Inside EICF What’s the “New Normal” by Carlos Olabe, EICF Executive Director “N
ew Normal” is a term in business and economics that refers to financial conditions following the financial crisis of 2007-2008 and the aftermath of the 2008–2012 global recession. The term has since been used in a variety of other contexts to imply that something which was previously abnormal has become commonplace1
. So, the
“New Normal” is becoming too normal albeit in cycle mode. Interesting to note that the theory of economic cycles i.e.: overinvestment (misallocation of rare resources), Keynesiana (insufficient aggregate demand), monetarist (lack of monetary discipline), real business cycle (aggregate supply in change), neo Keynesiana (market imperfections) have always been there and now as sudden shock a new source is being established. Investment Casting companies have been working in an ongoing growing market with a world average annual growth of 4.5% during the last 9 years configuring at the end of 2019 an overall figure of 14,3 billion USD. It is also recognized that this behaviour was different among market segments and that the overall annual growth figure was decreasing lately, in particular the market segments of Automotive and Energy were having a negative evolution showing the effects of uncertainty in association with the application of environmental policies which somehow were shifting the economic model for energy generation or powered alternate vehicles. Aerospace, biomedical and general engineering sectors remain strong driving the overall growth. The challenge Investment Casting related companies are facing now is of broader spectrum as it is affecting many market segments at a time and in the form of a negative demand shock. The question when planning ahead is how it is bound to be the recovery, the famous arguments on the “V” or “U” shapes are on the table, with a very difficult answer to forecast as there are many variables affecting and in particular the availability of a vaccine that could provide the confidence to restore the social interrelation and the whole economic activity which is derived from it.
14 ❘ May 2020 ®
So, is this “New Normal” pointing out to accept the weakness of the sense of certainty aimed by our society today, mostly based on the availability of advanced information? Although Risk Analysis and Risk Management practices are common practice nowadays, in most companies and organizations still the heed the advice of ancient Aesop fable, “The Ant and the Grasshopper” is valid in our days. By the way just another note of interest when talking about Risk Analysis, please consider the WHO Global Preparedness Monitoring Board report entitled: “A WORLD AT RISK Annual report on global preparedness for health emergencies”, dated September 2019, in which it is stated : “The world is at acute risk for devastating regional or global disease epidemics or pandemics that not only cause loss of life but upend economies and create social chaos.”2
, so the
risk was clearly identified and the report clearly addresses the mitigation actions. The Investment Casting Industry is bound to go through this process of market drop with adjustments on capacity and redefining the business model for many companies. These are going to be tough times and the Association is here at the members service in support of whatever initiatives are necessary to bring back the “new normal” to normal.
1 Source : Wikipedia 2 Source : WHO GPMB Annual Report – A World at Risk
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