Transcript The economy and the events industry

Prospects for the global construction
economy
Prof Dominic Swords
www.dominicswords.com
From recession to recovery?
the timing?
the pace?
the place?
5 Years + : Megatrends
1 – 3 years: sustain competitiveness
2011 : tactical plans
From recession to recovery?
Grow – momentum - expansion
phase
Stabilise – confidence and
sentiment – investment and
consumption
Fix – asset, credit and stock
markets
Progress out of recessions
2.0%
1.0%
0.0%
0
6
12
18
24
30
36
42
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%
-8.0%
Months from start of recession
-9.0%
Source: www.niesr.ac.uk
1930-1934
1973-1976
1979-1983
1990-1993
2008
48
Sentiment improving in the EU
Baltic Dry Goods Index
The Great Crash
Over-capacity driving
volatility
... realisic long term level but highly volatile …
‘The crisis is over… ‘
Main economic and financial indicators confirm that that the world has
emerged from recession.
But the severity of the crisis points to a very different post-crisis world.
Over the foreseeable future, the resulting economic landscape is likely to be
characterized by the combination of problems in a damaged financial system
together with a weak recovery in the global economy held back by fiscal
restraint.
A German CEO
Construction - the worst collapse …
… in decades
EU Forecasts
3.3
Improving
though gradual
return to
growth
At lower
level
in mid term
2.1
And
continued
significant
risks
2.2
3.9
Euro area
forecast to
grow 1.5% in
2011
US by 2.1
and Japan by
1.3% this
year
1.6
What does
this tell us?
1.1
0.7
Risk and volatility will be continuing themes in our economies &
European Commission Autumn 2010
EU Forecasts
3.3
Improving
though gradual
return to
growth
At lower
level
in mid term
1.7
And
continued
significant
risks
2.2
3.9
Euro area
forecast to
grow 1.5% in
2011
US by 2.1
and Japan by
1.3% this
year
1.6
What does
this tell us?
1.1
0.7
Risk and volatility will be continuing themes in our economies &
European Commission Autumn 2010
China and India still at low relative level …
… but moving fast
But are still much below the West in per capita income
China is setting a new course
- Long term ambitions for moderately prosperous society - xiaokang
- Spread benefits of growth, re-energise agricultural productivity and
output, redress urban drift to the East
- Expand domestic market, reduce export dependency, allow yuan to
appreciate in due course
- Invest in infrastructure and buildin
The world top 30 in 2050
BCG – Global Value Creators
d on Total Shareholder Returns (TSR): includes change in share price and dividends based on calendar year data in local currency
Source(s): Thomson Financial Datastream; Morgan Stanley Capital International; BCG analysis
BCG – Global Value Creators
… in construction and machinery sector
Forecast growth …
… and re-ordering of main markets
What’s staring us in the face?
- A shifting global landscape
- China - Domestic development &
international presence
- US - Search for external markets
- EU - Multi speed economies
- How do we capitalise on these
developments?
… the decade will be mixture of these trends
So, what?
Imperative 1
- Financial efficiency
- From operational efficiency to
commercial effectiveness
- Streamlined decision making
- Supply chain power
- Margin growth
So, what?
Imperative 2
- Market distinctiveness
- Market leadership in reputation if not in
absolute size
- Re-define segments
- Innovation
So, what?
Imperative 3
- Selective investment and capacity
expansion
- Market entry and investments in new
markets (product, service and/or
geographies)
- Lay foundations to enable sustained
organic value creation
Questions
Trade winds blow
US and EU consolidate domestic
markets – companies build on local
strengths
Exports more balanced – Western
businesses find opportunities in high
growth geographies
st
1
nd
2
China
and India
largest
economies – with buoyant domestic
markets
Far and Middle Eastern business invest
in Western markets – offering local
competition o established players
Troubled waters
Credit markets slow to gather
momentum
Business and consumer
confidence slumps
China over-whelmed by internal
social and economic stresses
Political instability drives
protectionism ….
Becalmed
Fiscal deficits decline while slow
uptake by private sector in EU –
distracted by worries over internal
euro difficulties
USA divided with negative impact on
investment and growth
Western businesses slow to identify
and react to opportunities and
threats
Emerging markets focus on local
regions
Three global scenarios – to 2020
Becalmed
Trade winds blow
Troubled waters