Economic Conditions: Germany's Cautionary Tale

The messes are not immune. The economic slowdown is affecting or expected to affect the giant German exhibition organizers just as it is other entities in Europe, and there's a feeling among them that while it's still too early to gauge the specific ramifications of the downturn, there will indeed be some.

Michael von Zitzewitz, chairman of the board of management at Messe Frankfurt, said that with the uncertainty surrounding the global markets and the speed at which current developments are unfolding, it's impossible to clearly predict the consequences for the German tradeshow market. But it's evident that the larger economic downturn will leave its mark on the exhibition industry, likely creating a weaker 2009 than 2008, which was strong, he said, at least until the last quarter.

Joachim Schafer, managing director of Messe Duesseldorf, concurred. It still might be a bit too early to tell what the economic crisis' effects will be, he said, but so far so good – with one glaring exception: Exhibitors at the quadrennial printing show drupa, held May 29-June 11, told him that buyers have not followed through with all the orders they placed during the show. And, Schafer added, although shows on the schedule for the rest of 2008 and early 2009 don't foresee any impact, to make predictions beyond that is impossible at the moment for either Messe Duesseldorf's shows at home or at venues overseas.

Tradeshows are not impervious to the current world financial crisis, said Wolfram von Fritsch, chairman of the Deutsche Messe Board of Management in Hannover, Germany, although he added that the Hannover Exhibition Center, with its international flagship shows covering a diverse range of capital goods industries, is well-positioned.

There's certainly caution all about. Schafer said Messe Duesseldorf will watch some of its show launches closely. And the biennial Newcast precision casting show scheduled June 23-25 might well be affected if production cutbacks in the automotive industry don't abate.

For now, he added, “the key parameters – exhibitors, square feet, attendees – of all our shows from mid-2007 to today have been up significantly over previous events.”

However, Schafer said, when it comes to transactions conducted during the shows and orders ultimately filled in post-show business, Messe Duesseldorf is seeing a different picture.

“Some of our large exhibitors recently reported that some orders placed during the show have not materialized,” Schafer said. “In particular, significant orders from U.S. customers are on hold or have been canceled outright due to the credit crunch in that market.“

Nevertheless, he added, exhibitor and attendee participation at shows this year was not affected.

Deutsche Messe is monitoring all developments with the potential to impact its exhibitions very closely and remains in constant touch with key industrial associations and market leaders, von Fritsch said. Economic peaks and valleys refracted through different structural conditions can have a time-delayed impact on the performance of an exhibition, he added.

Large shows, such as the biennial IAA Commercial Vehicles (held Sept. 25-Oct. 2; 275,000 square meters, 2.9 million square feet) and Mack Brooks Exhibitions' EuroBlech metalworking exhibition (held Oct. 21-25, 2006; 87,700 sq. m., 936,460 sq. ft.) have demonstrated an enormous amount of resilience, remaining largely unaffected by current dislocations.

Messe Frankfurt officials remained optimistic that it will continue to grow its revenues this year and report a respectable profit.

“In 2009, our strong global footprint will allow us to overcome potential economic problems with individual shows and markets through gains in other shows and markets,” von Zitzewitz said.

He noted that during the 2001-02 financial crisis in Argentina, Messe Frankfurt elected not to abandon the shows it had in the country – as some international organizers did. Today, von Zitzewitz said, Automechanika Argentina is one of its most successful events outside Germany.

For now, Schafer said, Messe Duesseldorf expects to see growth flatten out, with minor revenue declines possible in some areas and renewed growth within 18 to 24 months.

“We are watching the financial developments closely while knowing that we cannot shape their outcomes,” Schafer said. “Measures to counteract any possible negative effects of the crisis can only focus on intensifying our preaching of the benefits of tradeshow participation in good times and bad.”

Deutsche Messe's von Fritsch said, “Looking ahead to 2009, we are confident that, given their strong technology and innovations-oriented focus, Hannover-based flagship exhibitions will weather the temporary economic storm.”

Schafer agreed: “We continue to play up the value proposition of shows, especially in rougher times.”