Surviving the pinch

The German economy is suffering and its politicians are making dire predictions for the year ahead. Anna Mitchell spoke to Tobias Lang, of Lang AG, to find out how the German audiovisual industry is faring in these turbulent times.

Late last year it was announced that the German economy had officially entered recession. The Government revealed that the country’s economy had contracted 0.5 per cent in the third quarter, following a 0.4 per cent contraction in the second quarter. Earlier this year the county’s economy minister, Michael Glos predicted that 2009 would see the economy shrink a further 2.25 per cent - grim news for Europe’s largest economy.

The export market was hit particularly badly with automotive and machine tool industries taking a heavy blow. The numbers suggest that Germany has been one of the hardest hit countries within Europe and the recession doesn’t seem to be over yet, with some pundits suggesting worse is to come.

Lang AG, a wholesaler of visual presentation technology, is based in Lindlar, near Cologne, and has felt the impact of the gloomy financial atmosphere. Tobias Lang, CEO of the company, took over leadership of the business from his father (who remains as chairman) last year. He says the sales side of his 90-strong business is struggling.

“Because of the problems in the economy companies will not invest in new material. Parts of our sales business are not doing as well as they did last year,” he said. “However, the rental side of our business is largely unaffected so far. There are still plenty of events where presentation material is needed,” he added more brightly.

“Last year in Germany we had a situation of quite high investment in the marketplace, with a lot of smaller companies buying material for their own rental stock. Now they are more patient and will perhaps wait a few months and see how the economy is going.” But, whilst a lack of investment impacts badly on sales, it can have a positive result on the rental business

Lang continued: “The demand for large displays is quite interesting. Last year, when the market was growing, I think we had some quite impressive products – from Panasonic, the 103” plasma and from Sharp, the 108” LCD. These are premium displays in the market and working very well in the rental business. We’ve pinpointed this business as an area for growth in the future.

“LED is hugely important for us and for the future. This market will grow because of the physical nature of this technology – the relationship between the energy you put in and the light you get out is great.” But there’s a slight stumbling block for LED at the moment. Lang continues: “The crisis in the car industry is a huge problem. At the big car show that was recently held in Geneva, and the one coming up in Frankfurt this Autumn, there has not been the same demand for LED that we have seen in previous years.”

Lang tells us that companies in the German audiovisual industry have gone out of business, specifically citing a Dresden company that covered a similar market to Lang AG. “They were a dry hire business too and they shut down,” he said. “The banks first reaction to this economic crisis was to make it much harder to get loans. The market was based on high investment, fuelled by debt and without that some companies could not survive

“If companies have problems paying you cannot rely on bank loans now. When you work in dry hire, customers must pay on time or you end up operating like a bank. In this crisis I expect to see even more companies shut.” Survival in this crisis is largely dependent on cash flow and Lang says his company is in a good position, investing out of its cash flow and not relying on loans. In addition Lang advises against companies putting all their eggs in one basket. “We do not specialise in one market. If you do this you can have problems if a particular market suffers, a good example being the motor industry.”

Furthermore, Lang says training is a priority right now. “Training is one of the most important things for us, especially in this market,” he says. “We conduct a lot of internal training as we need the knowledge of good technicians. It’s a long process but we have a good team of young people. We conduct training sessions twice a year for all our video equipment and we also offer training for our customers. If we want to get 100 per cent out of our products it’s very important that our customers and our staff know how to use them. Staff often come with qualifications from Fachhochschulen [Universities of Applied Science] but we still have to educate them about the new equipment. Every time new equipment comes in we have to update our knowledge.”

Although Lang AG seems to be well set-up to survive, what’s the larger plan, how will Germany pull itself out of this crisis and what does this mean for the audiovisual industry in the country? Lang doesn’t think the Government’s reaction has really started yet. He elaborates: “For example, the Government still doesn’t know if it will save [ailing car manufacturer] Opel. But they will try and help the economy through and the decisions of the German government will be hugely important for our industry and us. We don’t yet know how much they will give and their intervention will not help us directly but, indirectly, any investment they make will be very important.”

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