Photonics News No 87

Dear readers,

After almost ten years of steady growth, we are now experiencing a noticeable economic downturn in some sectors. Especially in mechanical engineering and the automotive industry, sales figures have been declining. Discussions with our customers have made it possible to identify some of the causes of this downturn. There are several factors that have played a role: the typical economic correction caused by overcapacity, overoptimistic planning from the previous year, and more difficult conditions on the Chinese market.

Since the political conditions and risks will not disappear in the foreseeable future, it is difficult to predict when the situation will improve again.

Not only are the protectionist approach of the US government and the chaos surrounding the British exit from the EU (the so-called “Brexit”) poisonous for our economy, but the German government is also lacking a clear plan for the economy, especially as it pertains to small and medium-sized businesses. It almost seems as if we have gotten used to the bubbling tax revenues of recent years or have linked the boom too strongly to our own political decisions.

Germany is a high-tech competitor on the global market. Emerging markets such as China have caught up extremely quickly in recent years and – with all the opportunities the market has to offer – are becoming increasingly competitive. The effects of US tariffs can be seen in an accelerated quest for independence, and once China has achieved the status of a technological leader in parts of the economy, there will be no turning back – not even for Germany.

We cannot escape increasing market competition, nor would that align with our company philosophy. However, we rely on internationally comparable prices and conditions, and they are always at risk of being torpedoed.

Our competitiveness is therefore increasingly dependent on political decisions regarding corporate taxes and technology investments. Unfortunately, the political debate is currently dominated by other issues that, in the short term, are expected to generate more votes.

Lower taxes cannot be equated with lower tax revenues in the medium term. It is our view, however, that high or constant tax rates inevitably can be.

LASER COMPONENTS has a good tradition of investing, especially during calmer economic phases, in order to prepare for the growth of the next upswing. Our close customer relationships have reinforced our conviction that there will continue to be a growing demand for the end applications of our components in the future. However, the general conditions must also align, since ultimately only the willingness of the economy, especially small and medium-sized businesses, to take risks and invest can herald the next growth phase.

Yours,

Patrick Paul
Managing Director, Laser Components GmbH