As we kick-off 2011 Anna Mitchell asks our region’s distributors what their concerns are for the coming year. All agree they’ll face challenges but most of them of them seem ready to rise to them.
Sign-off sagasCompanies are reticent to sign-off projects, perhaps as a hangover from austere times that have created caution in the market. Many of the distributors surveyed told us that lengthy sign off times caused problems with stock management and forecasting.
Harald Steindl, general manager of Austrian distributor Mocom, said projects are increasingly short term and unpredictable. Alain Richer, director of marketing for Sennheiser France, echoes his thoughts: “It’s getting very difficult to get any approval from the end user and when we have the order we are forced to deliver the equipment tomorrow”.
Slow sign off isn’t a new phenomenon in Kuwait but for very different reasons according to Kennet Vaz of Al-Alamiah Technology Group. “The Kuwait market is very slow but people are used to all projects taking time. The market is gradual but it’s steady.”
2, New players in the fieldCarsten Steinecker, director of business development at Comm-Tec in Germany, says as the AV market matures competitors are entering the scene, particularly the typical “IT players” such as Techdata, a company that opened an AV division in 2010.
“More and more people from the IT world are trying to get into the AV market,” adds Richer. “We are selling more internet or digital network systems and the IT guys are very competent in this field. They want to target [the AV] market because of better margins on equipment.”
Vaz believes that his company’s dual focus on AV and IT has kept Al-Alamiah in business while smaller AV only companies were unable to survive the recession. “IT consultants are visiting shows that exhibit AV gear to learn about the equipment,” he notes.
3, Money mattersAs distributors often import equipment the economy and currency value of the countries surrounding them is of concern. As recession and economic problems spread through the world in 2008 currencies fell and reached points of virtual collapse causing massive fluctuations in exchange rates. The markets may be starting to settle but with turmoil in the euro zone there is an expectation that the oscillations will continue.
Richer says changes, particularly between the euro and the dollar, affect Sennheiser France as it imports American and Japanese brands. And Stephen Fenby, managing director of Midwich Limited, also pinpoints exchange rate movements - particularly between sterling, euro and the dollar - as a risk factor in the coming year.
4, Taxing concerns“One big concern is the increase of VAT tax at the beginning of next year,” says Tomasz Trzaskalski, owner of C4i Consultants for Industry, a Polish distributor. “It will go up by 1% which seems small but has some large results including all the problems associated with paperwork. VAT in Poland will be 23%, which is quite a lot”.
And it’s not just Poland that faces these headaches. Across Europe there have been or will be increases in Greece, Ireland, Latvia, Poland, Portugal, Romania, Slovakia, Spain and the UK. VAT increases obviously make equipment more expensive but there is an additional impact as most companies need to rewrite stationary and change processes to reflect the new rates.
5, Recruitment and retentionSteindl says that recruitment is never easy but if, as hoped, business starts to pick up in 2011 then finding good staff will be hard. “Everyone in the market knows who the good staff are and who the bad staff are,” he explains. “For the bad guys the recession wasn’t easy because you obviously get rid of the bad guys first. But when there is more work in the market everyone will want to re-staff at the same time and it will be hard to find good guys.”
“Recruitment is always difficult in this part of the region,” agrees Vaz. “People know things move slowly here and they head to markets that are moving fast. Most of our staff are from India and we train them ourselves and take them through CTS qualifications from InfoComm.”
6, Convincing the clientTrying to convince clients to implement new technologies that, sometimes, they don’t understand is always difficult. When they’re emerging from austere times and looking for return on every penny they spend it can be near impossible. Of course, this is bad news for manufacturers, distributors and integrators.
“Trying to convince consultants of new technologies is very difficult,” illustrates Vaz. “Especially when projects here are delayed for three years and new technologies are out at the end of project. We tell them that the old ones are outdated and still they put their foot down and say no.”
7, Digital dividendIf you’re interested in the professional audio industry then its probably likely you’re aware of the digital switchover that threatens wireless microphone users. “In France from the 1st of December 2011 the wireless microphone will not be usable over 790MHz which is a problem and it’s a threat,” says Richer.
However, he does concede that a law forcing users to replace kit could be positive move for a distributor. “We see the dividend as a possible increase in revenue for us but we don’t know how much kit we’ll have to replace. It’s difficult to make predictions and we are not even sure what will work. It’s still a major concern for the industry. If you relocate a big portion of the users that were on the upper part of the frequency range down to below 790MHz there could be too many people on the same frequency.”
8, Government bureaucracyTrzaskalski’s experience in Poland has led him to believe that any type of government presents bureaucratic barriers to private companies. “Generally speaking, governments cause problems for entrepreneurs. This situation will not change for enterprises and small companies in 2011.
9, A lifesaver?“EN54 is a new evacuation and life safety standard that will be introduced in Europe,” explains Richer. “Equipment will need to go through approval and only that which passes the tests can be installed. But there’s a massive amount of confusion in all areas of the marketplace. The manufacturers are confused, the end users are confused, no one really knows what to do.” Confusion in any marketplace is not healthy and for professional audio manufacturers, installers and distributors it’s going to be really important for them to understand and be able to implement compliant systems by the time EN54 comes in to force at the end of March 2011.
10, Supply issues“It may seem strange that, in a recession, certain products may be in short supply,” explains Midwich’s Fenby. “However, many of our vendors set their production plans many months in advance and, with a recession apparently looming, they cut supply. Where demand has not fallen as anticipated, product shortages have ensued. Our response to this has been to try to hold larger buffer stocks in order to ensure the best continuity of supply for customers.”