Interview with Javier Eguren, President of Cecimo

The mandate of Cecimo's Presidency is biennial. The mine began in October 2007 and therefore ends in October, 2009 following the conclusion of the EMO.

It really is a mixture of reasons, because it was the turn of Portugal but he informed Cecimo their difficulties in organizing an event of this magnitude, so it was decided to do it in Spain, where San Sebastian was chosen as the most appropriate place.

There are two a year. I have to say that when I came to the Presidency the first thing we wanted to do was turn these assemblies, to turn them into acts with more interest for the participants and not so much in meetings of internal matters closely related to the Organization itself that, in our view, it was not what you need to an entity such as Cecimo. In short, we made a selection of strategic themes and, logically, the issue of the crisis was chosen to be treated in this last Assembly.

Our goals for this last Assembly can be divided into three blocks: the first, how to make use of the EU initiatives to alleviate the effects of the crisis, the second, locate the indicators that allow us to get ahead of ourselves to visualize how to lead the incoming orders in the future and, the third, study the image and the communication of the sector with the financial world.

With regard to the initiatives of the EU, the analysis focused on financial aid and support to the r & d and innovation.

As regards the indicators, Cecimo is establishing a series of indexes that allow us to anticipate what will happen, in other words, we wanted to locate the variables that enable real predicting how to lead the market in the coming months and how will this affect incoming orders.

The first indicator that we decided to take into account is the stock market. We were looking for the correlation between the value of the enterprises of machine-tool which listed in Europe - 20 - and the world - about 30. And certainly, we note that there is a very clear relationship between these stock market indices and incoming orders.

The second indicator you have based on the analysis of the expert Peter Meier, ex-directivo of one of the leading companies of machine-tool and currently an independent consultant. Peter Meier works based on an index of business confidence and manages to make predictions to 12 or 18 months who have a high degree of coincidence with the reality of the capture of orders.

And thirdly, we rely on Oxford Economics, a prospective consultant whose analysis we believe tight to the reality. As a result, we are better able to estimate how to pass the immediate future for the sector.

I would say that the flexibility to adjust capacity to the current situation of the market, is essential today. On the other hand, we must be able to selectively attack the geographic markets that are coming out before the crisis, such as China. The indicators that China is beginning to change cycle are already clear. In addition, demand has also started to recover in the other BRIC countries, expression that refers to Brazil, Russia, India and China. We have no doubt that they will be, they are already, being those who will soon demand equipment.

Indeed, be present in global markets requires a certain dimension, a subject which we are talking about on a recurring basis. A small company also has its advantages and its own weapons, but if children are not able to be present in emerging markets will suffer greatly and some will not overcome this crisis. Anyway, sell to Europe and virtually we do not see export, Europe is already our domestic market and Spanish manufacturers sell in these countries a natural and continuous way. Our companies are already internacionalizadas, i.e., the step I have cattle. This is very atypical if we compared with other sectors, but it is precisely one of the factors that will allow us to move forward.

While our machines manufacturers have already fully integrated in its philosophy internationalization, there is no doubt that the sales in other geographical markets is our output. When the Administration describes the steps important to give the companies to emerge from the crisis, the truth is that they are describing a process machine tool manufacturers have been doing it for a long time. Opted for everything what is being said: r & d, training and search for external markets... Yes, look for other markets is a way out. What is happening is that, for the first time, the crisis is so global, that are not saved her none of the major economic blocs in the world. Why the positive impact of internationalization is being so scarce, because the demand is very low on all sides. But the change of climate in China, especially, is already making possible some investments.

We will demonstrate, precisely because we have done the homework, which we can deal with the crisis better than others. The behavior of the economy is cyclical, probably already be sensed a recession, but the cycle in which we find ourselves now is brutal. Having done the homework allows now that societies are well managed, with a high degree of flexibility, innovation and internationalisation and prepared to deal with this situation. We have the answer to the economic cycles in the DNA of our organizations.

Keep this high investment in r & d is a challenge which we must face. The only way to respond to competition from manufacturers of emerging countries is the productivity of our machines. If our solutions of mechanization, or production in general, are more productive, we will succeed. And this can only achieve it by means of innovation and increasing productivity.

The data that I have that figure is equal to or slightly higher than in countries such as Germany or Italy. It is obviously an average figure that varies from company to company and from year to year.

It is completely stopped, but I think that the industrial vocation of some areas is important. By placing us, Europe is a world leader in the production of machine tools, with 44% of world production, and in Europe there is no doubt that Germany, Italy or Switzerland have a special role. I would say that that happens with the Basque country, where traditionally has focused on the industry, which is one of the supports of our economy in a very significant way, as opposed to other communities. We do not foresee any improvement in the national demand for machine tools by the end of 2009, we discard it completely and, Furthermore, I believe that we will continue to fall until then.

Not, in our sector since then is not so.

I believe that the order books will be better in 2010, but not so the statements of income. This will make the environment better, although the actual business situation will be worse than in 2009. We believe that we will touch background at end of 2009, which will begin to improve the backlog, but will this not be noticed in the accounts of the companies until months later, precisely for this period of about six to eight months there since that captures a request unless it is delivered.

Insurance. Against manufacturers of the dimensions that have the Japanese, Chinese or Korean, with highly integrated companies, to us we have to be leaders in innovation and differentiate us technologically. The orientation of many of the Chinese builders is the volume, they want to grow at all costs, even neglecting the margin and quality. In Europe we have a number of large companies that are world leaders in dimension in their respective segments, but the sector as a whole is primarily composed of a fabric of SMEs, and they have to compete in niches. We have to identify and adapt to these niches and be leaders in them.

One of today's challenges is to keep the scope of operations. At the moment of falling demand we can fall into the trap of expanding sales share sacrificing margin, but this is a huge risk. I certainly do not recommend.

As we all know, is one of the origins of this crisis in the financial crisis. We already aproximábamos to a cycle of contraction of the economy, but financial speculation, the housing bubble and its global nature have been made that the current crisis is deeper than the previous. In addition, the liquidity in the markets right now is still very limited and this is much to hamper operations. I.e., our customers have problems with financing to buy machines and the manufacturers themselves find it difficult to finance their businesses.

The Administration should ensure mechanisms to ensure financing competitive companies are to survive. It would be unrecoverable economic and social loss to lose the competitive industrial sector due to lack of funding. Successful steps have been taken, but they are needed most. An example of very successful measure is to remove the collateral required to access to aid for r & d of the CDTI (Centre for Industrial technological development). (Public body corporate, under the Ministry of science and innovation), because does not change the budgets or requires more resources, but provides access to this infusion of cash.

There are interesting actions such as plan Renove for machines that have been set in motion in Italy or the programme for the reduction of the interest rate on loans for those societies which were profitable on July 1, 2008that is to say, before the big punching of the crisis.