The current world financial situation
involved a significant amount of over-leveraging – derivatives. The
wild fluctations we currently see, and the continuing downturns, are
attributable to world wide de-leveraging. As painful as the current
financial situation is, the correction will build the foundation for
operating down the road. The geospatial industry has historically
provided solutions to everyday, real problems in society. As stability
in the financial markets sets in later, a veritable dam of cash will
flood the market looking for real investment opportunities, many of
which will be infrastructure related and oriented toward providing
basic human needs.
There is lots of speculation in the marketplace at the moment, be aware of that. But I think Nils Pratley of The Guardian writing
in a column entitled ‘The day the ticking time bombs went off’ sums up
the situation talking about Warren Buffet who wrote a letter in 2002 on
the topic of derivatives.
“Complexity breeds other faults, as Buffett described. Derivatives,
because they are so hard to value, make it easier for traders and chief
executives to inflate earnings. They exacerbate problems if a company,
for unrelated reasons, suffers a credit downgrade that requires it to
post collateral with counterparties – “a spiral that can lead to a
corporate meltdown”, he wrote.
In other words, if you divide something of value many times,
supposedly creating value each time; eventually all the pieces will
have a value that is hard to define, and hard to see.
Geotechnology is reality based
GIS, GPS, remote sensing, geotechnology and spatial
information related software are all based on reality. They are
products which have evolved through the realisation that more efficient
energy systems, clean water, better and more food, improved sanitation,
efficient buildings and transportation systems etc. – are needed and
required in society. They are technologies of value, offering improved
living conditions for people.
When we talk about sustainability at V1 Magazine, we don’t speak of
it in fuzzy terms. We recognise that sustainability entails research,
understanding needs, good design, effective spatial analysis, quality
data, effective modeling and so on. In this sense, infrastructure if
done correctly, is efficient and leads to sustainability. In this
sense, good application of GIS will solve real problems of a spatial
nature, delivering solutions and answers – with high ROI. And in this
sense, remote sensing is not just pretty pictures, but a reliable data
source that enables high levels of quality food production, sustainable
forests and the effective monitoring of the landscape and oceans.
The recognition that spatial tools and technologies provide raw,
basic value into the market place and society is an important point. It
draws the line between frivolous applications and those worth investing
in due to their effectiveness, value and potential for creating
Impacts going forward
In October of 1987 the New York Stock Exchange was reaching
new lows. The world was reverberating in the downturn and everyone was
selling. But the world survived – only to enter one of the strongest
bull markets ever seen during the 1990’s.
On a side note, it is interesting to note that stock trading in 1987
was not fully integrated into computing technology. Much of the trading
occurred manually still, and emotion did not flow as rapidly because
the numbers could not be followed as quickly as they can be today, nor
reported upon in the media. Today, it is worth mentioning that trades
are often computer driven – but their outcomes are not fully known.
Geospatial technology differs in this respect because we often know
what we are attempting to achieve, why we are using it. But this time,
we have Internet, so now the whole world is involved, minute by minute.
At the present time the needs for clean water, safe bridges, good
food, fresh air and running roads are needed more than ever. Whether
the market goes up or down, these needs remain – and grow. A dam of
cash is building up behind the lack of financial trading at the present
time. As stability sets in (and it will); this dam will unleash a rush
of money looking to solve real world problems.
Our goal, I think, is to ensure technology of value is present when it does.
The current state of the world economy is certainly troubling,
particularly in light of this week’s losses on the financial markets.
Enormous government bail outs here in the United States for Bear
Sterns, Fannie Mae, Freddie Mac, and now AIG, make you wonder where all
the government money comes from to prop up these failing ventures, and
whether there will be any money left over for important investments
that could add renewed vitality to the economy.
The lack of available credit will undoubtedly have an impact on
business growth in all sectors, with less money available for mergers
and acquisitions and for R&D investments. The overall economic
market has shown some signs of rebound, but the lack of construction
starts has certainly harmed the survey-oriented companies in the
geospatial industry. There seems to be money on the open market to
invest, but the sub-prime mortgage issues need to die down before a
rebound is possible.
It’s clear that we’re faced with a recession, but it’s not as
broadly felt as past economic downturns. There are some sectors that
are resilient regardless of broader economic trends, and the geospatial
community is somewhat shielded due to the critical markets that are
served. In the early 2000s, there were issues with budget deficits in
local governments and reduced geospatial investments in the utility
sector due to large-scale consolidation. While those markets
contracted, the overall pain to the geospatial community were largely
offset by security concerns that opened up the homeland security sector
and geospatial intelligence spending. This evolving geospatial
marketplace seems to follow hot markets as individual application areas
discover the benefits. While these new markets will someday dry up, the
overall diversity of the geospatial market provides a broad base of
support for companies that generalize as well as specialize.
Need for Change
There’s widespread call for investments in areas that both benefit
our planet and our economy. The move toward clean energy technology and
the need for infrastructure spending are both issues that have become
entwined into the race for the next American president. Both candidates
have indicated an interest in investing in clean energy, and in some
level of infrastructure spending. These investments are seen as a good
bet to get the economy back on track, and both provide markets for
technology and services that will benefit the geospatial industry.
The overall objectives of a green revolution, as stated by Thomas
Friedman, are toward innovation to respark the American economy while
benefitting our planet. Any debate about such an investment should be
fought on the basis of global priorities.
There’s a recent quote in the press from Steven Hawking who was
defending the $8 billion investment in the Large Hadron Collider as
well as the space program, “If the human race cannot afford this, then
it doesn’t deserve the epithet ‘human’.” Given this context, it really
amazes me that our environment hasn’t been placed on a larger pedestal
than the space race and deep questions about the origins of our
universe. After all, we’ve spent untold billions on exploring space
without finding any similar planets that could support life. Shouldn’t
we be worrying more about the ability of our own planet to support
life, and invest money accordingly?
Innovation Drives Growth
Technology innovation is the driver that weathers all downturns. If
a new technology can show that it can do things better (more
accurately) with greater efficiency, it will get snapped up regardless
of the economy. The key is to show that money can be saved and that
business can be won based on the new technology. New advancements renew
interest from more mature markets, while opening up new markets.
The geospatial industry has been a constant innovator, with new
hardware, software, sensors and service businesses. Overall, the
geospatial marketplace will continue to hum with reasonable yearly
growth. Large public geospatial companies have long operated at a
profit, with some cyclical variance depending upon their focus.The
opportunities in this market sector are very broad and diverse, but
evolve largely around better decision making. As long as geospatial
technology contributes to better decisions, meaning greater efficiency,
there will be no better place to weather out economic downturns.
I see a bright future for geospatial professionals as well. I
witnessed the employement prospects first hand recently at the GIS in
the Rockies Conference where I was told that several late career
changers were roaming the halls looking for an interesting profession
and something more stable than the real estate market. The application
of geospatial technology will provide good career opportunities for an
increasing number of workers for some time to come.