Marketing in an era of extreme politics

Like it or not, the electric power industry is a significant tool of the political system. Actions taken by politicians can strongly influence the market, and can quickly change your sales tactics without you being able to do anything to protect yourself and your company.

The decision announced recently by Interior Secretary Zinke should send shockwaves through the power industry, despite it not being involved. Zinke said that the Trump Administration would not allow offshore drilling around the Florida coast, because of objections within that state. This follows their plan to allow drilling everywhere, as part of their platform.

How many people in the drilling industry made plans based on the political promise to open up drilling? How many companies in the industry began marketing their services to drilling companies, assuming there would be a larger market to enter?

When the decision was announced there were calls from environmentalists saying that if they can change their minds over Florida, why not everywhere else? If all it takes is a state to object, this can rapidly change the potential market.

Now translate this to the power industry. We saw numerous promises from candidate Trump that haven't necessarily been followed up on by President Trump. When he was elected, did your company make plans and projections based on the presumed increased availability of coal? If you did, those promises may seem a little hollow right now.

While much of this may seem like an attack on Trump, it is not. The same holds true for every politician. They make certain promises, so they will get elected, then may or may not follow through.

The thing to really be concerned about is the polarisation between the two major parties in the United States. Republicans are seemingly out to preserve the carbon-based power system, while Democrats seemingly want to destroy it. As the two parties trade power over the years, what does this do to the industry, and what does it do to your ability to market to that industry?

The bad news is that coal plants will all shut down in the long term. As Democrats take power they will work on regulations that will harm the ability of coal plants to compete, adding to the market forces already doing that. And it is a lot easier to shut down a plant than it is to restart it, or to build a new one.

The good news is that we are a long way away from the end of coal. You cannot just shut down all the coal-burning plants overnight. They are currently around 40% of total generation in the US, we need to replace that before shutting plants down. There are also plenty of opportunities within the industry even as it goes away. Ongoing maintenance will always be necessary, especially as the fleet ages. Even the work to close plants provides opportunities.

So, make your plans, make your sales goals, with all this in mind. In the short term there may be wild fluctuations in policy, but over the long term the coal-based industry will slowly fade away.