Major infrastructure development plans in Asean, together with dynamic manufacturing growth, especially in the automotive, electrical and electronics industries, are contributing to the strong prospects of the wire and tube sector, say industry executives.
The rapidly growing ranks of middle-class consumers and their willingness to spend are increasing. A balanced and more sustainable consumer-oriented growth model is now driving the region forward, they say.
“Wire, cables and tubes are basically an unseen ‘hero’ industry. You don’t really see or recognise them, but in fact these products are in everything in your day-to-day life. Despite being hidden behind the wall, they are very significant,” said Gernot Ringling, managing director of the trade fair organiser Messe Dusseldorf Asia.
“We foresee that strong growth in construction and manufacturing throughout the region will support the burgeoning market demand in this sector,” he said on the sidelines of Wire and Tube Southeast Asia 2013 held recently in Bangkok.
Mr Ringling noted that since the trade fair was relocated to Thailand from Singapore in 2007, it had continued to gain more popularity over the years. The increase in first-time exhibitors as well as the strong group of committed exhibitors indicated the growing importance of the Southeast Asian market.
Thailand, he said, is where these trade fairs needed to be. “Thailand’s dynamic automotive industry is ranked 10th globally. Its significant growth in commercial residential construction and major infrastructure development projects are great robust backdrops.”
The growth prospects of the country can be further underlined by increasing steel demand that is projected to hit 17.62 million tonnes, up more than 6% from 2012. The wire, cable, tube and pipe industries are major users of steel.
Because of the country’s strong fundamentals and strategic location, Mr Ringling said that among the Asean countries, Thailand was likely to enjoy greater opportunities once the Asean Economic Community takes shape.
Echoing that sentiment was Heinz Rockenhauser, the president and CEO of Maschinenfabrik Niehoff GmbH Co KG of Germany. He suggested that the industry had already come back to almost the same level it was at before the 1997 Asian financial crisis.
“My outlook on the market is very positive,” he said. “Part of it is because energy distribution and infrastructure are the initial requirements for industrialisation. And when a lot of investments are happening in these areas, it will transfer directly to us.”
Other supporting factors, he said, were the acceptably low levels of public debt in most of the countries in the region, low or moderate inflation, and large young populations that can contribute to higher levels of productivity.
“Right now, half of our exports go to Asia. We also have seen a lot of improvement in Asean, particularly over the past few years,” Rahul Sachdev, executive vice-president at Wire and Plastic Machinery, the US-based global equipment supplier, told Asia Focus.
“The labour cost in China has gone up and it will continue to do so. Therefore, a lot of industries in Southeast Asia are being seen as an alternative to China.”
Mr Sachdev, however, noted that the challenges the region needs to face are the political will to uplift the standard of living for the people.
“The economy cannot grow unless there is political will to improve education and infrastructure. This has to come right from the top,” he said. “Asean member countries should get together and make solid commitments on areas that they will collaborate. Lack of political commitment is the biggest drawback here.”
Mr Rockenhauser added that the mismatch of qualifications in the job market was something that the region needed to take into serious consideration. In general, mechanical and engineering skills in the region, especially for new graduates, are not yet up to the mark.
“Bridging the development gap among Asean countries is also a challenge,” he said. “You have Singapore whose GDP per capita is higher than that of Germany, working together with Myanmar, one of Asia’s poorest countries.
“It is really essential that [leaders in] the entire region put their heads together and help each other to prosper.”