The Euro will change the economic behavior of European companies and force them to operate more like American companies, said Peter Praet, chef de Cabinet of the Minister of Finance, Brussels, Belgium. With one currency taking the place of a variety of others, there is "no option to exit," he said. "It will require institutional change."
When the countries that are members of the European Union (EU) give up their individual currencies, they can't turn back.
While optimistic about the future of the European economy, there are risks to be considered. "Serious risks are risks that build up over the years," he said. "But knowing the risks means that the institutions should be reformed."
Praet discussed the changing marketplace in western Europe where 11 countries now form the EU. He offered comments at the European Petrochemical Association Logistics Meeting November 28-December 1, 1999, in Amsterdam, The Netherlands.
European companies will need a more disciplined work force than they have had previously, but collaboration with labor will be crucial for a successful transition of the EU economy. European corporations typically have given way to union demands and then persuaded their governments to devalue the currency, which offset the cost of placating the unions, Praet said. But because devaluing the Euro will not be an option, companies will be encouraged to resist union influence, and unions, on the other hand, are likely to be more responsive.
Unions will have to assume a global view of wages and other worker issues, said Praet. "This can be accomplished if unions understand that cooperation between them and management is good for both."
However, there are other economic factors at work. Financial analytical skills in the EU are weak. The European Union Bank officials do not have the expertise and access to information like the United States Federal Reserve Bank. "The global market is a catalyst for action, but the EU Bank resists it," he said.
Another problem lies in the many cultural differences in Europe, including languages. "Eleven countries are manageable, but it is not management without problems," he said. "The EU is like a cartel of social democrats unlike in the United States where the political climate is centered in capitalism. The United Kingdom is somewhere in between. The world is global, but it is not a global village."
Growth Bodes Well With predictions that the worldwide chemical industry will continue to grow 3-6% per year and will utilize more tank containers and fewer drums, the prospects for the tank container industry appear excellent, said Edward Kew, tank container director for Welfit Oddy of Port Elizabeth, South Africa.
"If that happens, the industry has tremendous potential," he said. Kew discussed the tank container industry at the European Petrochemical Association 26th Logistics Meeting November 28-December 1, 1999, in Amsterdam, The Netherlands.
However, it's not all good news. Current manufacturers are not expected to be able to meet the demand, so additional startups will have to occur, he said. At the same time, the price of nickel has risen. It represents 60% of the cost of stainless steel production. With those factors present, Kew estimates a new tank container will cost between $20,000 and $22,000 in 2000.
The industry has experienced growth of 16% annually over a 10-year period, said Kew. He estimated 140,000 tank containers in use around the world today. About 13,500 tank containers were produced in 1999, he added.