 The dramatic fall in the Australian currency has impacted negatively on two-thirds of Australian businesses. |
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Australian businesses expect further economic turbulence in the New Year as credit market conditions and the volatile Australian dollar impact on prospects for 2009.
The latest Dun & Bradstreet (D&B) business expectations survey reveals that one in four executives has been negatively impacted by changing credit market conditions and two-thirds have been hurt by the dramatic fall in the value of the Aussie dollar since July.
Inflationary pressures are set to continue into the New Year, with 81% of executives indicating they will raise selling prices in the March 2009 quarter.
According to Christine Nolland, national marketing co-ordinator of Linde Material Handling, prices are being reviewed based on the Australian dollar and material cost factors.
She tells Forkliftaction.com News that a tightening of the retail/small business sector is anticipated together with a more cautious approach in the larger business area. "Determining factors, as we see it, will be the Australian dollar and what develops in the Asian market and local mining sector."
Wayne Franklin, director of Calmat, says the company is being conservative on stock purchases at present due to the weak currency and the general economic conditions.
"We are fortunate that we have short lead times from our suppliers, so we are able to quote ex-factory at the current exchange rate with a currency variation clause.
"I feel confident that the Australian dollar will bounce back shortly, so any stock purchased now will be very expensive, if and when we get a recovery."
General manager of NYK Forklifts, Phil Singleton, says, "the fact that we purchase our equipment in American dollars from Japanese sources has resulted in our purchasing power being vastly eroded".
"Therefore, to maintain our small margins, we have no choice but to increase our selling prices on new stock."
He tells Forkliftaction.com News that it looks like Australia may enter a recession in the first quarter of 2009 due to a possible second quarter of negative growth.
"I believe market conditions will react in a defensive manner by procuring only the most essential capital equipment and retaining older equipment longer. I predict casual rentals to increase due to the non-commitant manner of customers and service and repair costs to the customers will increase due to older equipment kept longer than normal."
However, on an optimistic note, Singleton believes the market will start to recover mid to end of the second quarter of 2009.
John Cowpe, Exide Australasia general manager, says the effect of the weakened Australian dollar forces companies to daily review inventory levels, debtors and pricing.
"Exide endeavours to keep price increases to a minimum but will implement pricing reviews to recover costs when necessary."
He adds that he envisages the current market conditions to continue into early 2009. "Our business will continue to monitor market conditions whilst offering a high level of customer service to our customers."
John Watts, business development manager of Barrier Security Products, tells Forkliftaction.com News that he anticipates an increase in prices for steel related products next year due mainly to the increase in the price of steel.
"We are trying to increase the range of our products made in Australia to avoid any dollar fluctuation woes. A rubber speed hump is normally imported which would be affected by the Australian dollar where our new speed hump is made locally which is unaffected by the Australian dollar and better quality.
"Our business has continued to increase due to our continual creation of new products and designs, for example our new Bollard Protective Sleeves, an Australian-made product that avoids the need for bollards to be continually painted and repaired.
"Our sales have continued to increase over the past five years at an average of 33% and the month of October 2008 was up 13% on our previous best."
According to Christine Christian, Dun & Bradstreet's CEO, financial turmoil is driving deteriorating conditions across the globe and hurting executive expectations for the New Year.
"The credit crisis has made it more difficult for Australian businesses to access funds - it has also caused significant volatility in the Australian dollar. As a result, executive confidence has declined sharply, with expectations falling to levels not seen since the 1990s."
Dr Duncan Ironmonger, Dun & Bradstreet's economic consultant, says although GDP growth will be lower in 2009 than it has been over the last few years it will remain positive.
"The federal government will provide further fiscal stimulus as necessary and the lower value of the Australian dollar will encourage domestic spending and exports whilst discouraging imports. This situation will help to maintain domestic production and jobs, with unemployment expected to stay below 5.5% in 2009," says Dr Ironmonger.
"Despite the slowdown in world growth, Australia will not experience a recession."
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