2008 was bad enough but will 2009 be even worse?

Dec 31 2008 by Iain Laing, The Journal

THE last 12 months have been incredibly turbulent in the business world. We have done our best to chronicle the changes in the landscape both in our pages in The Journal and via our website, and now we have called upon some of our regular correspondents to look back on the highs and lows of 2008.

Ian Shepherdson, economist

2008 WAS the year we learned how to stop worrying about inflation and start worrying seriously about deflation. The troubles in the global economy started in the US mortgage market but soon spread more or less everywhere as we learned that most major banks outside the US owned a variety of worthless paper, too.

As the losses mounted, the banking system teetered on the edge of meltdown, forcing the Government to bail out institutions run by people who called themselves masters of the universe but were more like lemmings.

The ensuing credit crunch has removed the oxygen of seemingly endless cheap money from people’s pockets, and the result is a deep recession.

For once, the North East has suffered less than the South, where the contraction in financial services is hitting hardest, but nowhere is immune.

The UK dodged the bullet in 2001 – an experience which seems to have convinced Gordon Brown that he alone conquered the economic cycle, so a whole generation of business people are now learning what recessions are like. It is all very ugly, so it is tempting to say goodbye and good riddance to 2008. Unfortunately we’ll soon be looking back at it with something approaching nostalgia, because 2009 will be worse.

James Ramsbotham, chief executive of the North East Chamber of Commerce

IT HAS become increasingly difficult to comment on the state of the economy as we near the end of 2008 as I cannot recall a time before now when we have witnessed such a rate of change that has brought such turbulence and unpredictability to all our lives.

We should not forget that recent figures showed that the North East economy continues to grow and, although we have experienced a year of two halves, the region appears better prepared to weather the downturn than other parts of the UK.

There have been some wonderful highs for NECC and its members this year including welcoming world figures and Royalty to the region with Polish icon Lech Walesa agreeing to be our guest in Durham and Princess Anne opening our newly refurbished Tees Valley offices in Middlesbrough.

We must be realistic that there are hard times to come, but also resilient and responsive to opportunities.

Ultimately, confidence is the key to our future success and I have witnessed throughout this year examples of the new-found belief that pervades our region. That gives me cause for optimism as this year draws to a close.

Alan Hall, regional director for manufacturers’ organisation EEF

WHATEVER we knew and whatever we thought back in January of this year, I think I am right to suggest that most of us could not have known or predicted what has ensued during the last 12 months. OK, so we knew Northern Rock was in trouble and the credit crunch had been well publicised in the US and beyond. But who would have said that Lehman Brothers would have collapsed, Northern Rock nationalised and US interest rates cut to just 0.25%.

So it is worldwide and it is painful, especially for any individual or family that is directly affected by all of this.

Within manufacturing, the progress of this economic slowdown has been unpleasant to observe. While the financial services sector was wrestling with its own difficulties, manufacturers remained largely unaffected during the early part of the year. Suppliers to retail and construction were certainly taking a hit but automotive, defence, aerospace and other sectors continued to do well, almost to the point of defying gravity.

I do not know what happened around October 15 to cause this but I can tell you that a huge swathe of manufacturers in this region were suddenly in the thick of this recession.

The scale of the slowdown does vary from company to company and sector to sector but there are very, very few unaffected at all.

Keith Hann, Journal columnist

IF nothing else, 2008 confirmed that the North East continues to lead the world. Northern Rock proved to be to bank failures what the Stockton & Darlington Railway was to transport. So much for those who sneered that this was what happened if you let people try to run a bank from the Regent Centre rather than Lombard Street or Canary Wharf.

It was also a year that demonstrated the total uselessness of forecasters. Twelve months ago the derided Bottler Brown was heading for disaster as the Tories coasted to an easy landslide victory.

Now he is implausibly repackaged as SuperGord, saviour of the planet. People have even started saying that maybe Mike Ashley is not so bad after all. It’s strange how abject terror can affect our reasoning. Although 2008 may seem like a year to forget, it has all the makings of “the good old days” if the relentless scaremongering about the cliff we are about to fall off proves even partially correct. For me, financially, it was the worst year I have experienced since 1987. It was also the happiest of my life to date. The best advice for these times is surely to remember that money isn’t everything.

Dinah Bennett, board director Women into the Network, Centre for Entrepreneurial Learning, Durham University

IF, as business owners, we have learned one thing from this year, it is the importance of building strong and long-term relationships with customers, staff and suppliers.

As the turmoil on the financial markets starts to impact on the UK economy, those companies that have invested time and effort in understanding their customers’ needs and developing a mutually beneficial working relationship with them don’t seem to be suffering as badly.

Those businesses with strong and often personal connections seem to be riding the economic storm better.

Ruth Winden Careers Consultancy has seen her best year ever. Fiona Cruikshank sold part of her business, the Specials Laboratory, for £20m while retaining a strong base in the region.

Zodiac Training reached a turnover of £3.5m with a profit in excess of half a million pounds and created 60 additional jobs in the past year. Lillian Mains, from Zodiac, says we are helped by North East women having had to manage a household budget, so we have generations of experience to guide us through to success, even in times of recession.

Some of Women Into the Network’s 4,000 North East members have closed their businesses due to the economic downturn, but they tell us they intend to start up again when the climate improves.

Nicholas Craig, partner, Watson Burton law firm

WHAT a difference a year makes. Blue skies beckoned this time last year. Instead they turned grey, our bank statements red and our knuckles white.

2008 was also the year of cool and quite a lot of wet. Particularly in August. Nevertheless, there were high points. There were the Olympic Games, the Great North Run, the success of Durham County Cricket Club topping the league and that short but sweet hot spell in April.

There were significant arrivals including Barack Obama, Gordon Brown and Kevin Keegan, and equally memorable departures, such as Tony Blair, Woolworths and Kevin Keegan.

It is a year which has shaken and stirred most of us. For that reason it will reverberate longer than many. We have become as budget-conscious as we were formerly diet-obsessed. As belts tighten, the appetite grows for an optimistic, confident future.

Blue skies could do their bit, too, by putting on a few repeat performances before the end of 2009.

Jonathan Grubin, young entrepreneur behind MiniG Media

MY first two years in business proved to be a steep learning curve, and 2008 has been no different. While some doors have closed, many more have opened. It’s hard to pick out the highlights from such a busy 12 months. The year has been all about meeting new people – sharing stories and ideas, and really immersing myself in the North East’s business community.

I’ve been amazed at people’s readiness to give up their time for a conversation, even when there are probably better things they could be doing. 2008 has undoubtedly ended very differently to how it began. Strong economic prospects have quickly turned into a financial crisis but I’ve decided that the best way to come out the other end is just to keep ploughing on through, and I’ve made a conscious decision to diversify more than I perhaps otherwise would. Next time around, I’ll know what to do – that’s the way I’m looking at it.

Kevin Rowan, regional secretary, Northern TUC

THE year started ever so well, with the news that the North East was, by a stretch, the fastest growing economy in the UK, closing the gap with other regions. But the good news didn’t last too long.

For a major part of the year some commentators were predicting ‘the end of capitalism’ as stock markets around the world collapsed amid a banking crisis not experienced since the depression era. Panic and uncertainty were ubiquitous and we continue to endure the knock-on effects as the global recession bites hard into the region’s economic base.

Tackling poverty and inequality of opportunity were key ambitions at the start of the year, focusing on bringing some of the large numbers of economically excluded workers back into employment and challenging the persistent features which still see one in five children in the North East growing up in poverty.

The focus on high value jobs in key sectors appeared to be starting to pay off and the first half of the year was permeated with a sense of optimism and wellbeing. If there remains room for optimism, it is that the region is well positioned to take advantage of the upturn when it comes.

Nissan is the most efficient car manufacturer in Europe and this year has enjoyed millions of pounds of investment.

The chemical and process sector has enjoyed some fantastic new investments and the North East is better placed than anywhere to secure investment in renewable energy.

The best advice for these times is surely to remember that money isn’t everything