STATE OF THE MARKET REPORT FOR THE GENERAL MANUFACTURING SECTOR - Insights on businesses serving the Australian General Manufacturing Sector
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STATE OF THE MARKET
REPORT FOR THE GENERAL
MANUFACTURING SECTOR
VERSION 2 - JAN 2018
Brought to you by:
Insights on businesses serving the Australian
General Manufacturing SectorINTRODUCTION
With our Steel Efficiency Review® we work with our customers to develop real solutions. We look closely at
your production and processing lines, identify cost and time savings and recommend incremental changes
which can translate into business improvements.
THE STEEL EFFICIENCY REVIEW® PROVIDES KEY
RECOMMENDATIONS BASED ON THOSE WELL-KNOWN WHO ARE WE?
7 AREAS OF WASTE:
We’re owned and supported by the manufacturing
and processing arms of BlueScope. Our network
comprising BlueScope Sheet Metal Supplies,
OVER PRODUCTION BlueScope Plate Supplies and BlueScope Distribution
provides a full range of material supply, logistics and
management options to meet your individual needs.
TIME IN WAITING We offer a comprehensive suite of steel and
aluminium products and processing services, and our
expertise covers every major industry sector: Building
& Construction, Transport & Automotive, General
TRANSPORTATION Manufacturing, Mining, Oil & Gas.
PROCESSING
INVENTORY
MOTION
REWORK
IT’S FREE, AND WE DELIVER OUR REPORT IN 2 WEEKS.
There is no cost and no risk in undertaking a Steel Efficiency
Review®. Our SER® Consultants simply offer you recommendations
on how to improve your operation’s efficiency and productivity.
We come back to you within two weeks with a short report, detailing
our findings, recommendations and cost-saving solutions.
22STATE OF THE MARKET - GENERAL MANUFACTURING SECTOR IN AUSTRALIA
Welcome to the Steel Efficiency Review® State of the Market report for businesses serving the General
Manufacturing Sector in Australia. This report has been compiled from our unique and proprietary industry
insight resource – The Steel Efficiency Review®.
1053
REVIEWS
To date we’ve completed 1053 Steel Efficiency Review® visits We hope this State of the Market report provides an opportunity for
nationally, with steel businesses both large and small. This has you to look closer at your business and review your operation.
amounted to over 2863 hours developing real solutions to save them
time, money and reduce risks. You’re also welcome to participate in our complimentary Steel
Efficiency Review® as a ‘fresh set of eyes’ helping you to identify
From these SER® appointments we have isolated findings relevant ways to turn steel into gold. If you have just participated we look
to specific industry sectors and niche businesses within that sector to forward to working with you to uncover the ‘gold’ in your business.
identify business improvement insights – those that can help you run
your business more profitably. Regards
The SER® Team
We’ve also reviewed and summarised relevant industry research from
IBISWorld Industry Reports to provide you with a more macro view
on where the industry is heading and the Key Success Factors (KSFs)
relevant to your business.
IN THIS STATE OF THE MARKET REPORT, WE
FOCUS ON BUSINESSES SERVING THE GENERAL
MANUFACTURING SECTOR IN AUSTRALIA. For more information, visit:
This report provides you with a summary of the common challenges steelefficiencyreview.com.au
faced by businesses serving the General Manufacturing Sector. We
also offer solutions to help you to build a more efficient and profitable
business.
3KEY FINDINGS FROM CONDUCTING OUR STEEL EFFICIENCY REVIEW® ON
387 BUSINESSES SERVING THE GENERAL MANUFACTURING SECTOR
Based on the results of 387 Steel Efficiency Review® visits completed on steel businesses serving the
General Manufacturing Sector in Australia, we have identified areas for improvement and waste reduction.
INVENTORY AND REWORK 3 KEY SUCCESS FACTORS
The 3 key success
factors for these
387 steel businesses
35% operating in the General
Manufacturing sector
nationwide are:
QUALITY ASSURANCE AND CERTIFICATION TO
35% of clients have opportunities to ENSURE PRODUCT IS FIT FOR PURPOSE
reduce the amount of rework and excess
inventory resulting in significant savings
in material cost
ABILITY TO SOURCE HIGH QUALITY RAW
OVERPRODUCTION AND TRANSPORTATION MATERIALS (SEMI-FINISHED) TO COVER
PRODUCTION COSTS
30%
BRAND AWARENESS TO CREATE NEW BUSINESS
GROWTH OPPORTUNITIES
30% of clients have opportunities to make
savings in controlled production runs and
reduced freight costs
44GENERAL MANUFACTURING IN AUSTRALIA
IBISWORLD DEEP DIVE
All industry information provided in this State of the Market Report has been referenced from IBISWorld
Industry Report - Machine Tool and Parts Manufacturing in Australia - April 2017.
KEY STATISTICS & CHARACTERISTICS
BUSINESSES IN
GROWTH RATE
COMPETITION
AUSTRALIA
LIFE CYCLE
BARRIERS
TO ENTRY
ANNUAL
STAGE
LEVEL
12-17
SIZE
MEDIUM
HIGH
$1.1B
DECLINE
-4.9%
948
INDUSTRY PERFORMANCE
Over the past five years, the Machine Tool and Parts Manufacturing The industry’s performance is expected to improve over the next five
industry’s performance has been significantly affected by fluctuations years. Revenue is forecast to increase at an annualised 0.7% over
in the value of the Australian dollar and the effects of the two-speed the five years through 2021-22, to total $1.1 billion. The projected
economy. Despite being boosted by rising activity in the Construction depreciation of the Australian dollar in the early stages of the period
division and increased total capital expenditure in the economy, will improve the competitiveness of exports and dampen pressures
industry revenue has decreased as a result of declining demand from from imports. Higher expected demand from downstream markets
the Manufacturing division and increasing pressure from imports. and greater total capital expenditure from both the private and public
Industry revenue is expected to fall at an annualised 4.9% over the sectors will also drive industry growth.
five years through to 2017, to reach $1.1 billion.
Exports are expected to grow moderately over the next 5 years as the
Industry revenue is linked to demand in key downstream industries. Australian dollar remains subdued.
Over the past five years, industry operators have been exposed
to mixed demand for their products. Rising demand from the
Construction division and increased capital expenditure on mining
in the early stages of the period has driven revenue growth over
this period. A large proportion of this activity has come from the
industrialisation and population growth in emerging markets such as
China, which has fuelled demand for mineral and energy resources.
5INDUSTRY PRIMARY ACTIVITIES INDUSTRY PRODUCTS & SERVICES
»» Component and Parts manufacturing »» Original Equipment Machinery
»» Die and metalworking hand or machine tool manufacturing »» Machines, parts and equipment
»» Drilling machinery manufacturing »» Drills and cutting machine tools
»» Forging machinery manufacturing »» Gas welding equipment
»» Machine tool attachments or parts manufacturing »» Metal dies, die sets and moulds
»» Welding or cutting equipment manufacturing »» Woodworking and metalworking machinery
SOME POSITIVE TRENDS OVERALL RISK RATING
Capital expenditure by both the public and private sectors is forecast Overall risk rating in the General Manufacturing industry is forecast to
to increase, primarily due to the anticipated improvement in overall be at a HIGH level over the outlook period.
business conditions and the return of planned capital investment
expenditure that was deferred or abandoned over the past five years. The main risk factors are:
These trends will likely see an increase in demand from the »» a higher level of revenue volatility implies greater industry risk;
Construction and Manufacturing divisions.
»» the fact that the industry is in decline stage of its life cycle; and
An expected increase in mining activity will positively affect revenue
over the next five years. The Mining division’s growing output and »» high level of competition.
continued export competitiveness will likely enhance its need for
industry products.
IMPORTS LIKELY TO CONTINUE MAJOR PLAYERS IN GENERAL
THEIR RISE MANUFACTURING
The industry has contended with strong and increasing import The industry is mostly made up of a large number of small players
competition over the past five years. that are generally contracted by metal and plastic manufacturing
companies to produce specialised and customised dies.
Companies in low-cost manufacturing countries, particularly in
South-East Asia, have lower labour and overhead costs compared Major companies include part manufacturers and fabricated metal
with local players, which allows them to pass cost savings on to their manufacturers.
customers.
As a result, domestic manufacturers have been forced to cut their
prices to remain competitive. This trend has put pressure on the
industry’s profit margins over the past five years.
66WHAT ABOUT COMPETITIVE ACTIVITY?
COMPETITION
WITHIN THE INDUSTRY
IS BASED ON
PRICE QUALITY
COMPETITION
FOR GENERIC PRODUCTS
IS BASED ON PRICE, WHEREAS
SPECIALISED PRODUCTS
ARE BASED ON
PRICE MARKET
PRODUCT REPUTATION
DIFFERENTIATION
There is a medium level of barriers to entry and medium industry The average risk score for all Australian industries is expected to be
assistance. The cost of entry into the industry can be high when in the HIGH band.
specialised products are being produced, but it is relatively easy to
enter the lower end of the industry. The level of risk in the General Manufacturing industry will be higher
than that of the Australian economy.
There is a low, but increasing level of exports and a high and
increasing level of imports. The market for generic products is being
increasingly penetrated by imports from countries with low labour
costs.
7CONCLUSION
The key findings from conducting our Steel
Efficiency Review® on businesses serving the
General Manufacturing Sector, show the need for:
HIGH QUALITY, BRANDED PRODUCTS The Steel Efficiency Review® has
THAT HAVE PASSED THROUGH RIGOROUS identified savings for these customers in
CHECKS FOR ACCURACY, TOLERANCE AND Inventory and Rework (35%) presenting
GRADE. opportunities to reduce the amount of
rework and excess inventory resulting in
When speaking to 374 steel businesses involved in significant savings in material cost.
General Manufacturing nationwide, we concluded
that it comes down to 3 key success factors: In addition, Overproduction and
Transport (30%) savings were indentified
providing for opportunities for controlled
QUALITY ASSURANCE AND production runs and reductions in freight
CERTIFICATION TO ENSURE costs.
PRODUCT IS FIT FOR PURPOSE
steelefficiencyreview.com.au
ABILITY TO SOURCE HIGH QUALITY
RAW MATERIALS (SEMI-FINISHED) TO
LOWER PRODUCTION COSTS
BRAND AWARENESS TO CREATE NEW
BUSINESS GROWTH OPPORTUNITIES
88APPENDIX 1: KEY INTERNAL ISSUES
ISSUE QUESTIONS
Major players in manufacturing are focusing increasingly on branded Do your operations benefit from economies of scale? What
products to differentiate their products from those of competitors. The opportunities are available to increase the scale of your business?
manufacture of a range of branded products provides a buffer against What are the costs associated with growing the scale of your
product specific downturns in demand. operations?
QUESTIONS ISSUE
How do you differentiate your products from competitors? What The ability to source reliable and cost-effective inputs provides
steps do you take to maintain or improve your competitive edge in the reliability and cost-effectiveness in the wider market. Major players
market? What potential markets can benefit from you developing a in manufacturing achieve this through acquisition and scale.
new product niche?
ISSUE QUESTIONS
The ability to achieve a low-cost production status through economies How has the availability of raw materials affected your cost
of scale is a distinct advantage within this industry as it has many structure? How vulnerable are you to shortages in your main input
standardised products that are produced for a mass market. materials? What steps can you take to secure large amounts of high-
grade input resources?
APPENDIX 2: KEY EXTERNAL IMPACTS
ISSUE QUESTIONS
Changes in the technology of manufacturing, which favour substitute How have raw material prices affected your revenue and profit
materials have an effect on demand for the industry’s products. margins? How did price fluctuations affect demand from your
customers?
QUESTIONS ISSUE
How has competition affected your product and services portfolio? Trends in manufacturing have a direct effect on the demand for raw
What strategies do you use to minimise competition? materials.
ISSUE QUESTIONS
An increase in the price of raw materials pushes up the cost of How did the fluctuations in manufacturing affect your profit margins?
production for manufacturers, and these increases tend to be passed What can you do to protect yourself from external factors?
on to consumers in the form of higher prices, which pushes industry
revenue up. Rising input prices can erode profitability if price rises
can’t be passed on in full.
9THE STEEL EFFICIENCY REVIEW® - TURNING STEEL INTO GOLD
CASE STUDY 01 ADELAIDE PROFILE SERVICES
Supplies and their understanding of the issues and its flexibility
“ APS thrives by providing a superior level of
service and quality and without BlueScope
Sheet Metal Supplies doing the same, we “
utilising the Steel Efficiency Review® process, APS would not have
been able to successfully complete the job.
“The BlueScope Sheet Metal Supplies team quickly grasped the fact
would not be able to win and keep customers. that we were not able to hold 5000 tonnes of steel in our warehouse,
so they manufactured the steel in 1500 tonne batches and held it in
Adelaide Profile Services Director Gordon Smith.
their own warehouse, delivering it to us on a need-to-use basis.”
“Not many companies would go out of their way to hold such large
volumes of product, but BlueScope Sheet Metal Supplies stepped
up to the plate, if you’ll excuse the pun, and gave us the options and
Adelaide Profile Services (APS) has enjoyed unprecedented
flexibility we needed to complete the project on time and on budget.”
growth since its inception in 1982. Now employing 40 people,
APS operates from a modern, purpose-built 6000 square metre
“Currently, we have tendered for a large overseas contract that
factory in the Adelaide suburb of Lonsdale in South Australia.
entails the use of non-standard plate – basically these are carbon
Set up by Alf De Roma & Terry Stewart, APS is part of the Adelaide steel plates that are smaller than the standard size as well as being
Profile & APS Aluminium and Stainless Steel Group whose thinner,” said Smith. “BlueScope Sheet Metal Supplies said that it
capabilities include CNC machining, drilling, tapping, countersinking, was not only willing to change a number of processes to enable the
bevelling, surface grinding, plate rolling/bending, cutting and production of this new product, but it had the technical know-how
punching, giving the company the ability to process virtually any to do it faster and at a better quality. This is the kind of service that
shape out of mild/carbon steels, stainless steel, aluminium and other helps us to succeed.”
metal products.
“As a company that prides itself on providing a premium level of
With a diverse customer base across various sectors such as customer service and product quality, the fact that BlueScope Sheet
construction, heavy engineering, agriculture, mining, defence, rail, Metal Supplies does exactly the same means that in this competitive
automotive, signage and marine, and a range of special purpose business environment, we can stay well ahead of our competition,”
machinery applications, APS is in many ways an Australian Smith concluded.
manufacturing success story.
For more information visit www.adelaideprofile.com.au
Adelaide Profile Services General Manager & APS Director Gordon
Smith said that the close and symbiotic relationship that has evolved
between his company and BlueScope Sheet Metal Supplies is one
reason why APS’s stellar growth has been possible.
“BlueScope Sheet Metal Supplies is the exact type of Australian
company we like to deal with – their reliability, flexibility, consistency
and quality of product is above and beyond any other local steel
supplier and allows us to service our customers to the highest
possible level,” said Smith.
“The ability of BlueScope Sheet Metal Supplies to give APS
controlled lead times and to provide superior steel products such as
XLERPLATE® steel at a consistent quality is what gives us an edge
over our competitors.”
A recent example is a railway customer that required APS to process
large volumes of steel. Had it not been for BlueScope Sheet Metal
10THE STEEL EFFICIENCY REVIEW® - TURNING STEEL INTO GOLD
CASE STUDY 02 JONDA SHEET METAL AUSTRALIA
Optimum leaf shedding and drainage performance is achieved by
“ They’ve been a supplier of all the sheet and
coil products for our business and were
“
extremely helpful in sourcing what we
corrugating the 2.5 metre rolls of the perforated material which are
then powder coated to match the COLORBOND® steel range.
Aluminium was selected because of its suitability for hand shaping
needed. during installation to follow the profile of tile or metal roofs.
Laura Nikolopoulos- Jonda Sheetmetal Australia. BlueScope Sheet Metal Supplies was able to source the aluminium
feed for the machine that John Nikolopoulos designed and built
to produce his Leafless gutter guard, utilising the Steel Efficiency
Review® process.
At last there’s a gutter guard that works.
“They’ve been a supplier of all the sheet and coil products for our
business and were extremely helpful in sourcing what we needed,”
For nearly 30 years Jonda Sheetmetal Australia has built a reputation
Laura said.
as a general fabricator and quality manufacturer and supplier of
rainwater goods. Now the Melbourne company’s willingness to
“We’re getting strong inquiry and sales through the leafless. com.au
innovate to meet customer needs is attracting interest and sales of its
website and we have also begun a radio advertising campaign which
latest product Australia wide.
is working well for us. Originally sales were mainly in Victoria but
Leafless is now also starting to go interstate.
At Jonda’s West Heidelberg premises John Nikolopoulos, who built
the business with his wife Dani, has worked for several years to
“Many sales are to DIY users, but Jim’s Roofing franchisees are also
design and manufacture an effective leaf guard product.
using our product and our traditional roofing contractor customers are
seeing it as a good product and an extra business opportunity.
“There are plenty of products on the market, but they all had
drawbacks, especially the cheap ones,” said daughter Laura
“We can arrange installation by highly reputable tradesmen who
Nikolopoulos, who now plays an active role in the business along
receive ongoing company training, are fully qualified and insured,”
with her brother Jake.
Laura concluded.
“Customers wanted a leaf guard that was going to last – one built for
For more information visit www.leafless.com.au
all roof types. John developed several different types of perforated
meshes but then decided to develop one from scratch, not just adapt
something already produced for another purpose.
“The big problem with many mesh-type leaf guard products is that
holes in the mesh are so small that they tend to clog up with dust,
roof lichen and broken down plant material.
“When these holes fill up, the mesh almost becomes a flat surface
and water will flow over the top and over the edge of the gutter.”
Jonda’s Leafless solution uses a six millimetre hole which is too large
to clog, yet too small to let debris though into the gutter. Aluminium
construction ensures Leafless will not break down in sunlight as many
plastic products will.
111800 010 247
www.sheetmetalsupplies.com.au
1800 549 197
www.bluescopeplatesupplies.com.au
13 72 82
www.bluescopedistribution.com.au
This Steel Efficiency Review® state of the market report has been prepared for information purposes only. BlueScope makes no representation or warranty as to the completeness or accuracy of the information contained in this report. You must
make your own assessment of the information contained in the report and rely on it wholly at your own risk. ©2017 BlueScope Steel Limited (ABN 16 000 011 058). BlueScope Sheet Metal Supplies, BlueScope Plate Supplies, Bluescope Distribution,
STEEL EFFICIENCY REVIEW and SER are registered trade marks of BlueScope Steel Limited (ABN 16 000 011 058).You can also read
