Just a Dip in the Stream
Aug 1, 2002 12:00 PM, By Nathaniel Hecht
I HAVE BEEN fielding a whole lot of questions lately about the state of the industry. It seems that everyone has an opinion, but what I've noticed is that there doesn't seem to be a consensus on the subject. Although my inquiries with many industry professionals are by no means scientific, they do shed some light on this confusing and often misleading subject. This question has no simple answer. However, our industry is small enough that we can look at some generalizations to help us understand things.
Take contractors, for example. Most firms that I have been in touch with report no major loss of job activity. In fact, many companies besieged by work are clamoring for qualified personnel to fill positions. If certification programs at NSCA and ICIA/InfoComm are an example, people with skills are being snapped up to fill vacant positions as soon as they graduate, and the number of graduates from the programs grows significantly each year.
Another example is the OEM manufacturer — that is, companies that build parts or even entire products for other companies to market and sell or include in the manufacturing process. Some of them have never been busier, which indicates that orders for new products are not being affected much. If you had attended this year's NSCA and InfoComm shows, you would have noticed a dip in attendance but no shortage of new product announcements. Some manufacturers have posted record-setting numbers.
Some might believe that this is true only of the stronger companies as they continue to grab market share in a down market. However, it means that manufacturers are making a commitment to continued strong growth in our market segment, especially because the new product announcements are coming from both companies that are already established in our segment as well as ones seeking refuge from slower broadcast and M.I. markets. Some newcomers that have been traditionally involved only in the computer industry have appeared at the trade shows and identified our segment as an area for future growth. For publicly traded companies, it appears that stock prices, on average, have remained stable or even gone up as the market as a whole trends downward. Many have reported record earnings for the first quarter of 2002.
So what does it all mean? Here's my perspective.
The public is still jittery when it comes to the economy, and those in the audio/video industry are no exception. There seems to be a pervasive air of conservatism when it comes to personal spending and investing these days, and it is warranted when one considers the vagaries of some of our most trusted institutions that have been in the news. The truth is the public has been hammered with losses during the past couple of years, so most people are being cautious. Most businesses became used to the unrestrained growth in the '90s, which allowed for double-digit increases in revenues. In fact, the sales departments of many companies became so comfortable that growth seemed to be a given, and projections year to year appeared so unwavering that they were taken for granted.
When projections are made in a vacuum and the economy takes a turn for the worse, a company can respond only by revising its numbers (which often leads to the dismissal of the sales professionals who are involved). Depending upon how close to the bone a company chooses to live, the result can be a massive downsizing or even bankruptcy. Thankfully, that has not been pervasive in our industry, which is another example of its strength. Will it last? It is hard to predict. Despite a dip in the stream, the future looks bright — but ask me again tomorrow.
Nathaniel Hecht is the editor of S&VC. He can be reached firstname.lastname@example.org.
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