By Viktor Lussi
Sales Director, Wheelabrator
There has been a lot of talk recently about the MINT economies (Mexico, Indonesia, Nigeria and Turkey), who are also part of the “Next Eleven” list of emerging economies. Beyond the catchy names, these groupings highlight potential opportunities for globally operating organisations with specialist offerings – like Wheelabrator.
However, demand for fast moving consumer products (or FMCG) is a lot easier to predict and respond to than long-term industry and infrastructure investment. For us here in Zürich, the latter is the interesting bit and it’s a tough one to gauge.
Too fast for the road
Demand for our equipment in emerging economies is closely related to the development of advanced infrastructure. Sometimes it’s down to seemingly banal things like: are the streets good enough to accommodate fast cars, that in turn require advanced manufacturing equipment to build?
Even markets that are now considered established, such as India, are still developing fundamental infrastructure. This is something we’re often discussing with our colleagues at our Technology Centre in Bangalore: should they build the same high-performance, high-tech equipment we’re selling to most European manufacturers, if there’s simply no room for such technology in the market?
Add to that some basic socio-economic factors, for example the question whether big enough sections of the population can even afford a car. Car ownership in Western Europe and North America is still miles ahead of BRIC countries, which of course also represents a massive opportunity. But it’s a very long game – and sometimes a political one, too.
The politics of infrastructure
Infrastructure investments are the basis of all manner of other developments. Steel production, for example, is correlated with investment in bridges and large building projects. Then there’s the building up of comprehensive electricity networks, that can act as a catalyst for other developments, such as the prevalence of fridges and cookers.There’s a tipping point from which good production equipment starts to matter. That’s when suppliers with experience in markets with a mature infrastructure can help.
However, infrastructure planning requires longer-term political and economic stability – and the political will to invest. For years there’s been talk about Russia ‘picking up within 2-3 years’, but as we’ve seen in the last couple of months, the political and economic landscape there lacks predictability.
Overall, there’s huge potential across both BRICs and MINTs, but the ability to release this potential is tightly linked to economical and political developments. In the end, political will is setting the course, ensuring that roads are being built and living standards improved.
China is still growing at a decent pace, if not as fast as a couple years ago, but India has somewhat stayed behind expectations – the growth spurts once envisaged have not happened. But not for lack of plans: many steel companies want to build a presence in India, but often struggle for various reasons.
The Next 11 – a round-up
Still, there are many interesting opportunities and developments around the world. We’ve seen a lot of activity in Thailand and Indonesia, where we’ve sold quite a few machines in the last couple of years. Thailand in particular had gained some momentum, with a marked trend towards investment and development, which was then disrupted by the political turmoil last year. It all depends on the political situation now, with stability being key for longer-term investment.
Similarly, a number of projects had started gathering pace in Egypt just before the revolution. They came to a complete halt but may now come back on – yet some uncertainty remains.
I guess the conclusion is, that terms like BRIC and MINT are great sign-posts of a country’s potential, but when it comes to real infrastructure development, that’s just the start of a very long game.