Well, first of all, these observations parallel closely the issues raised by utility executives in our most recent utility surveys. Most importantly, uncertainty over deregulation (and/or privatization) is a reality in today's utility work place in many areas of the world. Uncertainty breeds inaction, hesitancy to purchase T&D equipment, systems and services except on a "must have" basis to serve load growth. Management decisions regarding T&D automation are most often made on the basis of knowledge about current and near-term to mid-term operating environments.

In addition, when management questions future T&D asset ownership, operation and maintenance of field (and automation) assets, and finds answers unavailable, it is unlikely that procurements will be authorized. The deregulation concerns that are on the minds of workers at utilities are also on the minds of suppliers. Survey respondents were asked to rank nine issues as either "critical," "somewhat important" or "not important" as related to their T&D automation business outlook. The top concern was "uncertainty over deregulation and/or privatization." This concern seemed important to suppliers regardless of where they were located.

"Thinning profit margins" was the next highest concern of the respondents. Eroding profit margins (or increasing operation losses) are not only issues facing T&D equipment and system suppliers but are a real possibility facing your own utility in the not-so-distant future. If there is not much profit potential in developing, manufacturing, or servicing the T&D systems and equipment marketplace, suppliers will be forced to turn their attention and R&D investment funds to other, more promising, markets and may simply close up shop.

Two issues vied for third place: the Asian financial crisis (at least for companies with automation business interests in that region of the world) and the rapid pace of technological innovation. Even remote events such as the current Asian financial crisis are likely to have an effect on your T&D planning, product pricing and product availability. Regional crises may further erode the supplier potential for profitable operations. Giants such as General Electric, Siemens and ABB may have to rethink their product and marketing strategies, T&D equipment and systems development schedules and factory loading. They may have to conduct other business risk assessments when major events such as this monetary and financial crisis occur. In turn, such events often result in a direct and dramatic shift in your options.

The industry business executives surveyed were also asked to provide their estimates of market direction and degree for 1998. While the forecast was positive overall—looking for worldwide growth on the order of 6%--some regions look more promising than others (Table 1). Latin America spending will likely increase the most with North America and Asia Pacific following.

In summary, two observations should be made. First, the suppliers seem to have a more optimistic outlook on spending plans than the utility managers recently surveyed, at least in North America. Secondly, it is still dangerous to group transmission and distribution spending plans together because they are most often on different paths. While transmission automation spending may remain conservative a while longer, distribution spending should increase more rapidly.

The chart above is based on January 1998 surveys of 25 industry executives from companies located in North America, Europe, Latin America, and Asia Pacific.