Whatever the weather

Distributors provide a vital link in the supply chain between manufacturer and integrator. Whilst one might argue that this means they are pulled in both directions on price, it also puts them in a unique position to give a perspective on the market as a whole. Beyerdynamic UK’s Managing Director, John Midgely, gave his thoughts on the state of play in the UK AV market.

After a summer of drama and change you’d forgive businesses in the UK for being a little cautious. Since May they’ve been variously flooded, bombed, had a new Prime Minister, had outbreaks of Foot and Mouth and Blue Tongue disease. On top of that they’ve seen interest rates rise five times since September last year and the credit issues first seen in the US manifest themselves in the UK banking sector.

However, in-spite-of the weather, both economic and climatic, the UK AV market continues to enjoy growth and optimism. This year’s PLASA show, held in early September, was widely hailed as being a success. Both exhibitors and visitors were in an upbeat mood. The support for regional exhibitions also continues with new events in Glasgow and Dublin planned by Scattered Media for the next 18 months and existing events such as Audex in Manchester continuing their development.

The UK also remains at the forefront of technology adoption in a number of fields. Government investment in technology for education has put an interactive whiteboard in one in three classrooms and seen the genesis of the Schools For The Future project, which will see a new bread of schools built with technology at the very heart of their design. Elsewhere, London remains the world’s largest financial centre providing massive opportunities for the AV industry in banks, brokers and legal practices. To cap it all, the United Kingdom will host the 2012 Olympic Games with the procurement process already beginning for key services such as voice alarm, and public information.

So apart from the weather, which is of course at the forefront of any British mind from day to day, what is the state of things as Mr Midgely sees it?

“In general business is good at the moment. It’s not fantastic but it’s good. Interestingly this is the first summer where we’ve not seen as many projects going on in areas such as Universities. I’m not sure that’s necessarily because they are not happening at all, just that they are not being squeezed into the traditional four week period.

“I think that’s actually a much healthier way of doing business, we don’t have that mad crushing rush of people demanding product to go and it puts much less pressure on integrators to finish the job.”

“I would say that we are ahead of the curve overall. However, that’s across the board, not just in AV or just in corporate or just in education. We’re in the MI and residential markets too. Despite what’s going on with the retail sector and the web we’re doing well.”

What’s going on on the web is a reference to the bane of all distributors at present - the dreaded web price. Midgely alludes to an issue of perception of value of product – A school bursar or project manager could reasonably expect to do a bit of research prior to making a decision. They browse the web, read up on the products and see a few prices. They are then surprised that buying from a distributor is more expensive. That doesn’t mean that the distributor is losing business, but both dealers and distributors will lose margin.

A second battleground that Beyerdynamic finds itself embroiled on is another one of perception – the so-called “good enough” attitude, that pervades many public sector projects, as Midgely explained: “If a product is good enough to do the job, then the attitude is that it’ll do. Price is still predominantly the driving force behind decision making in local government and other projects. We’re seeing it even in areas such as DSP. Although DSP has been around a long time it’s taken a while to filter down to all levels of price. There’s now quite a bit of low-cost far-east manufactured product, which is “good enough” to do the job. But when you try to talk about audio quality or performance or speed, they don’t find themselves borne forward to the ultimate sale. That’s an issue of educating the market really.”

Outside of the core markets of education and the corporate sector John continues to see reasons for optimism. Residential AV, whilst being a very young market, is still one that he describes as “interesting”. Interesting in the sense that there is a strata of customers who are prepared to pay in excess of £40,000 on a project. That’s business that anyone should find interesting. However he sees no indication that AV in the home, much like home automation, will be anything other than a niche play until technology companies get past selling bells and whistles and start to make an economic case for people to invest.

Local government also continues to be attractive, playing to Beyerdynamic UK’s core competence in conferencing products. New demand for facilities such as webcasting is triggering a general upgrading of AV systems to deliver what is required. One market that is noted as one to watch, is the Court Room.

“The UK courts system is under a lot of pressure. The whole issue of language is an important and topical one. You can’t arraign someone if you can’t speak to them. A recent report in a Sunday paper showed that there are something like 200 languages spoken in the city of London at the moment.” The legal system is having to adapt to cope with the country’s changing demographic.

But what about credit crunches and general elections? Well the latter has since been averted, probably until 2009, so the usual holding of collective business breath is staved off for the foreseeable future. On the subject of the global economy Midgely is also surprisingly confident: “I think there’s a natural, human or British reaction to the problems we’ve seen. Business will ride it out, it’ll take three or four months, and things will start to turn again.” In terms of the impact on day-to-day business it appears that there has been a delaying of a few decisions rather than cancellation of works already planned. John also noted a reduction in the amount of quotations being made.

Finally, a note on training – like many other markets in Europe the UK is struggling to have enough trained staff to do the work available. “At the moment we’re suffering from a real lack of mid-level programmers and installation engineers,” said Midgely. “We do a lot of training ourselves, and send people to our suppliers, but integrators just don’t have the slack capacity that would allow them to send staff away for any length of time.”

When it was put to Mr Midgely that we might see foreign imports of staff in the AV sector, much like has already happened in other industries such as construction and IT, he was absolutely clear. “I think we will, it hasn’t happened yet, but if you look at the likes of the Czech Republic or Poland, where people are already coming here from, they have an excellent number of credibly trained an educated people.”

A warning then if the UK market doesn’t pull its collective socks up and improve its levels of training. In a global labour market you cannot afford to be complacent.

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