With a new French President seeking to stimulate the economies of both his own country and the wider Eurozone, there are signs of a shift in the debate away from austerity towards growth. This tension is particularly evident in Greece - ironically the founding home of democracy - whose politicians have had to go back to the people for a second time as they wrestle with the Euro Bank's demand for economic discipline against public pressure for expenditure.
For Europe as a whole, the signs remain gloomy. Any shine that was put on the world's stockmarkets after Spain's banks received a bailout, albeit with plenty of strings attached, was quickly tarnished by the news that European PMI composite index fell to 46.0 in May - where 50 is neutral - representing further shrinkage in the Eurozone.
It is more than 15 years since I first visited lubricants companies in Paris and, rather like Hamburg, the changes are highly illustrative. Gone are the big national head offices of Shell, Esso and BP, with their training centres and fine facilities. The former Esso building in Rue Malmaison now has a Red Star - not of China, but of Heineken - on the roof! Many of the brand names have been swallowed up: Fina, Mobil, Veedol. Lesser brands have been divested like Unil and Kroon and for those that remain, domestic sales are now dwarfed by those in China.
What we are seeing is the inevitable effect of reducing investment in mature economies and movements of funds in the growth areas of “Eastern” Europe and the growing Asian markets. Unsurprisingly, even more acute developments have been taking place in Greece with wholesale divestment or closure of some businesses. These lubricants businesses are both the lifeblood and the indicators of an active and vibrant economy.
The Eurozone banking-led crisis is continuing to take its toll. As we have argued before, the Euro is subsidising the German manufacturing sector whilst throttling demand and competitiveness in the peripheral European regions. Like everyone else, we have to wonder how long the Euro as currently constructed can be maintained.
Europe's legislators and auto manufacturers are also under the spotlight now that the CARS 21 Final Report has been released. The recommendations range from broad legislative to technologically specific. Whilst industry association, ACEA, welcomed the report, they were already issuing warnings to both legislators and manufacturers to act immediately and not ignore the findings if Europe's motor industry is to remain competitive globally. More on this in next months' View from the Bridge.
Mercifully the US is still just holding its own with its PMI for May at 53.5, a small decrease but positive, as it has been for 37 months now. Likewise, China was still positive at 50.4; though down 2.9% in April. It could well be that we will see a stimulus to keep the growth coming.
With the European banking concerns comes an increasing fragility for the world economy, despite the up-beat effects of the Queen's Diamond Jubilee, the Olympics and the US elections coming together this year.
To move lubricants sales forward, there is a need for enhance internet marketing, with improvements in presentatation. Links to increasingly sophisticated inter-connected solutions are becoming more the norm - something that is a key focus for OATS' business activities.
If you would like to find out more about our marketing solutions or talk to OATS or have any views on this, or any other, content in this month’s OATS Bulletin, please contact us.
Sebastian Crawshaw
Chairman, OATS