(Not) Full Speed Ahead in Zagreb

ZAGREB, Croatia–Perhaps the best news to come out of the UFI Congress here was that the worst might – just might – be over for much of the world’s exhibitions industry.

But that doesn’t necessarily mean a full recovery is yet underway for the global tradeshow business either.

“The hard climb has just begun,” said Jochen Witt, CEO of consulting firm JWC and moderator of the UFI CEO Think Tank, a session held during the annual congress of UFI, The Global Assn. of the Exhibition Industry, intended to help leaders of the world’s largest tradeshow organizers draw some conclusions about the near future.

There was little argument during the Oct. 28-31 meeting about the current state of the industry: “Stagnation and maybe a slight decrease for our industry worldwide,” said UFI President John Shaw, “with strong decreases in the United States and Western Europe.”

The good news, though, he added, was “we have actually been hit less than other media. Businesses come to our medium meaning to sell their products.”

Otherwise, according to those who participated in the third annual UFI CEO Think Tank, the relative health of the tradeshow industry around the world remains mixed.

According to Witt, the weakest performance at the moment appears to be in Europe, North America, Japan, India and Russia. Countries experiencing surprisingly good results are China, Brazil and Turkey.

Many of the factors affecting shows, good or bad, are consistent throughout the world.

For instance, Witt pointed out, “No matter where you go, lead shows are performing well, low-cost models are benefiting and everything in the middle is suffering.”

At the same time, regardless of the location, shows serving promising industry sectors, such as gas and energy, are doing well, while those serving struggling sectors, such as automobile manufacturing and real estate, are struggling right along with them.

Most of the leaders of the 14 tradeshow organizations who participated in the UFI Think Tank, from companies representing more than €4 billion ($5.9 billion) in revenue and 1,500 events, agreed the global industry was in a period in which many companies were focused on reorganizing, controlling costs and reducing headcounts.

“This is a time to reduce levels of risk and exposure,” said Eric Everard, chairman of the Artexis Group and incoming UFI president, “but it’s also a time to seek new business opportunities.”

Witt said an UFI Think Tank survey found that 14 percent of members believe a recovery will be in full gear by the first half of next year. Another 43 percent said they believe it will come in the second half of next year, and the same percentage does not expect recovery until 2011.

Witt noted the same fundamental obstacle to a larger economic recovery is impacting the exhibitions industry: a lack of liquidity in the market.

“There’s not enough money in the banks to be lent,” he added.

The same lack of liquidity, Witt said, has led to a decline in consumer spending in the U.S., along with a boost in the savings rate there – which has had an unwelcome, albeit unintended, consequence for global trade.

“Each percent of savings increase in America is $100 billion of lost spending,” he added, “and you know what that means to us.”

Although they may have been minority views, not all of the 300-plus attendees of the UFI Congress were as pessimistic as others.

“Mr. Witt was a little negative, I thought, particularly about my country,” said Serguey Trofimov, president of St. Petersburg, Russia-based show organizer the Retec Group.

Economist Dominic Sword coincidentally presented his global economic analysis to the congress the same morning it was announced that the U.S. gross domestic product grew by 3.5 percent in the third quarter, the first time in a year it had not declined.

“We are beginning to see the winds of change,” Sword said. “The pace of recovery just depends on psychology.”

However, even he noted, “In the short term, growth will be slow and fragile – at least for the next three years.”