ISSUE 5 MAY 2012
GIVING CUSTOMERS AND INDUSTRY THE EDGE WITH NEWS AND INNOVATION
P&H MinePro Major players in Australia's mining boom.
IN THIS ISSUE Cutting Edge Profile - P&H MinePro 8 Giving You The Edge - The Negotiation Book 12 Community Edge - Marysville Revisited 15
DISTRIBUTION UPDATE Continued commitment to our customers, our industry and our future.
WELCOME Welcome to the fifth edition of The Edge. In this edition, we have brought together a selection of case studies that cover a wide range of steel products and applications. We have extended the case studies to two pages this time, to give you a more in-depth view of each. As usual we have included a Community Edge article, a general interest book review, as well as an economic piece to keep you up-to-date with the factors affecting the steel industry. We have also included a sustainability article where we discuss the Green Star rating system; we will endeavor to include an article in each subsequent edition on sustainability and the environment. I hope you enjoy this edition of The Edge, we have received great feedback so far and I continue to encourage you to send your thoughts on future editions and topics you would like to see more of. Please forward any comments or suggestions to: contributions@bluescopesteel.com
Andrew Bray Andrew Bray General Manager BlueScope Distribution
While challenges remain within the global steel industry, BlueScope Distribution has continued to focus on our customers and providing outstanding customer service. Our business has undergone many changes in recent times, and is now in an even better position to deliver upon our commitments to our customers. We have an impressive team of dedicated people that are working extraordinarily hard in branches and offices all over Australia every day, providing quality steel products to a wide range of customers. Working with our customers to deliver the right steel supply solution for them is an integral part of our strength as a steel supplier, and our people have maintained focus and enthusiasm despite the wider challenges facing our industry. BlueScope Distribution has invested in our processing capabilities, to ensure we remain at the forefront of steel supply and processing. Recent editions to our suite of capabilities include new coil plate processing, and roll and cut grooving. These capabilities complement our existing range of services, which include CNC profiling, drilling, coping and notching, sawing, guillotining, shearing, slitting and blanking. There will be a more in-depth look at our processing capabilities in future editions. Safety is part of the DNA of how we operate at BlueScope Distribution and we continuously strive to improve our performance and make our business and the industry safer. Across our network we now cumulatively have close to 450 years injury free which includes 29 sites with over 10 years LTI free. BlueScope Distribution is always ready to share our experiences with customers and support a safer Australian Steel industry. Whilst our industry has faced significant head winds and volatility, BlueScope Distribution will remain focused on delivering on our commitments to safety, our customers, industry and our future. We remain focused on streamlining our processes, and improving efficiencies, so we can deliver the best steel supply solutions to the Australian market.
GLOBAL ECONOMIC UPD ATE Australia’s economy has continued to perform relatively well overall due to high resource demand, despite the financial difficulties facing Europe.
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Crude steel production is forecast to continue to grow, albeit more slowly Global crude steel production exceeded 1.5 billion tonnes with CRU and Macquarie expecting growth of 4 to 5% in 2012 3. In line with expectations, Chinese production continued its upward trend with a 9% increase YOY in 2011. South Korea also grew strongly in 2011 at 16% YOY 4, and the US has continued to recover with 7% growth YOY. In the US the economy continues to progress, with the labour market showing signs of comparative improvement. However, uncertainty still remains about the impact of the Euro zone turmoil. Residential markets showing signs of positive growth forecast in FY13 The HIA December forecast indicates weakening new housing growth through FY12 5, with a return to positive growth in FY13. Renovations activity is expected to remain relatively flat for FY12 and FY13. The ABS reported seasonally-adjusted estimates for total dwellings approved fell 1.0% in December, following a rise of 8.4% in November 6. Engineering activity remains strong Engineering activity expectations remain solid, with strong demand being linked to the resource sector 7. Moreover, flood reconstruction and infrastructure projects have also attributed to positive forecasts in FY12. Although the Performance Construction Index (PCI) continues to contract, signs of improvement are evident. Manufacturing activity remains flat, providing an opportunity to invest Australian manufacturing growth forecasts remain flat, as unfavourable exchange rates, import competition, soft domestic demand and uncertainty surrounding interest rates and European markets disrupts confidence levels. However, BIS Shrapnel has noted manufacturers taking advantage of the strong exchange rate to invest in new equipment. Mining projects dominate Australian investment Mining projects continue to dominate the investment landscape in Australia, now accounting for 46% of all investment projects currently under construction
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Australia’s economic infrastructure demand continues to be driven by the mining, oil and gas sectors1. Although the resource sector is continuing to experience unprecedented growth, other major industries are showing signs of softening conditions, increased competition and unfavourable exchange rates impacting heavily. This is highlighted by the recent modest GDP growth reading of 0.4% over the December 2011 quarter, mainly dampened by slow construction activity. The mining sector has recently experienced a decline in demand, due to a slowdown in Chinese crude steel production owning to the extended uncertainty in Europe. Expectations were for demand to recover swiftly following the Chinese New Year; however this has not been the case yet. The China Manufacturing PMI rose to 51 in February, from 50.5 in January, suggesting activity continued to expand, however SBB notes that much of this increase is due to restocking by long steel producers. However, SBB also noted that traders appear optimistic of a recovery throughout March as the construction season commences2.
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Chart 3: Change in value of definite projects listed by industry ($ billion), Part 1 100 80
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Change in value of definite projects listed by industry ($billion)
or committed. This breadth of projects has helped to deliver the strongest growth in business investment spending ever seen during the September quarter of 2011. Deloitte Access Economics expects investment levels to continue rising over FY12 and the following two years. This is very much driven by the healthy pipeline of projects awaiting approval, of which mining projects again dominate (accounting for 44% of the value of projects in planning) 8. Rural output continues to outperform On the agricultural sector front, farm production and rural exports surged in FY11 and are expected to remain elevated through FY12 owing to continuing favourable weather conditions. In FY13, rural output and exports are expected to decline to more normal levels, in line with an assumed return to average weather conditions 9. 1. Deloitte Access Economics Investment Monitor – December 2011 2. Source: SBB China Analytics – 06 March 2012 3. World Steel Production report World Steel Association media release “World crude steel output increases by 6.8% in 2011” – Jan 2012 4. World Steel Production report World Steel Association media release “World crude steel output increases by 6.8% in 2011” – Jan 2012 5. HIA Economics January 2012 Edition – Residential forecast 6. Aust Bureau of Statistics – Jan 2012 Edition – ABS Category – 8731 7. Performance of Construction Index December 2011 8. Mining – BSL Economics – Key Australian Steel Sector Forecasts, Feb 2012 9. Agriculture – BSL Economics – Key Australian Steel Sector Forecasts, Feb 2012 Disclaimer: This document is made available to you on a strictly confidential and non-reliance basis. While every care has been taken to ensure the accuracy of the information, BlueScope Distribution Pty Ltd does not warrant the accuracy, completeness, currency or fitness for purpose of the information. You should verify and check the accuracy, completeness, reliability and suitability of the information contained in this document for any use to which you intend to put it. Except to the extent to which liability may not lawfully be excluded or limited, BlueScope Distribution Pty Ltd and its related bodies corporate will not be liable to you or any third party for any direct, indirect or special loss or damage however caused (including, without limitation, breach of contract, negligence and breach of statute), which may be suffered or incurred in connection with the information.
STUDY
CASE
TOWN & COUNTRY CONCRETING
Concrete Moves Confidence in BlueScope Distribution takes regional company to a whole new level When Liam Kinniburgh tendered for work on a major building project in his home city of Ballarat, he knew it would be a turning point for his company, Town and Country Concreting. “The size of the project was larger than anything we had previously tackled, by a factor of 10,” Liam said. “It was also quite complex and more than one local company had looked at it and decided not to bid.”
“That’s when I decided to approach BlueScope Distribution, to see if they would be able to supply all the rebar, mesh and steel formwork we would need. It wasn’t going to be just one delivery, but many; over several months.” Town and Country Concreting was subsequently appointed concreting subcontractor to lead contractor Cockram Group, on the $31million Science and Engineering Precinct building program for the University of Ballarat. The School of Science and Engineering, situated in the University's Mt Helen, Ballarat campus, is one of the establishment’s oldest schools. It offers
Liam Kinniburgh (left) and Bruce Howell (right) on site at the University of Ballarat
academic programs and research in the areas of earth, environmental, food, biomedical and technology sciences, while its engineering streams carry a well known reputation for excellence. Centrepiece of the new facility for undergraduate and post graduate courses and research is a 5 level structure on a 3000 square metre floorplate, due to open later this year. “We’ve worked on jobs of a similar size before, but not to tackle all the concreting work ourselves,” Liam said. “Because of the size of what was involved, I needed to be certain I was dealing with an organisation that would be responsive and could keep up the flow of material as it was required. “Building a good relationship and being confident about the company and the people supporting it was particularly important. We needed a supplier with whom we could be in daily contact to ensure we got what we needed, when we needed it, at site.” Bruce Howell, BlueScope Distribution’s Account Manager – Reinforcing in Ballarat, explained the various elements involved in creating and sustaining a business relationship under such circumstances. “You’re not just dealing with product availability and scheduling, but also the commercial factors that are required to be addressed during a project, plus the relationship between the parties to make it all work. “One of the advantages of working with an organisation such as BlueScope Distribution is we have all the resources a customer needs. And in this case that involved me devoting virtually all of my time for the first few weeks to ensure everything happened as promised. “BlueScope Distribution has handled larger structural steel supply jobs around Ballarat, but for reinforcing steel, this was our largest so far,” said Bruce. The scope of the work called for up to 70-tonnes of steel for reinforcing and structural decking to be delivered to site each month, with first deliveries in June 2011. Reassured that BlueScope Distribution’s Ballarat branch had the material, organisational and logistic resources to support Town and Country Concreting, Liam committed to the relationship and assembled a workforce of 50 formworkers, steel fixers and concreters.
“Initially, we presented our plans and requirements to BlueScope Distribution on disk,” he said. “The work was scheduled and it went from there. They supplied processed rebar, sheetmesh and even arranged for the delivery of LYSAGHT BONDEK® structural steel decking through the BlueScope Lysaght business. “With so many workers on site it was vital to keep up a smooth flow of steel products to them. Not surprisingly, especially in the early stages of construction, there were occasions when our requirements changed very rapidly, but BlueScope Distribution coped with that. “As the building program has progressed our onsite foreman, Adam Naylon, has worked out his short-term requirements for reinforcing steel and then liaised with BlueScope Distribution to have them produced and delivered to site. “One way or another we’ve been in contact with BlueScope Distribution virtually every working day since the project began. It’s been a very successful relationship for both parties. “We’ve just been awarded another large construction contract, which is the UBTec Building, and we are using BlueScope Distribution again after our experience on the Science and Engineering precinct project,” Liam finished. In fact the complexity of the challenge for Town and Country Concreting and for BlueScope Distribution in Ballarat has been highlighted during an overlap period, during which the concreter had crews at work on the two sites and BlueScope Distribution was successfully delivering to both.
fast Fact An education in Ballarat a century ago was the start of a career that was to create an iconic Australian food. Cyril Percy Callister, educated at the Ballarat School of Mines, went on to become a chemist, food technologist and the inventor of Vegemite.
STUDY
CASE
WASCA
For more than 40 years Washers And Stamped Components Australia Pty Ltd – WASCA – has helped hold Australian manufactured goods together. Literally.
Chris Coyne, technical director, steers the company his father Tony established and sees evolution and innovation as the key to a bright future. The company has also aligned itself with key suppliers and service providers such as BlueScope Steel Sheet Metal Supplies, whose performance it depends on to underpin its reputation and growth.
With a workforce of just 25 this family owned business in Rowville, Victoria, has not only survived but continues to thrive despite a business environment that challenges everyone involved in manufacturing.
“Our technical ability for innovative design and cost-effective manufacture is at the heart of what we do,” Chris said.
WASCA’s original directors, Tony, John and Pat Coyne, manufactured washers and other stamped parts for the fastener industry, supplying merchants that also on-sold to the public. When not busy being tool makers, machine operators and floor cleaners, the Coynes always had an eye to how their business could innovate and evolve to secure its future. Their success is clearly demonstrated by the WASCA of 2012; an organisation that has successfully undergone generational change at ownership and management levels while cleverly expanding its core business. Not only does WASCA manufacture round washers in all materials for all industries, it stamps components including clips, inserts, special washers, brackets, roofing washers and automotive specialties.
“In fact, when I’m asked to explain what WASCA does, I tell people we’re a solutions provider. The solutions we develop benefit WASCA as a manufacturer as much as they benefit our customers. “When you’re calculating raw material for production, it gets down to how much is needed for the part and how much is scrap. Designing around those percentages minimises waste and therefore cost.” It’s that drive for efficiency that underlies every aspect of WASCA’s operations. “In 2008, when economic conditions were particularly tough, we had discussions with BlueScope Steel Sheet Metal Supplies as well as plating
and heat treating specialists about contracts, schedules, relationships and whatever we could do to secure our links with organisations that could support us,” Chris explained. “We’ve had excellent support from BlueScope Steel Sheet Metal Supplies, who now supply around 200-tonnes of ZINCALUME® steel to us each year. It’s used to manufacture washers for roof fixings, etc and the quality is absolutely second-to-none. “We get six to ten-tonne drops, but BlueScope Steel Sheet Metal Supplies is very flexible,” Chris continued. “If we need to pull a delivery forward there have been instances where we’ve made the phone call one day to Bojan Kilibarda, their Market Development Manager and the steel has been delivered the next morning.” WASCA has also put BlueScope Steel Sheet Metal Supplies’ responsiveness to the test in other ways. “I put an enquiry about price and availability to BlueScope Steel Sheet Metal Supplies in a situation where I REALLY needed an answer in three days,” Chris said. “Bojan got it to me in a day – despite the request being for a nonstandard product. The pricing was brilliant and we got the business. “Every time we pursue something they act on it. It’s really good. “The value-adding BlueScope Steel Sheet Metal Supplies brings to our relationship is impeccable. They’ve even done amounts of marketing for us. We’ve probably had 10 referrals to other companies with which BlueScope Steel Sheet Metal Supplies does business and that has resulted in work for us,” Chris enthused. Much as this assistance is appreciated, the management team at WASCA knows all too well that its ongoing success is largely in its own hands. “The skill and future of WASCA is its innovation,” Chris said proudly. “We’ve got the manufacturing and technical facilities to innovate and to make components here at a price so our customers will be competitive. “If a customer needs 100,000 of a complicated small bracket we can have the tooling and the parts made within 4 weeks. “To be competitive we’ll even source quality ex-stock material that other companies might class as scrap, purely because of its small dimensions. To us, that’s just a challenge to innovate so that we can run it through our equipment to make parts.” Regarding future goals, Chris is very clear: “WASCA will remain at the forefront of design and manufacture in our field and perhaps beyond,” he concluded. BlueScope Steel Sheet Metal Supplies is proud to be an integral part of WASCA’s success and is committed to providing the very best products to them, now and for the long run. L: Bojan Kilibarda, R: Chris Coyne
CUTTING CUSTOMER PROFILE
BUCKETS of Experience Helping P&H MinePro keep ahead of the game...
“By pre-planning and having BlueScope Distribution hold that stock for us we are able to eliminate the lead-time which would otherwise result if we had to wait for the steel to be produced at the mill. “BlueScope Distribution’s Kewdale branch actively manages the steel stock they are holding for us. We get regular reports and can draw down on that stock to have it on site within 24 hours. “Although we order steel from the mill for specific purposes, the vendormanaged inventory system gives us maximum flexibility in how we use it. As we draw down stock we re-order through BlueScope Distribution.” Much of the XLERPLATE® steel used at Bassendean is custom range 350 grade L15 plate, produced by BlueScope Steel under licence to P&H MinePro in non-standard plate sizes and various levels of thickness up to 100 mm thick.
To understand what an effective business relationship can deliver; look no further than P&H MinePro Services Australasia and BlueScope Steel. The relationship, which has existed for decades, has arguably benefitted not just both companies, but the Australian economy as well. It’s a relationship that begins at the Port Kembla Steelworks, extends to P&H MinePro’s major sites in WA, NSW and QLD and helps a thriving export business. It’s a relationship at its most active between BlueScope Distribution’s Kewdale branch in Perth and P&H MinePro’s manufacturing facility at Bassendean. Quality mining equipment P&H MinePro Services is at the forefront of original equipment manufacture for the surface mining sector and its Bassendean workforce keeps this site humming. The Company has provided quality products and services – like electric rope shovels, draglines, conveyor components, machine upgrades, rebuilds and parts – to the Australasian surface mining industry since 1958, including the recent addition of LeTourneau wheel loaders.
It is a product that came out of collaboration in the 1990s between steel technologists at the Port Kembla steelworks and P&H engineers at the Company’s Milwaukee, WI, USA headquarters. “BlueScope Steel changed its manufacturing process to advance its own standards and also to accommodate our requirements,” Colin said. “There was an intensive back-and-forth process with our head-office engineers in Milwaukee to perfect that grade of steel up to 100 mm thick. Prior to that, BlueScope Steel had not produced an L15 grade up to that size.” BlueScope Steel’s steel-making initiatives during that earlier mining boom period have had flow-on benefits for all fabricators. Additionally, it’s helped P&H MinePro’s Bassendean facility prosper in the local market as a manufacturer using Australian steel. “We export to our parent company in America and to Indonesia, South Africa, Russia and Canada,” Colin said. “Dippers or buckets and the handle or support structure to which they are mounted, plus face shovels or rope shovels are our main products. “Because of our distance from suppliers and markets we try to be independent and self-sufficient. The relationship with BlueScope Distribution for vendor-managed inventory is working very well.”
At any time there are huge rope shovel buckets with capacities to 63 cubic metres under fabrication, alongside a steady output of large conveyor pulleys and TowHaul Low Loader mining equipment, capable of transporting loads to 450-tonnes. In the current mining boom customers have an inherent sense of urgency and P&H MinePro Services is already scheduling work into 2013. Streamlined production To streamline its production process the company purchases the large amounts of special XLERPLATE® steel grades it needs direct from the Port Kembla Steelworks. As a result of equipment upgrades and the intensity of activity at Bassendean, P&H MinePro has chosen to keep its XLERPLATE® steel stock at the BlueScope Distribution branch for its needs. “Because of the non-standard sheet sizes and grades that suit our requirements, we order directly from BlueScope Steel’s Port Kembla steel mill,” Operations Planning Supervisor, Colin Rayner explained.
BlueScope Distribution’s Strategic Accounts Manager – WA, Justin Stevens (left) visits P&H MinePro Operations Planning Supervisor, Colin Rayner, at the mining equipment specialist’s Bassendean works in Perth.
STUDY
CASE
J A M E S L . W I L L I A M S P T Y LT D .
BlueScope Pipeline Solutions streamlines pipe system supplies for cutting-edge bioscience facility When mechanical services specialist James L Williams Pty Ltd was chosen to work on the construction of a cutting edge biosciences facility in Melbourne it selected BlueScope Pipeline Supplies for the supply of steel pipe systems, Victaulic® fittings and steel sections. James L Williams’ vast experience and assistance from BlueScope Pipeline Supplies has ensured the contractor’s success on the project to create AgriBio, Centre for AgriBioscience, a joint initiative of the Victorian Government through the Department of Primary Industries and La Trobe University. “We recognised through our previous relationships and from discussion with key BlueScope Pipeline Supplies personnel that they had the ability and commitment to provide us with what we needed in an efficient and cost effective manner,” James L Williams’ project manager, Michael Reid said. “BlueScope Pipeline Supplies enabled these processes of the project to be stress free through their hard work and diligence”. BlueScope Pipeline Supplies provided a single point of contact and numerous meetings before commencement of the project to settle delivery strategies and communication channels for ordering and invoicing. “That was vital to be able to track orders, deliveries and invoices,” Michael said. “It resulted in the on-time and on-budget outcome which we all wanted.” On the supply side, BlueScope Pipeline Supplies was able to source hard-to-get items from overseas and pulled out all stops
to organise availability of enough pipe so that large headers could be manufactured locally. “They also assisted us by arranging contacts for the pre-fabrication of piping and fittings and by helping with the speedy resolution of issues which always come up on a construction site,” Michael said. “We would explain what we needed to achieve and they were able to recommend types of fittings which did the job we required.” BlueScope Pipeline Supplies was also able to bundle and deliver pipes, fittings and structural steel components in loads which could be delivered straight to individual work sites within the development’s footprint. The $288 million public private partnership project is at the large end of the scale even for JLW. It involved James L Williams’ engineering, drafting, construction and site teams, with work taking place for more than two years. “Through the nature of the project, several issues were able to be resolved through the ability and willingness of BlueScope Pipeline Supplies to act in a consultative manner to assist in working through a resolution,” Michael said. “They were then able to work with Victaulic Pty Ltd to procure the materials required and have them on site with minimal disruption to the project schedules. “It was pleasing to have a supplier as dedicated and as excited about a project and wanting to play a significant part in seeing that the project ran smoothly from quoting prices, delivering goods, assisting in prefabrication through to the invoicing. “BlueScope Pipeline Supplies enabled these processes of the project to be stress free through their hard work and diligence,” Michael concluded.
SUSTAINABILITY G R E E N S TA R ®
Follow the Green Star Building towards a sustainable steel future Taking actions today that won’t inhibit the opportunities of future generations is the essence of sustainability – and the reason why more people are building green. Around the world, buildings account for a significant amount of energy consumed and choosing materials and designs with sustainability benefits provides one of the biggest opportunities to be environmentally conscious. To help make these choices a reality the not-for-profit Green Building Council of Australia (GBCA) has committed itself to developing a sustainable property industry by encouraging the adoption of green building practices. Central to this is a recognised steel credit system that encompasses the steel supply chain and how it can play its part, from steelmaking, manufacturing and fabrication through to design.
It starts with steel The GBCA steel credit focuses on encouraging environmentally responsible production, design and fabrication methods that result in the efficient use of steel as a building material. A responsible steel producer has been defined by the GBCA as a steelmaker with ISO 14001 certification and worldsteel Climate Action Program membership. BlueScope Steel is a responsible steelmaker and products produced in its Australian operations meet the mandatory requirements of the credit. The inherent properties of steel – strength, durability and light weight – translate to a range of design possibilities that are likely to accrue points. The high strength-to-weight ratio of steel means larger room volumes can be enclosed in a single space, which can translate to better levels of natural ventilation, light, heating and cooling. These help improve both energy efficiency and indoor environmental quality. The durability of steel also allows it to be more successfully used in designs for disassembly and the lightweight nature of steel means it is an ideal material for adding volume to existing buildings. A responsible steel fabricator has been defined by the GBCA as a fabricator that has been accredited to the Environmental Sustainability Charter of the Australian Steel Institute. Purchasing BlueScope’s steel through a responsible fabricator can contribute one point to Green Star® accreditation.
How does the Green Star® rating system work? The rating system is a checklist of items for which points are awarded if you meet or exceed the benchmarks in eight environmental impact categories (management, indoor environment quality, energy, transport, water, building materials, land use and ecology and emissions) plus a special category for innovation. Depending of the construction project in mind, the GBCA has developed different rating tools for office, retail centres, industrial,
education, healthcare, multi-unit residential, convention centres, mixed-use, public and existing buildings. For approval, formal submissions require significant evidential proof and are assessed by the GBCA before being weighted and an overall score calculated. The final score is then expressed as one of three classifications: 4 Star – Best Practice (45-59 points), 5 Star – Australian Excellence (60-74 points) or 6 Star – World Leader (75+ points)
Choose BlueScope Steel products BlueScope Steel is a strong supporter of the GBCA and is proud to be associated with the development of tools for the Australian market that drive sustainable procurement decisions. BlueScope Steel is a member of the World Steel Association’s Climate Action Program and its steel making facilities comply with the ISO 14001 Environmental Management System. Importantly, BlueScope products can form an important part of a Green Star ® accredited building and structural steel products that meet the strength grades for this credit are part of our product range. The following examples are only some of the solutions that could be of benefit to your next project: UÊÊ ` v À i`ÊÃiVÌ ÃÊ >`iÊvÀ Ê Õi-V «iÊ-Ìii ½ÃÊ Ì À i`ÊV Ê can help gain 1 point UÊÊÎxäÊ}À>`iÊ8 ,* / ® steel fabricated beams and columns can help gain 1 point UÊÊ " ", " ® steel, ZINCALUME® steel and GALVABOND® steel meet the minimum strength requirements, helping gain 1 point UÊÊ iV }]Ê«ÕÀ ÃÊ> `Ê} ÀÌÃÊ iiÌÊÌ iÊ Õ ÊÃÌÀi }Ì ÊÀiµÕ Ài i ÌÃ]Ê helping gain 1 point UÊÊ/,1 ", ® steel framing meets the minimum strength requirements, helping gain 1 point
To find out more, contact your local BlueScope Distribution representative or call 1800 800 789.
®
Your definitive guide to successful negotiating Recommendation
Abstract
Negotiation consultant Steve Gates takes a balanced approach that makes this manual valuable for negotiators with a wide range of skills and approaches. Though not necessarily the right tool for raw beginners, The Edge recommends this book’s tough lessons to more experienced negotiators and anyone looking to become more realistic about business.
Negotiation is crucial in everything you do and although it might not be a formal part of your job, it determines your salary, the power balance in your relationships and your position at work. However, negotiating offers no objective scale to measure your success or failure and you must assess your performance in relative terms. The multiple variables involved, such as time, price and logistics, complicate this appraisal. Keep your ego in check and your vision clear enough to see what the people on the other side think, observe what they do and analyse how these factors affect possible outcomes.
“The Negotiation Clock Face” One book on negotiation insists you collaborate while another calls negotiation War and says you must fight for every inch. Both are correct. No one can tell you a right or wrong way to negotiate. Instead, apply certain tools in different situations. To help you understand these tools and how they relate, imagine the negotiation clock face. The right side of the clock (12 to 6) features tools that ask you to play tougher as you divide a finite amount of value. The left side (6 to 12) houses more cooperative tools. Divide them as follows: s "ARTERING O CLOCK – An exchange or swap can take place between strangers without a shared language. In bartering, you trade one item for another s "IDDING TO O CLOCK – Auctions and on online sites like Swoopo or eBay use this tool. To deploy bidding as a strategy, you must be ready to walk away. s (ARD BARGAINING O CLOCK – People prefer not to use the hardbargaining approach too often. The concept that if you win, someone else loses, often strains our sense of fairness. Good questioning and targeted proposals are crucial to hard bargaining. When you make a proposal you anchor the negotiation and fix the bargaining range within which all further give-and-take occurs. Put yourself inside the opposition’s heads, identify their breakpoint and keep them from figuring out yours. Practice self-control and staying quiet.
s $EALING TO O CLOCK – This technique involves making arrangements on details that don’t give you incremental value, but which might benefit the other side. For example, if you don’t care about a contract’s completion date you could grant the other side its desired terms in exchange for something you do want. You can make deals on several different issues in a single negotiation. s #ONCESSION TRADING TO O CLOCK – At this point, the negotiation clock ticks into collaborative tactics. You’re still guarded and cautious, but you begin to offer conditional trades (if you do this, we’ll do that) to build value for both sides. s 7IN WIN O CLOCK – In this mode, both sides gain. Exchange low-cost, high-value items to increase the total value opportunity. This is challenging because negotiations are emotional as well as rational and even when both sides win, they never both benefit to the same degree. s 0ROBLEM SOLVING TO O CLOCK – Your goal is to increase performance and compliance while reducing risk. You might have to share information, but in this mode you try to solve the other side’s problems for them in order to facilitate a deal. s 2ELATIONSHIP BUILDING TO O CLOCK – When you’re interdependent with the other parties or work together on a regular basis, benefit them as they seek to help you. Transparency is vital and your negotiations can include intangible factors.
REVIEW
BOOK
T H E N E G O T I AT I O N B O O K
Power The more power you have the more options are available to you, but power is not a fixed, objective quantity: it depends on perception and shifts according to circumstances. Access to information is a source of power, as is understanding the other party and yourself, while any power imbalance partially determines the nature of negotiations. Ultimately, you’re negotiating with people with specific attitudes, skills, weaknesses and constraints. Identify these, plus any benefits from a quick resolution and any meaningful issues beyond price.
Need The parties’ level of dependency affects negotiation. If you need the other party more than it needs you, this alters the balance of power. To equalise your dependency develop a strong Best Alternative to a Negotiated Agreement (BATNA). Historical precedents like an earlier contract or established pattern of deals shapes new negotiations. When demand is intense and one side controls supply, this also changes the dynamic. Also, if you need a deal sooner than the other side, you’re weaker.
Traits Several personality traits contribute to your success as a negotiator and you can develop most of them. The first is nerve: Stay calm and believe in your position and you’ll try things you wouldn’t attempt otherwise. Next is self-discipline, with which you can wait out the useful silences. You need tenacity to hold your positions and values and to state and restate your proposals when necessary. Tenacity works well with assertiveness, but don’t be arrogant or disrespectful. Ask for what you want and work to get it. Instinct can serve you well and this feeds caution so you listen to internal doubts about sweetheart deals, which are never as good as they seem. Sharpen your instincts with curiosity. If you don’t know something, find out through research, talking to those who know the opposing party and asking the other side direct questions when appropriate. Humility is essential, too, so keep your ego off the table.
Behaviour The best negotiators share characteristics and behaviours that define their tactics. At all points on the negotiation clock face the skilled negotiator pays attention, not only to what people say but also to their signals and nonverbal cues. Think clearly, remain undisturbed by threats and anger, know people differ in their understanding of fairness and remember negotiation is not about being fair. Bear the weight of silence but never show discomfort. Be willing to open with an extreme offer; to shape it, to be realistic about its chance of success and to adapt accordingly. Finally, learn to read the other side’s breakpoint. Ask “what if?� questions: What if we did this? What if we exchanged that for a better turnaround time? Shape the context of the negotiation so people trust one another. Take an active role in setting the agenda and generate value creatively, while working to build agreement.
Emotion The more self-aware you are the more effectively you negotiate. Emotion drives people and makes them unpredictable, so choose your emotional responses consciously and display emotion only for strategic purposes. Stress often leads negotiators to relinquish their positions or to signal their positions through fidgeting or verbal tics. Minimise the information you betray with body language and be aware of how others signal without speaking.
Preparation Preparing methodically contributes powerfully to successful negotiations. To negotiate as a team you must prepare and practice as a team and you’ll function best when members fill four roles: spokesperson, figures person, observer and leader. Of course, if you’re negotiating alone you’ll have to step into each of them all at different times. Know how much authority the team needs, has and know your limits.
Authority Each negotiation tactic requires a certain level of power and has an effect on your relationship with the other party, often a negative one. A strategy like asking a hypothetical question, however, has none. For example, “What if we were to ‘hypothetically’ increase the order after three months, how might that change the fee structure?.�
Tools An array of tools will help manage and track the negotiation. Start with the primary variables: price, fee or margin, volume, delivery, contract period, payment specifics and specifications. Define your goals in each area before you start and begin linking them, planning trade-offs and anticipating how triggers might be linked to specific variables. For example, if the other party is willing to pay faster, can you deliver faster? If they order a much higher volume, how much of a price discount can you provide? Block out basic if-then statements in a table format for ease of reference. As you combine variables, consider how each affects another important variable: risk. Finally, bring a prepared form for recording the specifics of all offers, so you can follow who offers what and when.
NEGOTIATION INFLUENCES EVERYTHING YOU DO! s /RGANISE THE DIFFERENT MODES OF NEGOTIATION INTO 4HE Negotiation Clock Face: Consider competition as the twelveto-six side and collaboration as the six-to-twelve side s 0OWER SHAPES NEGOTIATION AND GIVES YOU OPTIONS PEOPLE WHO have power use it s 0OWER SHIFTS ACCORDING TO CIRCUMSTANCES s 3UCCESSFUL NEGOTIATORS HAVE CHARACTERISTICS NERVE SELF discipline, tenacity, assertiveness, instinct, caution, curiosity, numerical reasoning, creativity and humility s 3UCCESSFUL NEGOTIATORS LISTEN ACTIVELY STAY CALM ARE PATIENT even when they aren’t comfortable, trade value well and read the nonverbal signals of others s %MOTION SHAPES NEGOTIATIONS 4O BE A BETTER NEGOTIATOR BE more self-aware as well as self-controlled s -ETHODICAL PREPARATION IMPROVES THE CHANCE OF A SUCCESSFUL negotiation s 0LAN YOUR GOALS FOR PRICE VOLUME DELIVERY PAYMENT QUALITY
contract period and risk s %NTER EVERY NEGOTIATION WITH A PREPARED AGENDA AND BE READY to record offers
INDUSTRY
UPDATE
Don’t trust just any roof in a storm... Independent research from the Insurance Council of Australia (ICA) and James Cook University (JCU) have advocated Australian homes use roofing made from steel, which is resilient to the harsh conditions prevalent during the thunderstorm season from September to March. The Bureau of Meteorology (BOM) says severe thunderstorms are localised events with a devastating impact that’s often underestimated and while most don’t reach the highest levels of intensity, all produce lightning and can cause injury and/or damage. On average, severe thunderstorms cause more damage in insurance cost terms than cyclones, earthquakes, floods or bushfires. Roofing choice is critical The ICA notes that roofing material is one of the most critical components when protecting a home from severe thunderstorms. According to their research, “The roof of your property is one of its most critical components, literally protecting you from extreme weather and the elements. Whilst it is important to have a roof design and material that is aesthetically pleasing and complimentary to the design of structure, compromising on durability, strength and resilience is not a clever option.” Across Australia, roofing made from COLORBOND steel is proving a strong, durable solution for extreme weather conditions, due to its superior, ovenbaked finish that resists chipping, peeling and cracking1. It also protects the family home for years to come as it is non-combustible, termite resistant and secure against intruders1. ®
Insurance implications The ICA also says the type of roofing material you choose might influence the insurance premium on your property, based on replacement cost and susceptibility to damage. The experience of many insurers is that well maintained roofing often performs better in a hailstorm than other materials. Roofing made from COLORBOND® steel is easy to maintain, requiring only natural rainfall or an occasional hose or wash down to keep clean.
Since Cyclone Yasi devastated communities across Far North Queensland, a study conducted by JCU analysed homes damaged and revealed that, when compared to other roofing materials, roofing made from steel performed well. The study said, “Overall, metal roof cladding, which includes metal roof tiles as well as continuous sheet cladding such as corrugated and rib-pan profile, performed well. The vast majority of cladding remained attached to the roof battens. This should be expected as the estimated wind speeds were less than design loads.” Ongoing investment BlueScope Steel continues to invest in leading technologies to ensure its coated steel products deliver superior performance and COLORBOND® steel, made specifically for Australian conditions, remains an ideal choice for residential homes. Not only weather-tight, it’s thermally efficient, thanks to the introduction of Thermatech® technology. This reflects more of the sun’s heat, leaving the roof space, and therefore the home, cooler. It can keep un-insulated buildings up to 5°C cooler while helping reduce air conditioning needs in insulated buildings. Furthermore, the ICA report states that when “designing or building a property, or re-roofing an existing property, it is important to ask your builder to present options for increasing the resilience of the roof and any skylights to hail, through material selection and roof slope.” Roofing made from COLORBOND® steel provides flexibility for a variety of roof shapes and sizes and BlueScope Steel offers a warranty of up to 30 years from the date of installation2. It is also backed by an enhanced warranty against flaking and peeling for a maximum of 20 years and against corrosion to perforation for up to 30 years2. For further information on COLORBOND® Steel call 1800 022 999 or visit www.colorbond.com 1) When installed to manufacturers specifications. 2) Warranty terms and conditions apply. Warranties are not available for all products and applications. The duration, terms and conditions of available warranties vary according to product use and application. To determine the eligibility of your project, visit www.colorbond.com or call 1800 022 999.
EDGE
SMILES ALLROUND
BlueScope Steel Sheet Metal Supplies Victoria branch wins Ford Distinction Award. The Ford Australia Supplier Performance Awards are held annually to recognise suppliers who go above and beyond expectations. They acknowledge those who, through outstanding performance and continued development as partners, contribute to Ford’s ongoing success. On Thursday August 11th last year, the team from BlueScope Steel Sheet Metal Supplies Victorian branch proudly received the Ford Distinction Award, having seen off all other contenders in their category.
Strong relationship The team at BlueScope Steel Sheet Metal Supplies has a long and strong relationship with Ford Australia. Through a mix of unique supply arrangements, outstanding customer service and a willingness to work with Ford no matter how complex the situation, they achieved formal recognition as much more than just another steel supplier. Importantly, the open and cooperative nature of the relationship has ensured it has stood the test of time. Over the years the Ford account has been looked after by different sales team members. However, everyone who has taken responsibility for it has worked
(Left to Right) Daryl Mann and Robert Graziano
hard to ensure that service, quality and relationships have always been maintained. Significantly, Ford has been a driving force in the Sheet Metal Supplies business maintaining its TS16949 LRQA quality accreditation. Along with his lead-team, Robert Graziano, President and CEO of Ford Australia, hosted an exclusive dinner to personally thank the four businesses that won the Ford Australia Supplier Performance Awards. He also touched on his thoughts regarding the opportunities and challenges facing the automotive industry and its suppliers. Representing the Bluescope Steel Sheet Metal Supplies team were State Manager Daryl Mann and Peter Tamvakis, Market Development Manager – Automotive, who proudly accepted the award on behalf of the team and company. Congratulations to everybody, past and present, who has worked as part of the BlueScope Steel Sheet Metal Supplies team on the Ford Australia account. Their hard work has not only been instrumental in helping retain and develop an important customer, it has shown the innovation and enthusiasm that helps keep BlueScope at the forefront of the Australian steel industry.
Community Comeback Marysville marks a major milestone.
The community of Marysville continues its fight back from the bushfire devastation of 2009, with life gradually returning to normal. On 19 November, 2011, a major milestone was celebrated when Her Excellency the Governor-General of the Commonwealth of Australia, Quentin Bryce AC CVO, officially opened the all-new Marysville Community Centre. The all-new facility is the centrepiece of BlueScope Steel’s $1 million support package to help rebuild affected communities and proudly representing BlueScope at the ceremony was Paul O’Malley, Managing Director and CEO. The new centre will operate as a multipurpose community meeting space, community group office, indoor recreation centre and community health service and doctors’ rooms. Located next to the primary school, it will play a big role in the life of the Marysville community as the rebuilding continues. BlueScope donated $550,000 towards the cost of the pre-engineered building and BlueScope Buildings worked closely with the architect in the design,
providing all the structural engineering drawings and calculations. Overall, BlueScope’s support to help rebuild Victorian communities affected by the bushfires included bridge girders, community kitchens and dining facility buildings, shipping containers, sheds and rainwater tanks. Employees of BlueScope donated more than $140,000 to the Red Cross bushfire appeal and a number were actively involved working for the CFA and SES. Additionally, others donated food, clothing and their time to help the general relief effort. BlueScope is proud to have played a part in helping rebuild Marysville and the other communities affected by the devastating Black Saturday bushfires. We wish all residents well and believe this new centre will help strengthen and secure Marysville’s already-strong sense of community.
STAFF PROFILE 13 72 82 incorporating
Andrew Bray
General Manager, BlueScope Distribution Time in Position: Since February 2012 Time with BlueScope?
Since the acquisition of Smorgon Steel in August 2007 and 10 years in the steel industry, overall. Prior to steel I was in the Fast Moving Consumer Goods (FMCG) industry, focused on branded food products. Sheet Metal Supplies
1800 010 247
Responsibilities?
I am responsible for the safety and development of our people, our financial results and the strategy, culture, leadership and overall performance of our business.
What satisfies you most about your work?
Ultimately it’s getting results that really drives me, but during the journey it’s the learning, both personally and organisationally, that I find rewarding.
1300 306 204 THE EDGE newsletter has been prepared for information purposes only. BlueScope Steel makes no representation or warranty as to the completeness or accuracy of the information contained in the newsletter. You must make your own assessment of the information contained in the newsletter and rely on it wholly at your own risk. Published by BlueScope Steel Limited. ® are registered trade marks of BlueScope Steel Limited. ™ are trade marks of BlueScope Steel Limited. © 2012 BlueScope Steel Limited ABN 16 000 011 058
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Ongoing and significant volatility is what we have seen over the last few years. It really started prior to the GFC and has continued, unrelenting, ever since. I believe it’s part of the role of a distributor to help the steel supply chain deal with this volatility to deliver better and more certain outcomes for our customers and Australian industry partners. So I’d say our challenge is in fully adapting to this environment, to turn our agility into further competitive advantage through our local footprint and capability and to do it in a way that is profitable and sustainable.
How do you relax?
Any outdoor sports, especially cycling and kayaking and I’m involved in Surf Life Saving. After exercise I like to do the extreme opposite and sit, reading.
What book are you reading right now?
STATE OFFICE CONTACT DETAILS VICTORIA / TASMANIA Westall Ph: 03 8543 3666 NEW SOUTH WALES Auburn Ph: 02 9714 8000
I usually have a couple of books on the go at any one time and my favorites are biographies. I’m currently reading “One Way Road” – Robbie McEwen and also “The way of the Shark” – Greg Norman. Over Christmas I read Rudy Giuliani’s – “Leadership”, which despite being somewhat self-serving (he is a politician) was still a good read. There seems no doubt he lead the 9/11 New York aftermath well.
QUEENSLAND Northgate Ph: 07 3622 9222 SOUTH AUSTRALIA / NORTHERN TERRITORY Ottoway Ph: 08 8245 3801 WESTERN AUSTRALIA Kewdale Ph: 08 6250 1000
COMPATIBILITY MATTERS! Whether you’re an employer or employee, ensure every piece of personal protection equipment (PPE) is compatible with other items. For example, with the best of intentions employers might buy expensive, high-spec items that, when used together are next to useless (e.g. eye protection that physically displaces earmuffs). Also be aware that uncomfortable equipment tends to be shunned by staff and this can lead to non-compliance – and disastrous consequences.
IN THE NEXT ISSUE Cutting-edge processing capabilities Sustainability and the environment Reroofing Melbourne’s Markets Book review and more... www.bluescopedistribution.com
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What are the key emerging trends or challenges you see in the steel industry and our business?