A contract ain’t what it used to be.
In the late 1990’s and the beginning of this century, oil prices began a steady climb that would see them reach historic levels. In 2008, the cost of a barrel of oil was as high as it had been since 1979.
So as the oil flowed more freely (while, not free, but you get the idea), every energy-producing corner of the planet committed to new projects, new contracts, and new anticipation of a lucrative market for years to come.
Unfortunately, the industry didn’t plan for all of that to disappear.
“Yet despite their vast importance, few experts seem able to reliably predict where oil prices will go next. Financial markets and policymakers are perpetually surprised by large swings.”
That’s Brad Plumer, senior editor at vox.com. For Brad, large swings in oil prices like those we experienced in the mid-2000’s is just one example of shattered expectations. Conditions that lead to a surprise in oil prices include:
- the difficulty predicting demand
- unexpected technological advances
For instance, with the growing popularity of electric motors in vehicles such as the Tesla, does this represent a boon or a bane for the oil industry?
Many would argue it does, however many others would argue the distinction between what types of energy we use isn’t a priority, only that we have energy to use at all.
With so many intangibles influencing the economy and the state of the industry, it’s little wonder that corporations large and small have a difficult time planning for a decrease in the budgets of their customers.
That’s why we have to plan for the worst while hoping for the best.
How Can You Lose Money?
During the design process we work through together with our customers, we always make sure to expose any potential situations that would result in lost funds. These examples range from common best practices to the all-but unforeseen circumstances that are difficult to plan for, which is precisely why we have to try.
- unqualified operators
- imbalance between purchase price and sales price
- supply outpacing demand (for machines, equipment, and parts)
- being outperformed by the competition
Losing to the Competition
Naturally, we’re focused on our own work and our own products, and we create solutions to the best of our abilities. It’s human nature to believe in yourself when you invest your life in your career, and that’s why it’s often unthinkable that our competition might actually be competent.
However, it’s right there in the word. If your competition wasn’t competent, then they wouldn’t be your competition, right?
Right. Well, the market is forcing the strong, progressive companies to improve and it’s offering the new up and comer’s a chance to prove themselves in a, wait for it: competitive market.
In addition to losing money to a range of factors like competition, the best way to pre-emptively strike against failure is to pinpoint as many potential instances of lost time as you can. This is why, before building a new attachment or fabricating a custom head or other tooling product, we spend as much time as it takes to get it done right. In the past, when a customer’s budget wasn’t nearly as tight as it is today, companies were working with new products as fast as they could be produced, because losing time later wasn’t as detrimental.
Well, those days are over. Certainly in the here and now and hopefully into the future as well if the economy straightens out, our industry can maintain processes that place value on time, energy, and of course, our investments.
The closer we scrutinize potential failures now, the less likely they’ll be to cause problems in the future.
And a future with fewer problems is one we can all get behind.