The new year hasn't given Europe much to celebrate yet. Recently released industrial and employment data shows the ongoing drag that austerity and recession prevention measures are having on the economy here.
Industrial production across the euro zone fell for the third straight month in November, according to Eurostat. Output slipped 0.3 percent from October and 3.7 percent from November 2011. The consensus forecast had called for 0.1 percent growth.
The year-over-year slide was the biggest since November 2009. And most indicators from the last three months of the year seem to point to a third consecutive quarter of general contraction for the 17-country bloc.
News reports have attributed the decline to across-the-board weakness and steep drops in the production of intermediate and capital goods. But a rising unemployment rate isn't helping matters. The euro zone's seasonally adjusted unemployment rate for November rose 0.1 percentage points from October and 1.2 percentage points from November 2011 to 11.8 percent, according to Eurostat. For comparison's sake, the US unemployment rate for November was 7.8 percent.
There was a dim positive note for the electronics industry. Industrial output in Germany, a hub for the high-tech and auto sectors, rose a modest 0.1 percent in November, Eurostat said. The country also had one of the lowest unemployment rates in the EU (5.4 percent).
I don't know about you, but this kind of news keeps turning my stomach, especially as someone based in Europe. It's like the recession will never end here, and there's really no end in sight.
What does this mean for the electronics supply chain? We'll know more about how individual companies fared when earnings are announced in the next few weeks, but I'm not expecting stellar overall results. As we've reported before, many of the high-tech bellwethers have been struggling the last few quarters, bumping along slowly toward recovery or moving forward with significant shakeups.
If I had to put money down, I'd bet we'll hear companies -- especially those dependent on consumer holiday sales -- say revenue conservatively inched up in the last quarter of 2012, though new orders in Europe were slow. Anything other than that would surprise me.
What will be more interesting is how companies and executives respond to Europe's ongoing economic slump. We all know it's an important and mature market, but what measures will executives announce now that it looks like the EU will report three consecutive quarters of economic contraction? How will they help turn these numbers around?
There is also the complication of having countries that are in the EU but are not within the Eurozone such as the United Kingdom. UK still uses the British Pound as its currency and is among the top 3 influencers in the EU. I think UK has the best of both worlds by sticking to its powerful currency and yet keeping a strong foothold within the EU.
@cryptoman - like Bolaji said, I think the EU is making hard decisions which are trickling down to individual countries. One problem I see, however, is that while the region works on a single currency and has some centralized government organization, it's still a collection of individual nation states who set their own tax-levying policies and adminster their own health, school, and social programs. And, while stronger EU nations dictate many of the rules, it's not a federal system.
@Wale - Right... the same is true with US companies like Blockbuster - who rents movies anymore? Certainly something to consider - some business models have run their course and even if they revamp operations may no longer be relevant in today's world.
tirlapur - knocking wood that 2013 is a better year. And which markets are you speaking of in terms of "scaling to new heights." I think similar economic softness is in the headlines in the mature, western markets.. and the US is still dealing with a trade deficit and growing national debt. Emerging markets are different.
Bolaji - yes, some countries (mostly northern European countries) are faring better than those in the south, as can be seen in this chart (http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/4-14012013-AP/EN/4-14012013-AP-EN.PDF). But Europe, like the US., is still recovering from a deep crisis where austerity measures haven't quite converted to positive growth, confidence in consumer spending or sustainable job creation.
@tirlapur: analysts from the finance sector, have demonstrated that crisis has started, initially, exactly from US a few years ago; maybe we will assist to a new cycle, I mean, US right now are moving away and recovering?
@Cryptoman: speaking for myself, I think you are right; after all, I am positive, sooner or later any local country within EU will act with a common and shared plan and way to think; it takes time, maybe a few years.
I think before we see any improvements in Europe, tough decisions on Eurozone and the debt of countries such as Greece need to be made.
@Cryptoman, I agree with you. But other countries can take lessons from what happened in europe. In Europe they have social programs that have been granted to an aging population, and the proper money hasn't been set aside to pay for those and the bills have come due. The United States is just entering that right now and they need to take steps to avoid Europe kind of situation.
I think European Union leaders are capable of taking the tough decisions that will power growth in the region. There are a lot of cobwebs to sweep aside but in 2012 they finally took some tough decisions. They'll do the same this year although it may take a while It isn't easy bringing all the odd parts into harmonious action.
I think before we see any improvements in Europe, tough decisions on Eurozone and the debt of countries such as Greece need to be made. Europe is fighting a battle to avoid economical disintegration at the moment. I think an important part of this battle is political as well. Therefore, Europe's economical performance in 2013 will heavily rely whether it can make tough decisions by leaving politics aside for a while. This is easier said than done though...
Natural disasters wreak havoc to the tune of $100 billion in annual damages, says a UN report. To cope, companies need improved risk management strategies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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