Thursday, February 05, 2009

Omani Manufacturers and the Credit Squeeze

Manufacturers across the globe are being hit by the economic slowdown with demand falling, and many in the industry expect trading conditions in 2009 to be among the toughest for two decades.

Ibtisam Al Faruji, Marketing Director, Public Establishment for Industrial Estates (PEIE) and organizer of the Oman Manufacturing Group (OMG) said: “Local manufacturers are understandably worried about possible fall-out from the credit squeeze, but output has remained healthy, and so far few firms are finding that access to finance is hampering prospects for output or investment. Nevertheless, there are some signs that the pace of demand and output growth may edge lower in the coming months.”

Manufacturing is not immune to the impact of sudden changes in economic dynamics and it is important for all manufacturers more than ever to have a strategy to maximize output levels and reduce rising costs. For example, how are manufacturers reducing energy consumption levels? Where are they innovating? And how are they cutting bottom line costs to improve efficiency? “It’s these critical business issues that the 2009 OMG seminar program will be looking at,” remarks Hamida Al Balushi, Origin Oman Campaign Co-ordinator.

The first OMG seminar is scheduled to be held 7:30pm, Monday 9 February at the Grand Hyatt Hotel and the topic for discussion is Oman’s Manufacturing Success: Learning from Your Neighbour.

According to Al Faruji: “The global economy has meant that labour intensive manufacturing is a tough place to be in Oman if there’s no design, innovative, production, marketing or environmental edge. But there are Omani manufacturers with innovative manufacturing processes which compete with the best in a very competitive and difficult global market place and we’ll be highlighting four of those firms on Monday night.”

Most manufacturers have already felt the knock-on effects of the global financial meltdown of recent months, putting firms under intense pressure to reduce costs and improve cash flow – often with fewer resources – while simultaneously managing an increasingly vulnerable supply base. In response to this situation, Monday evening’s OMG seminar will scrutinize four Omani manufacturers who have developed successful products, services and process innovations, analyze where those ideas came from, how setbacks were overcome and how creativity and innovation are fostered within their businesses. The intention is to offer ideas and inspiration to local businesses by learning from the experiences of successful locally-based business innovation leaders.

The line-up of panelists for the free-of-charge OMG event includes: S. Gopalan, CEO, Reem Batteries (pictured); Yousuf Ahmed, CEO, Oman Textiles; Anwar Ali Sultan, Director, W.J. Towell; and Dr. Bhaskar Dutta, CEO, Jazeera Steel Product Company. The moderator for the evening is former Shell Oman Marketing, Managing Director, Nick Pattison.

OMG Moderator, Nick Pattison suggests one of the best ways for manufacturers to combat economic downturn is to understand cost base and compare it to revenue. “When your revenues go up, your costs go up with it. When your revenues start to come down, your costs should come down. The problem is that many businesses allow sales to go down for quite some time before they respond – probably because we’re eternal optimists. If I were a manufacturer, every month I’d want to see the correlation line between costs and income, and they must match.”

Mohammed Al Hosni, Manager of the Knowledge Mine Business Incubator Program and a regular OMG attendee says it’s important for businesses to analyze their business model and risk profile. If you see a problem, or even a potential problem, deal with it immediately. The business start-up expert goes on to say: “Those who deal with it then and there come out of the situation in a better place.”

“The current global economic climate is certainly worrying, although many of our local manufacturers have seen crises come and go, and will have the experience and nous to weather this period of economic instability,” suggests PEIE’s Marketing Director.

“If you’re worried about your business’s ability to survive the economic downturn. Fear not. Attending the 9 February Oman Manufacturing Group will go a long way to helping your company through the tough times,” smiles Al Balushi.

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