Business in 2008 and 2009
2008 was a good year for Hydro. We experienced growth in both sales and profitability. Overall, it was probably one of our best years.
To own and operate a business, one basically has to be an optimist, but I must admit that is a challenge in today's environment. Tight credit, lower stock market values and lack of confidence in the economy are sure to affect the industrial sector in the coming year. When companies look for areas in which to reduce expenditures, maintenance and repair can be one of the first areas affected. While I do feel that fundamentally the markets we emphasize-power generation, oil and gas and steel-have a positive longer term outlook, 2009 is uncertain at this time. Like other companies, we will adapt our strategies for the year ahead as market conditions become clearer.
Critical Issues
These comments apply across the board in terms of the markets we service.
The economy is certainly a critical issue as well as the new administration's plans and ability to work in a positive way with the business community. Policies and programs that encourage business investment and job creation are the foundation of economic growth.
The availability of skilled craftsmen and engineers continues to be a critical issue. For many years, our educational system has ignored the importance of training young people for these important "blue collar" jobs in the manufacturing sector. I think that by now everyone is aware of the crisis, but even effective recruiting and training programs introduced now will not solve the current shortage of skilled workers.
The nature of work in the manufacturing sector has changed dramatically and in a positive way in the last 20 years. We need to get this message to our young people and introduce them to the opportunities for personal growth and economic reward that the manufacturing sector has to offer.
Business and Technology Trends
The perception of customers throughout the markets that we serve is that the consolidation of the pump industry throughout the last 15 years has resulted in a decline in customer service. This has created an opportunity for us and has been in part responsible for our growth. We continue to focus on and invest in people and systems that enable us to deliver customer service that will exceed market expectations. Those companies that focus on delivering superior customer service can expect to increase market share and achieve above average returns on their investment.
Additional Thoughts
We are experiencing a "greening" of the industry which is both necessary and long overdue. Considering the massive amounts of energy that pumps consume worldwide (estimated by the Hydraulic Institute to be from 20 to 25 percent of total energy), it is absolutely imperative that the industry be proactive. Even a 2 to 3 percent improvement in pump and motor efficiency worldwide would have a positive impact on reducing emissions. In our own small way, we have focused for many years on efficiency improvements when evaluating pump rebuilding projects. It is part of our corporate strategy to extend our current product and service portfolio to include programs that support this important objective.
We also wish to take this opportunity to applaud the Hydraulic Institute for its leadership and for its important initiative with the Department of Energy, Pump Systems Matter.