Hypertherm wrap up and outlook for 2013
Sponsored article provided by Hypertherm
It is almost the end of 2012, and Hypertherm would like to take this opportunity to share its views on the year gone by, and its plans and outlook for 2013.
An interview with Mr. Soo Kam Tatt, director, Hypertherm Asia
1. What interesting or outstanding trends did the metal cutting industry in Asia display in 2012?
Within the global thermal cutting industry, fiber laser made greater inroads, as higher capacity systems that can cut thicker materials were introduced. This was a continuation of the trend seen in 2011, which saw the technology outpace CO2 lasers.
In the field of plasma, the industry observed continued refinement of cutting technology capability for both mild and stainless steel. With increased competition in these segments, previously known applications were reinforced, while new ones were introduced.
Manufacturers of plasma systems also introduced more accessories and applications-based solutions that enhanced the original equipment manufacturers’ (OEMs) ability to integrate plasma into their cutting tables more easily. At the same time, this increased the value proposition of the final product.
2. What was the biggest challenge for the industry this past year, or over the past few years?
The greatest challenge in 2012 was, in my opinion, the slowing economy in Asia, and in particular in China. In addition, the India market showed signs of lagging later in the year, and other Asian markets were also affected by the downturn, leading to lower economic output across the region.
On top of economic difficulties, demand evaporation and heightened investor cautiousness dampened the investment climate of numerous key Asian countries.
3. Is there any silver lining for the metal cutting industry in response to a poor global economic outlook for 2013?
On the global front, it is difficult to determine whether the metal cutting industry will see an improvement as the US and Europe economies are now in different stages, and continue to be exposed to various market challenges.
Although the US industry performed generally well in 2012, the looming fiscal cliff is a time-sensitive factor that may throw the country and international markets into disarray.
Closer to home, China hopes that its new leaders will recognize the need for continued growth. This comes alongside expectations for measures that will facilitate economic development and growth that is sustainable. In India, the government recently proposed credit-easing measures and new regulations, in order to attract foreign direct investment (FDI). These, if agreed and approved, should inject some confidence into the sagging Indian market.
Apart from Asia’s two largest economies, governments of other countries in the region have also invested or plan to invest large sums to upgrade business infrastructure, in order to improve the local economic climate. These measures will be key to making 2013 a better year for companies in general.
4. Please share with us the significant milestones that Hypertherm witnessed as a company in 2012.
Within the span of a single year, Hypertherm reinforced further our presence in two Asian markets – India and China. In India, we incorporated a new office in New Delhi, which also houses our first local cutting technology center (CTC). The CTC will serve as a gathering point where employees of over 40 channel partners can train up their technical skills and sales expertise to enhance their capabilities when introducing Hypertherm products to end-users. Channel partners at a training session in Hypertherm’s India CTC.
As for our China operations, we moved to a larger premise to accommodate the growing associate base, and to have the CTC and office located within the same facility. This is in line with the growth that we’ve seen in the country over the years.
Hypertherm launched a few new products in 2012, the most notable being the Powermax 105®. This is a new 105-amp air plasma system used for handheld and automated cutting and gouging. The system is designed to comfortably cut 32mm-thick metals, and sever metals up to 50mm-thick. It is the toughest, most versatile system in its class.
Another outstanding innovation was the HyPro2000 torch, meant for retrofitting onto existing MAX200 systems. Compared to the standard torch, the HyPro2000 cuts 25 percent faster and has the potential to increase consumable lifespan by up to 75 percent.
5. In which industries did Hypertherm attain the most significant growth in 2012? What were the factors that led to this?
2012 was a challenging year, and there wasn’t a specific industry that stood out for our Asia business. The leadership transition in China complicated the slowdown of the domestic economy as the country normally doesn’t make transition and implementation measures during this changeover period.
Although signs of economic decline in other Asian nations became evident only after China experienced a drop, the slowdown was already felt within the industries earlier in the year. Many markets in the region witnessed decreasing GDP as we moved towards the end of 2012. In India specifically, inflation, government bureaucracy, the weak Rupee and decreased agricultural output due to low rainfall have lowered the country’s GDP down to about five percent for 2012.
6. China has been pressured on many fronts to allow the value of the yuan to be controlled by market forces. What impact will this have on Hypertherm’s business in the country?
At present, Hypertherm transacts business in China using the yuan. If the currency is controlled by market forces, fluctuation of the yuan will vary to a greater extent than it does at the moment, and may therefore have a greater impact on us than before. However, this variability will depend on the strength of the yuan, which held steady for the most part of 2012. In a situation where business conditions are dull, like what we’ve witnessed in 2012, a yuan that is subjected to market forces could weakened, which would pose challenges to our business in China because the cost of our systems and products would inevitably become more expensive.
7. India's government recently expressed its openness towards FDI. Does this have any impact on Hypertherm's business in the country?
New initiatives by the Indian government to attract FDI have generally been viewed positively by the business community. In order to succeed, however, these propositions have to find traction within the complex web of Indian democracy, the coalition government, and the bureaucracy that the country’s leaders plan to minimize. Successful implementation of proposed ideas is likely to attract investment in the country, and should therefore raise confidence in the local business climate.
8. Since Hypertherm entered Korea, what major changes have you witnessed in the local market within the last six years?
Hypertherm entered South Korea in the early 1990s by working with a distributor, and appointed a local manager in 2006. Since then, the business has ridden on the global shipping investment cycle, and has been part of the Asian shipyard growth spurt. There has also been a spike in the construction and agriculture equipment industries through the years.
At the time when all this growth took place, Hypertherm introduced the highly successful HyPerformance series of HyDefinition plasma systems. This proved timely as the product enjoyed excellent reputation and acceptance among the local OEM and end users. These systems have consistently proven to produce superior cut quality and achieve optimal productivity while minimizing operating costs.
Despite market opportunities presented by the booming shipyard sector, as well as the construction and agriculture equipment industries, OEMs in Korea’s thermal cutting industry experienced some attrition. As a result, only the fittest competitors remain in the business today, and many of these mainly focus on selling to the domestic market.
9. Many organizations and governments are now pushing for companies to practice sustainable development. How can the manufacturing industry answer this call?
Sustainability is an inevitable call to ensure that the incessant industry pursuit of growth doesn’t come at the expense of environmental degradation. Many companies are aware that they can play a part, and have started pursuing efforts to reduce their impact on the environment.
At Hypertherm, we have set long-term goals to reduce waste and minimize our carbon footprint. We continually hold ourselves accountable to these targets. As part of our efforts to reduce waste, we are looking into ways to make every component of our products recyclable, reusable or reclaimable. Our target is to produce zero waste by 2020.
In order to reduce our carbon footprint, we hope to improve in the way we transport our products worldwide. Energy consumption is one area we are looking at as part of our sustainability efforts – we want our products to be as electrically efficient as possible. Another area is the way we transport our products worldwide and here we will be optimizing and finding a blend of reducing the carbon footprint and serving our customer efficiently.
10. What are Hypertherm's plans for its business in Asia come 2013?
As I mentioned earlier, 2012 has been a challenging year for Hypertherm in Asia. China’s purchasing managers’ index (PMI) in October indicate that the country’s economy may have hit rock bottom, which seems to coincide with the general view that recovery will probably only occur in 2013. For India, if the government’s measures to attract FDI kick in, this would bode well for the country’s business in 2013.
Although these factors may bring about favorable conditions, growth is unlikely to occur at the same pace as it did previously as current domestic issues in both China and India will crimp exuberance to a certain extent. At the same time, export prospects presented by the rest of the world will not be as bright as before.
Notwithstanding the economic climate, at Hypertherm, we view the New Year with vigor, as we always have. As a company, we will focus efforts on pursuing technologies and applications that offer value to end-users and our partners. We have expanded our capabilities in China and India in 2012 with larger offices and incorporated new cutting and training facilities. These will further raise our support levels, and allow us to serve our customers more efficiently to minimize potential downtime.