With IBC apparently buoyant this year, despite a global recession, Will Strauss attempts to take the pulse of the manufacturing sector.

As I trawled the halls of the Amsterdam RAI at the weekend, more companies and people outside in the real world were feeling the pinch of a global economic slowdown.

The holiday firm - and West Ham shirt sponsor - XL went into administration, leaving tens of thousands of holidaymakers stranded, countless members of staff out of work and (presumably) lots of creditors out of pocket.

And then, a huge bank that I'd never heard of - but who apparently are very important - Lehman Brothers, filed for bankruptcy protection in the States. The knock-on effects are huge - not least for the five thousand employees who work in Canary Wharf.

It didn't look good. Yet, as I spoke to manufacturer after manufacturer amongst the technology exhibits of IBC, the mood was buoyant.

Is the global recession not affecting broadcast equipment manufacturing at all?

A big fat no

  • One managing director of a server manufacturer said that growth at his company was at 140% year-on-year.

  • Another boss, this time of a company that is involved in the camera end of the market, asked “if this is a recession, can we have one every year please?”

  • A third person that I spoke to - a sales person in the editing world - said he was cautious about revenues - and wouldn't bank on something until he had the contract signed - but equally he hadn't felt any effects yet and his company would continue to pump money into R&D.

From my own experiences over the last few days, if your business is about helping producers and broadcasters, facilities and crew move from SD to HD, things looks great.

If you make ‘traditional' broadcast kit and infrastructure equipment and have existing installations with people who want more of the same, things also look great. This is certainly the case for makers of routers, T&M kit, vision mixers, video etc, - the companies that were populating the busiest parts of the RAI.

But that leaves whole swathes of the industry unaccounted for.

Potentially, yes.

To get an overall picture, we can look at the IABM's latest Global Market Study, the results of which were announced at IBC. It states that there will be a slowdown soon.

Apparently, the broadcast and media technology manufacturing market will see single digit growth through 2009 and 2010. Revenues will grow at 7% and 9% respectively as companies find sales a little tougher than in recent times when growth has been in double digits. And then, in 2011, it will get better apparently.

There are certainly a couple of negatives. What if you want to borrow money for development or expansion or to pay off debts? Can you get credit? I would suggest it would be hard.

Financial institutions don't want to lend to each other. So they're going to find it hard to hand over the cash to the media industry - especially if you work in a part of the market (like post for example) where customer companies are regularly part of a cycle of rise and fall, re-invention and reincarnation. Those customers will find it equally hard to borrow money for their purchasing requirements.

How about manufacturers that have large work forces? I can pretty much guarantee you that in the next week or so we will get confirmation of a series of job cuts at one of our most famous manufacturers. It will be painful but necessary for a company that needs to streamline in order to - financially - make the most of its obvious qualities.

There is also talk of a major merger between two manufacturers. This may not be indicative of an economic recession. And, in fact, may point to one of the companies doing well enough to buy the other out. It may, equally, be a case of scale being important in order to maximise revenues, increase efficiencies and take a larger share of the market - to potentially stave off the pressure of a global slowdown and continue to grow in the future.

Assume the position

If I have to take up a place in one camp or the other, I would say the technology end of the market should be alright. There are lots of industry specific things going on right now that mean much of manufacturing will not be affected. Not least of these is the continued transition to HD.

Commercial broadcasters may be getting less ad revenue, but they cannot afford to not keep up with the pace of technology change. Some ad people might lose their jobs, but the likelihood of capital expenditure being reduced is small.

Broadcasters are making a transition to HD and beyond. They are looking five to ten years into the future. They are looking to improve their efficiencies, to improve the quality of their output and to find new ways of making money and programmes. They won't necessarily be put off by short term ‘uncertainty' or ‘nervousness.'

And even if broadcasters are forced to make cut backs in certain departments, there is good chance they will outsource some of their requirements - which means that systems integrators and independent technology providers could benefit. These companies can expect to feel the belt-tightening as customers demand better value deals but, equally, they are likely to be able to grab longer or better contracts on the back of such changes.

Those are just two examples. There are more.

So, my glass is half full. The technology makers and dealers will be fine as long as they continue to react quickly to the needs of their customers, continue to spend on R&D and continue to work hard to maximise what opportunities are out there.

And, whatever happens, just be thankful that none of us work for Lehman or XL.