Wednesday, 5 November 2008

The credit crunch… where is it impacting?

Debby Lloyd, MD at EcoSearch gives her thoughts on the credit crunch and where it is impacting investment, Cleantech and Renewables as well as recruitment.

Image by Tatjana Krstic

Has the appetite changed?
Well – no … except the deal landscape has – deals in the “investor in- trays are now being super scrutinized” – IRR/NPV/WACC etc are all being looked at in detail. To coin a phrase from one investor this week:

“2 months ago it was 20% business plan and 80% vision – now its 80% business plan and 20% vision”

Debt funded projects – well there is evidence that these are being reviewed and are being impacted, there are suggestions that, for example in the wind turbine space, lead times have come down – is this indicative of projects being shelved or put on ice temporarily? – It could well be.

What’s the recruiting landscape like?
This is usually a really good measure of things to come. EcoSearch has seen casualties amongst the recruitment organisations (the recent demise of Ellis Fairbank for example). Has EcoSearch seen a downturn and cancellation in headcount? None whatsoever (touch wood, long may this continue) compared with mainstream business (ie. non Cleantech and renewables). We checked with our international network and it’s looking pretty dire in some places. Mainstream construction is being seriously hit. Asia is experiencing general nervousness and some headcount freezing, a backing down on general construction. Dubai is also seeing general nervousness. UK & Europe – FMCG hit, Financial Services hit.

What are the challenges for today’s Cleantech employers?
Those competing for talent in the global pool (as opposed to just UK National pool) could face an uphill struggle. As we seek to relocate people from overseas the current housing market in the UK is a huge factor in the decision making process (arguably now is the best time to buy – it can only go up from here surely?).
Many talented candidates are in a situation where they would rather “stick” than “twist” on a career move until the markets settle down a little – the general nervousness is causing people to think hard before jumping.
Start-ups competing for talent (and some to a certain extent further funding!) need to make sure they pitch themselves really well – the safe houses, i.e. well funded utilities and infrastructure based organisations are holding out strong in the current market; the risk versus return situation needs careful managing.

If you have any thoughts on these points, whatever your perspective, feel free to discuss in the comments.

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