'Crisis? What crisis?' is a legendary quote attributed to the UK's Prime Minister Jim Callaghan in 1979. It was allegedly his response, upon returning from vacation, to a series of escalating industrial and political disputes which quickly led to his parliamentary party being ousted from power as the UK Government.
I mention it simply to illustrate the fact that one can be so engrossed in one's own little world that you can fail to notice the momentous developments in the worlds of others.
By the time this issue of Valve World magazine hits doormats, the global financial situation may well have moved on considerably, hopefully for the better, quite possibly for the worse.
However, as I write, the Dow Jones in the USA yesterday dropped 770 points in a single day, its largest ever fall! The situation here in the UK appeared set for a similar freefall - 'America sneezes, the UK catches a cold' as our old saying goes.
But no, it didn't happen in the UK (or more accurately it hasn't happened yet). In fact UK stocks bucked the trend and rose a little on the day. How could this be?
British 'stiff upper lip'?
I like to think it's the good old British 'stiff upper lip' and our stockbrokers have managed to keep their heads when all about them were losing theirs. Actually it may be simply that the UK financial scene is just a little bit more robust than that of the USA. It also has to be borne in mind however the US may well be that little bit further down the road to recession than we are ourselves.
State of UK Manufacturing
So, how will the affairs of the banking and investment sectors affect the earthier world of manufacturing?
Photo: Heap & Partners
Well UK manufacturing was, until recently, doing very nicely thank you. No-one was talking about it much in the press, but UK manufacturing had bounced back to a very buoyant level of activity. I can vouchsafe that the UK valve and actuator industry in particular was extremely busy, mainly, it has to be said, led by very strong exports. The investment levels by UK valve and actuator manufacturers in machine tools and test equipment also remains extremely high.
But all the turmoil in the strange world of finance has, despite the fact that global demand for our products remains very high, already started to have an effect. According to the Chartered Institute of Purchasing and Supply, the UK manufacturing sector shrank last month at the fastest rate since records began in 1992, officially showing a contraction. The fear is that the UK – like many other countries across the globe – is now heading for recession.
False Economies
Everyone will now be that extra bit more mindful about costs, negotiating better deals, and ultimately 'trimming back'. It's this last point that worries me most. Plant specifiers and operators will no doubt have costs under the mircoscope, and this – rest assured - is where false economies will be made. 'Trimming back' on valve and actuator purchases will, if rushed, lead folk into considering sourcing their products from untested and potentially unreliable suppliers. Preventative maintenance schemes will be 'stretched' to the point where it'll be difficult to apply the term to what would become a 'wait until it fails' policy.
Saving £5000 on the purchase of a control valve is no good if the valve fails and the process plant is losing £5000 every hour while it is shut down awaiting the arrival of a replacement valve! Nor should anyone's life be put at risk by the procurement of unsafe, improperly tested product.
With the huge global demand for oil and gas, the world's valve and actuator industry may, or may not, be facing some tougher times in the future. My call to the user-base of our industry is not to panic, to keep your heads and to continue to demand only the very highest standards, and be prepared to accept that high quality sometimes carries a premium. Let's not create a crisis of our own by over reacting to 'someone else's cold.'
The BVAA represents over 100 UK suppliers of valves, actuators and related products.
See http://www.bvaa.org.uk for more details.
, dated May, 20, 2003
