Pumps & Systems staff spoke with Tsurumi America Managing Director Glenn Wieczorek about the major trends to anticipate in 2017 and how the landscape of the pump industry will change.
How is the departure of longtime, knowledgeable employees due to retirement, etc., affecting your company, and what steps are you taking to fill the resulting employee skills gap?
Tsurumi has been successful with employee retention for a long time—in fact, we have the first and second employees we ever hired still working in the U.S. office. These are people who have been here for roughly 35 years, and I don’t think a lot of companies can say that.
That being said, we do have some very talented, seasoned people leaving our company, such as our former general manager, Bill Davidson, who recently retired. People like Bill take huge amounts of information and technical ability with them when they leave. It can be a challenge to replenish those deficiencies since a lot of young people coming out of school don’t often say, “I want to work in manufacturing and application work.” They typically want to work for glitzier tech companies like Facebook or Google.
We found success by working with our human resources department to attract new talent and to make sure the young talent we already have stays engaged. We go out of our way to challenge these employees, and we don’t expect them to work under the same conditions that young workers did 30 years ago. We’ve evolved as a company to entice these younger employees without sacrificing our corporate culture.
Ultimately, we strive to maintain a balanced workforce of older and younger employees. Tsurumi values the knowledge and experience of a more mature individual as much as it does the energy and fresh perspective of young people—that outlook has served us well in making sure that skill gaps stay filled.
How do you see governmental regulations impacting the market in the coming year?
It’s hard to say at this moment what government regulations will be in place in 2017. We don’t know yet if there will be an onus on saving energy or handling waste in a way that benefits the environment. We don’t know if the EPA will be dismantled or not. There’s a considerable amount of industry-wide uncertainty right now.
Some changes will happen without government intervention, though. In the case of consumable water, for example, companies are going to have to meet new standards for energy usage. It will be interesting to see if manufacturers can meet these standards and how that will impact the overall performance of their equipment.
The Tier 4 emission standards for diesel engines have had a big influence on the industry, and that trend will only continue into 2017. The cost of these engines is going up dramatically, which affects a lot of manufacturers including Tsurumi. Preserving the environment is crucial, but at some point, we need to make sure that the cost of meeting these environmental standards doesn’t become too high.
What are your predictions for the oil and gas market in 2017?
I think the oil and gas market is going to be relatively stable. It will be comparable to where it is right now in my estimation.
Saudi Arabia and Iran are competing for output and pricing at the time of this interview, but I think prices will be relatively stable moving forward. I don’t see it going up to $100 a barrel, but I don’t see it going down to $30 a barrel, either.
It has a huge impact on our overall economy. Cheaper gas is a benefit to the average consumer—however, companies that are involved directly and indirectly with the oil industry are negatively impacted from lower oil prices. There are many industries—the pump market included—that have been negatively effected by lower oil prices.
What trends/activity are you seeing in mining, desalination, chemical processing, pulp & paper, etc.?
In the case of mining, I don’t think that metal prices will move up or down that much in the coming year. It depends on where the industry is headed considering this new administration. We could see a lot of coal miners being put back to work, which would mean displacement of people working in renewable energy.
Analyzing the mining industry can give you a good indication of how the overall economy is doing. For me, the best indicator of the mining industry’s health—and therefore the economy’s—is copper. Copper is primarily industrial and commercial in nature. It’s used for making the windings for motors as opposed to jewelry. Unfortunately, I don’t see a demand for copper the way I did three or four years ago. If manufacturing is down and you’re not building as many motors or machine tools, or putting as much money into infrastructure, you don’t need as much copper. I expect the demand to stay down for the immediate future.
What kind of year will this be for water/wastewater?
If there’s more money available in the coming year for infrastructure under the new administration, I assume that will affect the wastewater industry. I see wastewater continuing to increase in relation to the population, and obviously, the overall need for water is rising.
Market demand for water will continue to be strong, but I don’t foresee big spikes in 2017. I don’t think the demand for wastewater equipment will spike, either. Municipalities will have to find the money to maintain existing infrastructure, which is a challenge in and of itself.
We know that water is becoming scarcer, and whether that is a result of cyclical forces or human impact doesn’t really matter. It’s just a fact. We need to stay on top of that and watch to make sure we can meet the demands. Companies that don’t keep an eye on this run the risk of being left behind.
What general business trends/challenges do you foresee for the future?
I’ve touched on this already, but the fact is we just don’t know what’s happening. That’s the reason that the stock market is going nuts—stock market futures dropped 800 points in the wake of the election only to rise 188 points. Every market is up now.
Financial numbers are bouncing all over the place, globally. The yen is close to my heart, being that I’m a representative of a Japanese manufacturer. On the night of the election, the yen lowered in value from 105 down to 101.6. The next day, it jumped up to just under 106.6, its highest value since June. To see that big of a swing in that short of a time really illustrates how tumultuous things are right now.
If tax rates are lowered and companies are given amnesty, it could be a big boom for the economy. It all depends on whether or not those dollars are used correctly. At Tsurumi, we’re not going to be overly aggressive, but we’re not going to stand pat, either. We want to remain financially nimble so we can make a quick decision if need be.
Like I said: I’m a representative of a foreign manufacturer, so I’m watching the global financial picture very closely. In light of what I see, I’m cautiously optimistic.
What can end users expect to see in 2017, and what should they do to prepare?
I think the pump market will be stable. Pricing isn’t going to experience a large increase. There will be some new regulations pertaining to energy use, but it won’t affect the markets where Tsurumi is active. I don’t see prices going way down, either. It’s going to be a bit of the status quo. Most companies are approaching the new year like we are—they’re not being overly conservative or overly aggressive.
If you’re tied into mining, and the prices of metals or minerals, then that’s another story. Is coal going to experience a resurgence? It could, if government subsidies are taken away from solar heating, but the coal industry won’t return to what it was 10 years ago. We’ve also seen copper prices take a big jump in a short period, which means it’s volatile. End users in the mining industry will have to keep an eye on both of these factors.
Companies are being more cautious than they’ve been in the past. The recession in 2008 showed us that having cash on hand gives you the ability to tighten your belt and retrench—to ride the storm out. The economy has been steadily increasing over the last five years. It’s stronger than anywhere else. I think a big part of that is the sense of fiscal responsibility that stemmed from the recession—people are spending less money on R&D, new employees and expanding markets. For these and other reasons, I think end users can expect some degree of stability in the coming year.
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