This week’s guest blog comes from Peter Westerman, Managing Director of Westermans International. He explains his views on the current oil crisis and the opening opportunities for trade with Iran.
The world has experienced relative financial growth for the past 50 years or so, but no one anticipated the dramatic effect oil could have on our lives and our economies. Historically most economies have been very dependent on oil and now all countries are seeking new alternative sources of energy.
However, I believe we are now entering a new worldwide recession, particularly with China’s current devaluation and the consequent and potentially damaging international crisis which could arise from this. Every country, and every individual company, must reduce their targets and profit levels in order to survive.
As a company specialising in refurbished welding machinery and plasma cutting, we have been working closely with Nigeria, Ghana and Malta, as well as closer to home destinations like Aberdeen, Scotland. Sadly we have seen a dramatic decline in UK activity as oil prices are struggling to recover. Major government spending cuts have hit Scotland badly. Poorer or smaller members of OPEC are so much weaker and cannot survive in tough market conditions.
On one side lower fuel prices here in the UK are great for transportation and help some British industries, but for many firms, business is slow and so are sales. Some of our machine tool partners in the North of England and Scotland are experiencing the worst ever time for business as offshore contracts are not being finalised. One company in Glasgow supplying industrial pumps has seen a drop of 13% in revenue: the lowest level for 30 years. They are taking aggressive action to reduce costs and improve competitiveness and the smaller companies will have to follow suit.
Billions of pounds of spending on new global oil projects have been put on hold, or even cut, by the world’s largest energy groups. This has affected the UK’s North Sea oilfields, certainly sparking some unrest on the rigs in the North Sea.
Admittedly, at Westermans, we have been very successful thanks to the oil and gas industry in the past, however we feel it is now time to investigate new and different sectors. On this note, we have been revising our export strategy activity in order to look at other markets and other countries.
Maybe the oil and gas situation will spark more trouble, and sadly potentially create additional conflicts around the world, so we may even contemplate opportunities to look at the military and defence industries!
Iran – a land of opportunity
A few months ago, I visited an Industrial Exhibition in Iran and I will try to explain what is great about the place from my experience and suggest what exporters and business people should look into when they are out there.
To start with, we need to remind ourselves of the scale of the place. The whole population in Iran is 80 million and the area is ten times larger than the UK, with huge supplies of oil and gas. With most financial and economic sanctions against Iran now been lifted as of 16 January this year (a few months ahead of the originally proposed time of March), we know there are now far fewer barriers to trade in place.
As it stands, Iran could become a world power and my business instinct is that every country in the world would want to trade with Iran. The first thing I would suggest is for everyone that enters Iran to go and visit the capital, Tehran. Get a feel for the place – the city is home to 12 million people and Iranians are very warm and friendly.
Here are some very basic yet useful tips I picked up:
- Be prepared when jumping into a taxi. In general, driving skills are even worse and more dangerous than those I witnessed when doing business in Italy. With four lane motorways carrying six lanes of traffic, Iranians are not famous for polite driving and that may scare a few people off.
- Religion is very influential and important to each Iranian. Do some homework and understand basic etiquette related to that.
- It is polite in a formal or business meeting to always shake hands. As a male, I was told to wait for women to extend their hands, if they didn’t I just simply nodded my head and smiled politely.
- The most popular greeting in Iran is ‘Salam’ which I believe means ‘Peace be upon you’. I was told only to reply ‘Salam’ back.
- When Iranians do business, they tend to stick to formalities. Once a business relationship has been formed, you may see that they will use your first name to address you.
- Men are called ‘Agha’ proceeded by the surname. So my name, Peter Westerman, would be ‘Agha-ye Westerman’. With women it is polite to use the word ‘khanoom’. So, my daughter, our finance director, Claire Spillane would be ‘khanoom-e Spillane’. Professionals with titles will be addressed similarly, for example, ‘Doctor-e Jones’.
Finally, we need to note that UK banks are still restricting funds being sent from Iran to here. That’s why Britain’s export agency is currently working hard with the banking industry and other European nations to try to alter their policies, if we are to get a piece of the action. For us exporters willing to strike a deal in Iran, more clarity about this is needed for sure.
Let’s watch this space. With improving prosperity and higher competitiveness, compared to other Middle East countries, Iran, once home to one of the world’s oldest civilisations, may soon be considered a world super-power again.