Rabobank Group

Many companies in the chemical, metal and electrical engineering industries are highly export-focused and form part of international production chains. Industrial products account for approximately 45% of all Dutch goods exports. Decreased demand abroad automatically leads to a loss of production in the Netherlands. 

The willingness of manufacturing companies to invest is decreasing sharply in reaction to this development. Particularly manufacturers of capital goods (machinery industry, transport vehicle industry, etc.) and their suppliers are clearly experiencing the related consequences. The food industry is actually the only sector of Dutch industry that is currently able to escape the global domino effect in the economy. 

A broadly-based recovery in the sector will only be possible once the volume of world trade has picked up again and confidence has been restored among both manufacturers and consumers.

Construction companies that focus on constructing new homes and commercial property are particularly being faced with decreasing order books. The number of new homes will fall to between 60,000 and 65,000 in 2010 (2008: 79,000 homes). 

The production of commercial property is expected to decrease by approximately 6 percent in 2009 (2010: -10 percent). Only construction in the public sector (healthcare, education and public administration) is expected to remain reasonably ‘afloat’ and to stabilise in 2009 and 2010.

Wholesale exports and re-exports are clearly suffering the consequences of the poorer economic conditions in the European hinterland. At the same time, imports from countries such as China and India are also decreasing. 

Domestically, the trade in capital goods and sustainable consumer goods is particularly under pressure. Increasing pressure on margins is spurring companies to reduce costs and to create added value.

Consumer confidence in the Netherlands has been historically low in early 2009. Growth in consumer spending is nearing zero, while purchasing power continues to rise and unemployment is on the increase. Sentiment consequently has the upper hand.

The non-food retail sector is faced with consumers that are increasingly keeping a tight grip on their purse strings. Purchases of goods such as automobiles, home furnishings and electronics are particularly being delayed. Consumers are likewise putting off replacement purchases of items such as new furniture, clothes and shoes. This is leading to a further decrease in revenue volumes.

The retail food sector is less sensitive to economic conditions because people will, after all, continue to eat regardless of the circumstances. The extremely high levels of sales transactions at supermarkets in 2008 will not, however, be repeated in 2009. 

Consumers are increasingly choosing to eat more up-scale cuisine at home rather than ‘eating out’. Specialist shops have been experiencing falling sales for years and this trend will continue in 2009. Rabobank forecasts that the retail food sector will be the only sector to post a rise in revenue at just under 2 percent, with much of this gain being attributable to price increases.

Spending is under pressure and the hotel, restaurant and recreation sectors are clearly feeling the effects of this development. While the volume of consumer spending at hotels and restaurants had already begun to decline, there is now also a demonstrable decline in business spending. 

Hotels and conference centres are seeing falling revenues as clients decide to hold more meetings internally. Bars and restaurants are experiencing decreasing numbers of both private and business customers. Revenue in the recreation sector is also decreasing. Dutch consumers are going on holiday less frequently and less expensively and are increasingly deciding to take their holidays in the Netherlands rather than going abroad.

The transport sector depends on trade and manufacturing. There are fewer items to be transported due to the more limited global demand for goods. This is leading to intensified competition and pressure on freight rates.

Transport by land and water are being faced with severe decreases in volume. International commercial haulage, construction and industry transport and movers are the segments of road transport being hit the hardest. Distributors of food and agri brands are affected considerably less by the contraction.

Many companies in the business services sector cut back their ‘flexible workforce’ first. This means that temporary employment agencies and service providers such as engineering firms, consultancies and IT service providers are finding it particularly difficult to gain orders. 

Communications agencies and estate agents are also extremely sensitive to economic conditions. Legal and financial service providers are suffering less from the current economic tide. The same also applies to hairdressers, security companies and day-care centres.