For the first time since the survey started in 2005 confidence has gone from positive to negative and 43% of respondents now expect the situation to be deteriorating in a year from now compared to 13% who think it will improve.
The survey, undertaken in conjunction with Ernst & Young, polled the views of some 80 senior executives in IABM (International Association of Broadcasting Manufacturers) member companies around the world.
IABM chief executive Roger Stanwell believes that the extended period of growth in the sector may be coming to an end. “Responses to our survey suggest that suppliers are now expecting much more challenging times over the immediate period ahead,” he said.
According to the IABM, the results reflect the “late cyclical” nature of the sector where large projects have momentum and so an adverse economic situation takes time to impact but similarly may make the sector late in recovery.
It is also indicative of the massive growth in the broadcast market over the last 18 months, buoyed by the “quadrennial events” such as the Olympics and the shift towards digital infrastructures and HD.
Order volumes and values have weakened over the last quarter and although selling prices were stable in Q3 2008, cost prices have continued to show upward movement resulting in squeezed margins. This is predicted to continue.
The political and economic situation and project and order deferral by customers are cited by 57% of respondents as factors that are limiting order growth.
Despite the gloom, Adrian Scott of the Bakewell House consultancy believes the downturn will work in the sector's favour.
“Q4 was pretty dire for just about everyone but I am confident this period will have a silver lining for those companies bold enough to see opportunities and not just threats,” he said. “The industry needs to go through a period of pain and uncertainty in order to become stronger. Underlying trends suggest there is nothing intrinsically wrong, but companies that don't work hard to ensure they continue to meet the needs of their customers might find themselves in difficulty.”
Key to survival
Scott also pinpointed some of the key factors that he believes will help companies survive.
“There will be a recovery sooner or later,” he continued. “The companies that lead it will be the ones that use this period as a time to restructure and change and do so in line with a vision of the future. It might mean getting rid of people or cutting costs, but in the long run manufacturers have little to fear as long as they are bold and look for ways to achieve significant improvements in their market intelligence, sales methodology and communication strategy.”
For more information on the IABM Industry Trends Survey go to www.theiabm.org/its