Pivoting, juggling and getting on with the job

AMTIL’s Australian Manufacturing Week is proof positive local manufacturers are up to the task of producing materials and products that are high-quality, ready-for-market, and fit for purpose.

Sheet metal manufacturing has never been busier. Businesses involved in CNC cutting, forming and fabrication, have not been busier in years. The feeling sensed in the crowd of manufacturers at the latest AMTIL industry event showed there was huge momentum in orders, and many had exceeded their capacity in forward orders due to the unavailability of raw materials. Juggling can be hard and full of risk if you don’t know where the balls are falling.

And the reason for that is that economically, the international picture is very cloudy. As KPMG’s Partner In Charge of Manufacturing and Life Sciences, Toni Jones, says in a recently released report on the world economy, divisions in the world economy were growing, well before war broke out in Ukraine or before COVID tightened its grip. Since then, these worldly tensions have caused companies to rethink their international strategies. Around 85% have discontinued working in Russia in particular, in response to the Kremlin’s moves on Ukraine, but globalisation is not necessarly retreating, it is more likely just changing shape.

Jones’ companion Stephane Souchet, the Global Head of Industrial Manufacturing at KPMG, cites an uncertain future for businesses, characterised by the disrupted patterns of global trade, geopolitical tensions and a growing investment drive into defence. The move into defence is a signal of changing shapes in our economy, not a retreat, as such. Jones adds that, “we have to not only focus on re-evaluating our sourcing locations, supply chain dependencies but also [to] foster nearshore and onshore capacity.”

Labour shortages here in Australia, increased costs for inputs, supply delays, wet weather and flooding were constraining factors in November. Interest rate rises have reduced demand from construction customers with builders delaying or cancelling orders. Import competition has increased. Despite all of this, surprisingly, new orders and stock deliveries were all positive in that month.

COVID-19 has also highlighted many risk and resiliency gaps. In another recent KPMG study citing global supply chain issues, 67% of CEOs indicated they would increase investment in disruption detection and innovation processes to reduce the impacts of disruption.

Government and industry leaders are also looking to build domestic capabilities to reduce their reliance on global supply chains. Of course, organisations must review their sectors’ supply chain flows and consider local inventory capabilities to reduce risk. Spreading the load of third parties to rely on for supply will ensure access to their stock. Relying on this ecosystem of vendors and having a wide-ranging strategic partnership within the domestic industry will keep parts coming in, and your knowledgebase up to date to future conditions. You should know everyone in your local network will want you to succeed as well. AMTIL knows the value of local networking during times like this, and it pays to stay connected.

The KPMG report confirmed the volatility of the Australian construction industry, with complexity becoming the new normal. As manufacturing is so much a part of the maze of construction and infrastructure ecosystems in Australia, learning to transform these projects into manageable business is paramount. Juggle as you stay on top of what you manufacture but keep all your balls in sight at all time.

Editor Paul Hellard phellard@amtil.com.au

Contributors

Drew Turney

Sales Manager Nicholas Raftopoulos nraftopoulos@amtil.com.au

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Publisher Shane Infanti sinfanti@amtil.com.au

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SHANE INFANTI – Chief Executive Officer AMTIL