Johnson, senior research director of IHS Global Insight, said. However, the valve, actuator and pump industry will see a good market in 2012, and an even better market going into 2013, presenters agreed.

The shining stars: Speakers agreed that India holds a great amount of potential with a GDP that is rising at rates of 7% to 8% per year. The country did not suffer the consequences most countries faced during the Great Recession because it “is not a high credit market. We had a small bubble burst, but the country has a low dependence on imports, a closely regulated banking system and an economy that has seen resilient year-to-year growth,” Ravi Krishnan, principal consultant at Krishnan & Associates, told the audience.

Although Brazil and China were also mentioned as great contenders in industry and manufacturing, several speakers noted that conditions in China, including very high inflation, mean some business may return to U.S. soil.

Renewables gaining market share: This is the first VMA workshop where a speaker—Rakesh Radhakrishnan, associate director for Navigant Consulting, Inc.—addressed renewable energy as a separate market. He told the audience that renewables will evolve into a clean energy standard adopted around the world in a variety of forms dependent on regional priorities. India, for example, has huge hydropower possibilities. The U.S., in the meantime, has a bad taste for coal, but incentives in several renewable energy fields are set to expire.

Radhakrishnan was not the only speaker who emphasized renewables.

In the U.S., “Wind seems to be where developers are placing their bets with a fair amount of solar on its way,” said Mark Zeiger, principal vice president and manager of procurement for Bechtel Power Corporation.

Shale drilling changing the picture: Many speakers mentioned the effects that shale sources for gas (and with more recent drilling methods, oil) are having around the world. In the U.S., for example, natural gas from onshore shale sources will constitute almost half of the production of gas in the U.S. by 2035, according to John Spears, president of Spears and Associates. Mark Eramo, executive vice president, CMAI, said that the newer sources, along with increased demands for goods within the petrochemical industry, mean that industry is “back in the game” and looking at adding processing capacity.

Complete coverage of the Market Outlook Workshop can be found in the fall 2011 issue of Valve Magazine, mailing mid-October.

Genilee Parente is managing editor of Valve Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it..

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