Manufacturers' Monthly December 2014 by Prime Creative Media

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MANAGEMENT >> TECHNOLOGY >> SOLUTIONS

DECEMBER 2014

INSIDE >>

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Management Harnessing operational intelligence

Efficient Manufacturing Going green can make you money

Material of the Month The incredible potential of carbon fibre

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Inside

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DECEMBER 2014

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For daily news visit manmonthly.com.au

Publisher: Martin Sinclair martin.sinclair@cirrusmedia.com.au

4 Editorial

Managing Editor: Kevin Gomez Ph: (02) 8484 0976 Fax: (02) 8484 0722 kevin.gomez@cirrusmedia.com.au

■ China FTA: Free trade of fair trade

Editor: Matt McDonald Ph: (02) 8484 0645 Fax: (02) 8484 0722 matthew.mcdonald@cirrusmedia.com.au

6 Comment

Journalist: Brent Balinski Ph: (02) 8484 0680 Fax: (02) 8484 0722 brent.balinski@cirrusmedia.com.au

■ Nation looking to catch a third wave

Editor-at-Large: Alan Johnson Ph: (02) 8484 0725 alan.johnson@cirrusmedia.com.au

7 News & Analysis

Graphic Designer: Dave Ashley david.ashley@cirrusmedia.com.au

18 Top 100 Manufacturers in Australia

■ News in brief ■ Australia-China FTA ■ Snapshot

Production Co-ordinator: Mary Copland Ph: (02) 8484 0737 mary.copland@cirrusmedia.com.au NSW Sales: Anthony Head Tower 2, 475 Victoria Avenue, Chatswood, NSW 2067 Ph: (02) 8011 3184 anthony.head@cirrusmedia.com.au

10 Management ■ How do successful manufacturers behave? ■ Harnessing operational intelligence

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12 IT@MM

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■ Why e-invoicing makes sense

28 Efficient Manufacturing

13 Endeavour Awards

■ Going green can make you money

■ Cook Medical – a past finalist

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■ Food standing up to challenges ■ Auto industry prepares to meet its maker ■ Setting the scene for future success ■ Building looks to a future of IR harmony ■ Weathering the storm

14 New Technology

30 Plant & Machinery Maintenance

■ Five technologies you can’t ignore

■ Stop equipment failure in its tracks

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MANAGEMENT >> TECHNOLOGY >> SOLUTIONS

DECEMBER 2014

Average Net Distribution Period ending Mar ’14 18,459

31 Warehousing & Forklifts ■ Battery-electric forklifts ■ 3-wheeled electric forklifts

32 Material of the Month ■ The material of the future

34 What’s New ■ ■ ■ ■ ■

Position switches Moulding machines High speed freezer doors Safety laser scanner Cutting tool inserts

38 The Last Word ■ Quickstep in automotive composites drive

Behind the cover

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■ Thermography and manufacturing

THIS time each year IBISWorld delivers Manufacturers’ Monthly something of a Christmas gift – a list of the top 100 manufacturers in Australia. The list, which includes both Australian-owned and foreign-owned companies, delivers our readers an overview of each company’s size and performance. It includes key financial figures and employment levels. This year, we have divided the list into industry sectors – Food & Groceries, Automotive, Plastics & Chemicals, Building & Construction, and General Manufacturing. We look behind the stats and hear from key industry figures about how their 2 0 1 4 - 0 5 - 0 6 T1 5 : 0 7 : 0 9 + 1 0 : 0 0 sectors are performing and what the future holds. INSIDE >>

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Management Harnessing operational intelligence

Efficient Manufacturing Going green can make you money

Material of the Month The incredible potential of carbon fibre

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Manufacturers’ Monthly DECEMBER 2014 3

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Comment

KEVIN GOMEZ – Managing Editor

China FTA: Free trade or fair trade?

NEXTISSUENEXTISSUE

Photography:Daxner Soren Asia-Pacific

• Safety in Manufacturing – Special Focus • Motors & Drives • Automation & Robotics • Metalworking & Machine Tools – Precision Measurement/CMMs • Management – HR, Recruitment & Training • IT@MM – Innovation & Design • Materials Handling – Warehousing & Distribution MA 1 1 1 4 _ 0 0 0 _ E X H -

S this issue of Manufacturers’ Monthly goes to print, the media frenzy around the G20 summit in Brisbane is subsiding. The focus, and the shrill debate, is shifting to the Australia-China free-trade agreement (FTA). Agriculture and service providers seem to be big winners. Currently, China imposes tariffs of up to 40 per cent on some goods. With the FTA, over 83 percent of goods exported to China will be tariff-free and this will go up to 93 percent within four years. And what of manufacturing, one may ask? For one, this sector’s exports to China are miniscule. However, there is concern that our modest domestic manufacturing industry will come under increased pressure from even lower-cost imports. Dumping is another concern and will need to be closely monitored. It works both ways, however. Sourcing input components from China at lower rates could make exported tariff-free products cheaper. Accounting and business advisory firm Grant Thornton, believes the Australian manufacturing industry should turn its focus to its role in supporting Chinese investment and how local industry can become a pivotal part of China’s supply chain. The industry should focus on developing relationships with China and capitalise on such relationships to benefit most from the anticipated FTA initiatives, says the advisory firm. 1 2 0 1 4 - 1 0 - 0 3 T1 1 : 0 5 : 0 4 + 1 0 : 0 0 The Australian Manufacturing Workers Union

(AMWU) is clearly unhappy and expects the FTA with China to “cause the death of struggling Australian manufacturers”. AMWU president Andrew Dettmer says we risk more cheap manufactured imports reducing Australia to “a primary producer, a farm and a quarry for the world’s largest nation”. The Ai Group believes the reductions in tariffs applied to manufactured goods imported from China should allow sufficient phasein periods that give domestic businesses time to adjust. Australia’s key, and perhaps sole, advantage in the manufacturing space is its intellectual property. Effective commercial safeguards in relation to IP infringements are essential to Australia’s ongoing relationship with China. The government also needs to ensure that local suppliers retain full and fair access to supply domestic projects and are not squeezed out of the domestic market by preferential treatment for Chinese suppliers, states the Ai Group. As always, the team at Manufacturers’ Monthly would love to hear from you, so drop us an email, follow us on Twitter and join the discussions on Facebook, Google+ and LinkedIn. This is the final issue of Manufacturers’ Monthly for 2014 and we take this opportunity to wish our readers a safe and enjoyable holiday season. kevin.gomez@cirrusmedia.com.au

BY THE INDUSTRY, FOR THE INDUSTRY. OWNED AND PRESENTED BY

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Siemens AG. All other logos, trademarks or service marks used herein are the property of their respective owners.

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Answers for industry.

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Comment

editor@manmonthly.com.au

A nation on the cusp of a third wave As the year draws to a close, Industry Minister Ian Macfarlane discusses the major issues facing Australia’s manufacturing industry with Manufacturers’ Monthly’s Editor-at-Large, Alan Johnson.

OHNSON: The latest industry reports show Australia’s manufacturing industry is still in negative territory, how do you see this trend ending? Macfarlane: Industry in Australia is undergoing a significant transition, just as it has done in other developed nations. In the ten years from 2003 to 2013, sectors including agriculture and manufacturing have been declining in terms of their share of GVA and their share of employment. During the same period business services and professional services have shown the greatest increase in their share of these same measures. From an economy that was historically built around farming and agriculture, through to heavy manufacturing and commodity based industries that have been the mainstay of our economy in recent decades, Australia is now on the cusp of a third wave – the transition into higher value-added industries that are based on innovation, research and the sophisticated skills base of our workforce. By addressing the cost of red tape, lowering the company tax rate, and putting in place a framework to encourage investment in growth sectors, the Government is working to improve the competitiveness of Australian manufacturers by lowering the costs of running a business in Australia. The Australian Government’s Industry Innovation and Competitiveness Agenda will address industry competitiveness through: • a lower cost, business friendly environment with less regulation, lower taxes and more competitive markets; • a more skilled labour force; • better economic infrastructure; and • industry policy that fosters innovation and entrepreneurship. Johnson: Last year, when I asked about gas supply, you mentioned an acreage system, where some of the gas from future projects could be set aside for domestic use. How would the system work, and is it still on the agenda? Macfarlane: The Australian Government is preparing the Energy White Paper to set a long-term policy framework for the energy and resources sector. One of the areas the White Paper will focus on is developing Australia’s future energy sources, including gas. The Australian Government does not support a retrospective, mandatory gas reservation policy. However, it is still the case that State Governments may wish to consider proposals whereby some gas

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The Federal Government does not support a retrospective, mandatory gas reservation policy – Macfarlane. from future projects, not existing projects, could be used in the domestic market. Ultimately these questions relating to onshore gas are for State Governments to address. The Commonwealth will continue to provide a broad energy policy framework for all energy matters through the Energy White Paper process. Johnson: Australian manufacturing is currently classified by the OECD as being in the ‘mediumlow and low technology’ category of nations, based on its R&D spending as a share of total value added. What plans does the Coalition have to change this situation? Macfarlane: While Australian manufacturing is the largest performer of business R&D, accounting for a quarter of total annual business R&D expenditure, there is more that can be done to transform manufacturing towards higher value added outputs. The Government is putting in place the policies and programmes that will provide incentives for manufacturing firms to invest in technology, and research and development, in order to foster a viable, competitive and successful manufacturing industry. Through the $188.5m Industry Growth Centres Initiative, the Government is targeting five growth sectors in which Australia has competitive advantage as a priority:

• Food and Agribusiness; • Mining Equipment, Technology and Services; • Medical Technologies and Pharmaceuticals; • Advanced Manufacturing; and • Oil, Gas and Energy Resources. Growth Centres will bring business and research together to boost productivity and create jobs by turning ideas into profitable products and services, reducing red tape and lifting workforce skills. Johnson: With our car makers set to close their factory doors very soon, how optimistic are you that component suppliers will be able to find new markets and/or transition into new markets? Macfarlane: It is important that our car component makers diversify their businesses to take advantage of opportunities in the growth sectors of the Australian economy. The Government’s $155m Growth Fund supports initiatives to assist automotive workers transition to new jobs, businesses find new markets and invest in capital equipment. A key element of the Growth Fund is the $20m Automotive Diversification Programme (ADP), which will provide assistance to Australian automotive supply chain companies to diversify out of the domestic motor vehicle manufacturing sector through investment in capital equipment and thereby retain manufacturing capability in Australia. Johnson: Commentators talk of the need to move to “Advanced manufacturing” and/or “High-Tec manufacturing”, but how do you see this occurring? Macfarlane: The Australian Government is creating the right environment for accelerating Australian manufacturing’s transformation into a knowledgeintensive and globally competitive industry. The new $50m national Manufacturing Transition Programme, the first round of which opened in September, is forward-looking and aims to support capital investment projects which help businesses transition or expand into higher value or niche manufacturing activities, and build skills in higher value and knowledge intensive manufacturing activities in new or growing markets. In addition, the Advanced Manufacturing Growth Centre will drive innovation in our manufacturing sector by leveraging off Australia’s great research capabilities. [Alan Johnson is Manufacturers’ Monthly’s former editor. He has researched and written about all aspects of the Australian manufacturing sector for over 25 years.] manmonthly.com.au

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News&ANALYSIS In brief... CSIRO job cuts There will be 75 jobs cut at the CSIRO, including 45 full-time equivalent jobs at the organisation’s Manufacturing Flagship. The decision follows a funding decrease to the organisation of $115 million over four years. The jobs will be shed over the next three to four months.

NZ PMI up New Zealand manufacturing expanded at its highest rate for 2014 in October and employment in the sector grew at the highest rate since 2002, according to the BNZ - BusinessNZ PMI. The figure for the month was 59.3, a 0.8 point increase from September.

US-China climate change deal US president Barack Obama and his Chinese counterpart Xi Jinping announced in Beijing that the US has committed to cutting emissions by between 26% and 28% below 2005 levels by 2025, while China’s emissions will continue to slow and peak by 2030 at the latest.

Resistance to anti-halal campaign The Australian Food and Grocery Council said it will not yield to a “misinformation”-based anti-halal movement. Anti-halal campaigns have targeted companies including Cadbury Kellogg’s and Fleurieu Milk and Yoghurt Company, which dropped its halal certification following social media, email and phone harassment.

Boral defends proposed JV Boral chief executive Mike Kane said the proposed $230m clay brick joint venture between Boral and CSR is necessary to keep local brickmaking alive. The proposal has raised the concern of the competition regulator, the ACCC, which believes it may reduce competition in the clay brick market.

APA still keen on NT gas pipeline APA Group has stood by its plan to build a natural gas pipeline from the Northern Territory to the eastern states, despite claims that it is not viable. Possible routes for the pipeline include from Alice Springs to Moomba in SA; and from Tennant Creek to Mount Isa in QLD.

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China FTA not a hit with manufacturers, unions THOUGH it has been called a “game changer” by the federal government, the recently-signed free trade agreement (FTA) with China is the subject of “mixed feelings” for the industry. Government figures show it will deliver a benefit to the national economy of $18 billion over the next few years, with as much as 95 per cent of exports to China to eventually be tariff free. Major winners are likely to include winemakers and dairy producers, both tariff-free after four years. However, there are concerns within the manufacturing sector around issues such as intellectual property and unfair competition, as well as proper efforts to explain to the industry how it can access the benefits of the agreement. “While [the Department of Foreign Affairs and Trade] provides information by putting the agreement on their website, this does little to inform companies of the steps that must be undertaken to take advantage of potential benefits and is not an effective way to extract value from the great expense and often considerable compromises involved in negotiating FTAs,” said Innes Willox, the Ai Group’s chief executive, in a statement.

“From our close engagement with a wide crosssection of domestic manufacturers, and through the research papers we have prepared on manufacturers’ attitudes to a China-Australia FTA over several years, we have distilled the following list of five hot spots for manufacturers.” These areas of concern were around transition arrangements for tariff cuts, anti-dumping protections, non-tariff barriers to exporters, IP protection and fair access for local companies in domestic projects. Meanwhile, the ACTU, AMWU and other unions said the agreement is potentially devastating for local manufacturers. Ged Kearney, national president of the ACTU, said that the precedent of the Korean Australian Free Trade Agreement (KAFTA) was worrying. “We are concerned that the content of this agreement will accelerate the hollowing out of Australia’s manufacturing capacity, by way of contrast with the relatively economically simple and low employment industries of agriculture and mining, putting the advanced status of our economy in jeopardy,” Kearney and other union leaders wrote in a letter to the major parties and crossbenchers.

What members of our manufacturing community think about the Australia-China FTA ‘John Howard’ How can any Australian government even consider a FTA with a nation of Government owned industry that applies import tariffs at will? Is the current government really hell bent on, even further, destroying manufacturing in Australia? ‘Jason’ Governments of both persuasions have pursued this path of opening the economy, however both persuasions have not undertaken the reform to help give us the framework to adapt to a more open market with the taxation, labour, etc. reform required. ‘Blueboy’ The ‘Elephant in the room’ is always the Union movement...never have they saved a job, never have they created a job. We are considered ‘lazy’ by the Asians and ‘have it too easy’. This is why we are the most expensive place in the world to do business.

So manufacturing leaves Australia in order to compete with the rest of the world, but unions still play the politics card, rather that co-operate with employers to achieve growth and employ more.. but are still buried in 30’s and 40’s and pushing the same stories about how unfair and brutal employers are..not accepting how there is no governance or corporate responsibility accepted by them as does the employers have to live by. ‘Tommo’ I’ll believe it when I see it. I know Chinese customs can cause delays. When I did make some things there one time, we had to get 30 motors brought in from here and they delayed things for six weeks. Has the FTA with the USA really done anything? They still sell us 2.5 times what we sell them and it’s been way for over 20 years. 18 months back we supposedly got direct RMB to $A

conversion, but I cannot do that with my bank. I export $50-100K to China each year. Government really does not have a good handle on how to help industry. Editor’s note: Comments are as received. Corrections are made to spelling and grammar.

What do you think? Go to www.manmonthly. com.au and make a comment about this or any other issue.

Manufacturers’ Monthly DECEMBER 2014 7

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RET negotiations collapse NEGOTIATIONS around the Renewable Energy Target have broken down, with uncertainty around the sector set to continue. Labor’s environment spokesman Mark Butler wrote to industry minister Ian Macfarlane, telling him that Labor would abandon negotiations around a revised RET. Macfarlane announced in October that it planned to reduce the RET from 41,000 Gigawatt hours by 2020 to a “real 20 per cent”, equivalent to roughly 26,000. Negotiations with the opposition on the 2020 target – which would ideally be around the mid-to high-30 GWh range for the opposition – have been taking place since then. “We gave it a good go,” the ABC reports Butler as saying. “We went to the negotiations in good faith with the objective to try and restore a bipartisan consensus underpinning renewable energy investment. Our positions are too far apart.” The government has accused Labor

of playing politics rather than supporting good policy. “And we’re a bit perplexed that they would roll out this letter in the eve of the G20,” Macfarlane told the ABC. The Abbott government’s approach to renewable energy policy has been blamed by Keppel Prince for its decision to cut 100 jobs last month. manmonthly.com.au

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Management How do successful manufacturers behave? Brent Balinski spoke to Professor Peter Gahan from the University of Melbourne and Jeffery Yeh from Homart Pharmaceuticals about the importance of High Performance Work Practices to small and medium enterprise companies.

ECENT research has shown there are certain ways highperforming manufacturing SMEs tend to operate. There’s a body of research showing a link between High Performance Work Practices (HPWPs) – a set of management tools that help get the best out of an organisation and its employees – and business success. “A lot of that [research] is international in orientation with limited work done here in Australia,” explained Professor Peter Gahan, director of the University of Melbourne’s Centre For Workplace Leadership. These practices are broken into three elements, based around knowledge, skills and abilities; motivation and effort; and opportunities to contribute. University of Melbourne’s Centre for Workplace Leadership recently carried out a survey of 1,054 manufacturing SMEs (under 200 employees), the first study of its kind in the country. The CWL has been sharing the findings from the High Performance Manufacturing Work Practices Study at a series of Manufacturing Skills Australia’s EScan 2015 events. There are successful small and medium-sized manufacturers in Australia, of course, and some obvious differences observed between those who adopt a suite of HPWPs and those who don’t. “The key thing that we’ve learned, I think, is that developing a high-performance set of practices that work together in a synergistic and complementary way is not rocket science,” Gahan told Manufacturers’ Monthly. “It’s not something that’s necessarily straightforward either in the sense that the key principles are clear, you need to sort of have practices that are focussed on motivating employees, building their knowledge and skills, giving them opportunities to contribute.

10 DECEMBER 2014 Manufacturers’ Monthly

Of those who have successfully implemented a range of these performance-driving habits, no two had done so in the same way. Homart Pharmaceuticals was one of seven best-practice case studies – along with companies including Redarc Electronics and Bundaberg Brewed Drinks – highlighted in the CWL’s research. The fast-growing supplements

and an environment that [will] make them work efficiently. Homart employs based on attitude first and skills – which can be developed later – second. Workers are provided with on the job training by team leaders, encouraged to share their suggestions (the production manager has an open door policy) and motivated through performancebased prizes and pay scales.

Research has shown a link between HPWPs and business success. manufacturer was established 22 years ago with four employees. It now employs over 100 (with 30 in production) across three nations, exports to 20 countries (50 per cent of its revenues are international), and has received numerous awards. Co-owner and operations director Jeffery Yeh said that expanding his business was guided by logic rather than a conscious adoption of a High Performing Workplace System. “I had completely no idea what’s a high-performance workplace,” he told Manufacturers’ Monthly. “We’re just [trying] to make sure people are happy working there, making sure they have tools and skills

Homart’s culture came about through trying to keep workers “happy, safe and efficient”, explained Yeh. “And a lot of things just fell into place when we were trying to do that,” he said. The manager said he was surprised that his company ticked so many boxes on the HPWP checklist, but was encouraged by the other case studies showing SME manufacturers making similar efforts to motivate workers, develop their skills and encourage the sharing of ideas. Companies like Yeh’s were also willing to look outside their organisation for advice. For example, Homart is currently optimising their pro-

cess through a Lean Manufacturing program, guided by Blakemoresource. Yeh believes this will increase productivity by 30 per cent. Firms who did less well with the adoption of positive human resources practices had a number of items in common, the research found. They tended to operate in declining or turbulent markets, have a domestic rather than export focus, and tended to be concerned with their survival and poor demand. They also regularly benchmarked themselves against their competition. Important for the adoption of a bundle of practices were phasing them in incrementally and in a way where they were complementary to each other. Gahan said success stories, “sort of build it piece by piece, starting with a very simple system and looking to build on it that way.” “[Also] the simple system has to have elements of all three that work together. You have to make sure they work together” According to another of the report’s authors, the more practices from each of the three categories were implemented, the greater the benefit that was experienced. “What we were able to show in fact was that these bundles of highperformance work practices were positively and significantly associated with profitability, product quality and labour productivity,”said Gahan. [Brent Balinski has been a journalist at Manufacturers’ Monthly since 2012. He is particularly interested in 3D printing and innovation. Find him on Google Plus at https://plus.google. com/+BrentBalinskiCirrusMedia]. Homart Pharmaceuticals 02 9648 2880 www.homart.com.au manmonthly.com.au

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Harnessing operational intelligence Australian manufacturers face many obstacles, from rising costs to the tyranny of distance. As Denise Carson explains, operational intelligence has the potential to help them do things smarter and remain competitive.

PERATIONAL intelligence (OI) refers to methods and technology that use machine data to deliver real-time visibility, as well as insight into IT and business operations. Manufacturing involves massive volumes of data, which come in a variety of formats and at high velocity. Though it may seem overwhelming, Australian manufacturers need to embrace its many uses in order to sustain and grow their businesses. According to the International Data Corporation, unstructured data, much of it generated by machines, accounts for more than 90 per cent of organisations’ data. This is particularly true in manufacturing where machine-generated data is massive in scale and contains a definitive record of transaction activity, system behaviour, application performance, user actions, security threats and fraudulent activity. Traditional data management means significant investment in data warehouses and marts, expensive business intelligence platforms and the associated skills sets. Relational databases cannot handle the complexity or scale of machine data and don’t provide the flexibility to ask any question or get answers in real time. OI still requires data management skills but lowers the bar significantly and puts the ability to gain highly valuable insights from big data into a broader set of hands. IT and operations, product development, sales and marketing staff can effectively use the data, and unlock the value within.

Information Technology OI platforms like Splunk significantly reduce the number of tools and skills needed to maintain complex infrastructure and deliver integrated endto-end operational visibility across IT and manufacturing control systems. OI allows rapid root cause analysis of issues up to 70 per cent faster than traditional methods without having to search through integrated, interdependent systems one by one.

Security and compliance Compliance can include everything from product manmonthly.com.au

safety to IT security and fair competition. But when this crucial issue is overlooked, manufacturers deal with major consequences, such as reduced financial performance and brand impact. OI looks beyond traditional sources and lets security and compliance teams analyse raw data from right across the business. The most advanced security approaches rely on a single system to collect and analyse data across all IT and operational systems, avoiding the traditional problem of having multiple, disconnected security systems.

Application development Getting applications into production faster through better insights and rapid issue identification is critical in manufacturing. Tracing transactions across the IT stack to find bugs quickly and improve code quality before it hits production can make an enormous difference to quality and profitability. OI improves this through real time insights gleaned from machine data and log files off both the applications and the associated IT systems. Once apps are in production, users can gain insights into application usage and how to adapt to new business trends and accelerate feature development.

Marketing and supply chain Discrepancies in inventory are a big problem for manufacturers and aligning production to supply and demand is critical. A great use case for OI in supply chain is Coca-Cola. They extract data from vending machines, social media and loyalty programs which feed into their Splunk OI platform. Real-time OI dashboards give a better view of the data, for example to correlate spikes in sales to events. Coca Cola noticed increased sales from college

campuses vending machines right before Walking Dead episodes. Now every time a consumer pushes a button on Coca-Cola’s Freestyle Machines, data goes into their Splunk platform helping to optimise the supply chain.

The Internet of Things Connected devices, sensors and industrial systems provide an ever growing set of unique touch-points to manufacturing operations and conditions. But collection, storage and insight into machine data generated by industrial systems and the Internet of Things (IoT) can be a challenge. However, if the data can be practically harnessed there are many advantages, for example: • Measurement, verification and constant commissioning. • Capacity planning. • Root-cause analysis and remote troubleshooting. • Anomaly and outlier detection. • Safety and compliance. • Cyber security. In today’s disruptive world, big data and the IoT is only going to keep growing. Leveraging this data is the key to the factory of the future and to sustainable success for any manufacturer. OI can break down the silos of data across design, manufacturing, marketing, sales and supply chain, and provides a pragmatic approach for Australian manufacturers to optimise and innovate for sustainability and competitive advantage. [Denise Carson is Business Manager, Operational Intelligence & Enterprise Mobility, at UXC Connect]. UXC Connect 02 9847 7100 www.uxcconnect.com.au Manufacturers’ Monthly DECEMBER 2014 11

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TechnologyIT@MM Why e-invoicing makes sense E-Invoicing is more than the sending and/or receipt of tax compliant invoices in an electronic format. As Scott Harkin explains, it can deliver plenty of benefits for you and your customers.

NE significant pain point that I often come across in manufacturing organisations is the use of paper based invoicing. Paper invoices are a barrier to efficient Accounts Payable (AP) and Accounts Receivable (AR). As an example, how often do invoices arrive as part of the delivery paperwork into a busy store or goods receiving department and are then expected to magically make its way through various departments depending on a business workflow and arrive on an AP team membersâ&#x20AC;&#x2122; desk for processing. Frequently this does not happen and so valuable time is wasted by both AP and AR chasing payments, replacing invoices, managing late payment cash flow issues and generally having a negative impact on an otherwise healthy and productive supplier/customer relationship. Itâ&#x20AC;&#x2122;s not just manufacturing. Of the current estimated 500 billion Invoices being transmitted currently worldwide there is estimation that only 8% of them are electronic or e-invoices. However, this ration is changing rapidly and the number is estimated to grow at a level of about 20% per annum over the next few years. This can vary country to country dependant on the development status. The growth we have seen to date in the utilisation of E-invoicing and Automated AP has really been driven by Government and big business where the traditional cost of the running AP automation and demanding e-invoicing has kept it out of the reach of all but the largest organisations. This is beginning to change and the functionality and benefits are coming into the reach of the small and medium market in all business types with a range and type of providers growing! One of the key drivers of demand for this growth is the considerable

12 DECEMBER 2014 Manufacturersâ&#x20AC;&#x2122; Monthly

cost benefit. The cost of issuing and receiving E-Invoices and utilising automated Accounts Payable processes can be 60-80% less than those of manual and paper based processes.

E-Invoicing E-Invoicing, at its most simple, is the sending and/or receipt of tax compliant invoices in an electronic format. In a more complex requirement it is the sending and/or receiving of invoices in a format manageable by another process. i.e. a company has an automated Account Payable process and requires their vendor invoicing to be issued in a very specific format for automatically reading the data within. This is not new to some industries. Taking a look at the schematic it is at once obvious to appreciate the operational and cost benefit to be gained by both the supplier and their customers. Consider the conventional paper based invoice issuing process compared to e-invoicing. The actual non-value-add touch points of each invoice become practically zero and the speed of interaction becomes almost immediate.

Accounts payable efficiency Aside from improving relationships with your vendors and freeing up the team for value add activities, for buyers there are a great many advantages to be gained through e-invoicing. Costs are reduced and efficiency improved by eliminating sorting, registering and manual data entry cutting down on process time and errors. Payment cycles are better controlled allowing for on-time payment, avoidance of late payment fees and ensuring the opportunity to capture contractually negotiated discounts.

Accounts receivable efficiency In manufacturing cash flow is king and while not all customers can be made to pay on time, as a supplier you need to make it easy for them and remove all roadblocks. E-Invoicing eliminates the delays that result from mailing, routing, sorting and re-keying paper documents. Your invoice arrives at the right place immediately ready for processing. On top of the time saving and direct communication, invoice delivery costs are reduced through savings in print, postage, materials processing and storage.

There is a reduction in lost invoices which remove duplicate invoice requirements and difficult customer management calls. With accuracy increased for your customer there will be a reduction in errors and rejected invoices. Over hundreds and thousands of invoices each year there is substantial time to be regained for value add activity. Every business has different requirements on size, scope and complexity but on a fundamental level and as a starting point I believe every business should look to issue and ask to receive their invoices in electronic format even it is just a system generated and emailed pdf. [Scott Harkin, a procurement and expense management practitioner, is a Director of ProcNet Services and P2 Procure to Pay.] ProcNet Services 03 8609 1734 www.procnetservices.com.au P2 Procure to Pay 03 8609 1734 www.p2procuretopay.com manmonthly.com.au

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EndeavourAWARDS Enter online at manmonthly.com.au

Medical solutions to the world Cook Medical Australia is a ‘patient first’ manufacturer of minimally-invasive medical devices. The company was a finalist in the Exporter of the Year category at the 2014 Endeavour Awards.

HE Brisbane-based company is a major exporter of patientspecific products designed to address anatomical limitations and improve patient outcomes, and its managing director, Barry Thomas, is a passionate advocate of local, knowledge-based manufacturing. Cook is part of world’s largest privately owned medical device company, Indiana-based Cook Medical (established in 1963). Earlier in 2014 it had an Australian headcount of roughly 450 (out of 900 in the region). Cook Medical Australia exported goods and services worth $105.5 million in 2013, over nine-tenths of its Australian manufactured products. By value, this was an increase of 31.1 per cent from the year before. Custom-made stent grafts for aortic aneurysm treatment and IVF manufactured at Cook Medical Australia are exported to customers in over 135 countries around the world. Last year Cook became the first company in the world to secure FDA approval to sell Fenestrated Endovascular Grafts in the US. In the same period, it also laid the groundwork for expansion into Indonesia, Vietnam and the Philippines. A finalist in 2014’s Endeavour Awards, Cook was edged out by another Australian manufacturing champion, RØDE Microphones. The medical device company has seen no shortage of awards acknowledging its formidable export achievements in recent years. A sample of these from 2013 alone

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Cook Medical Australia was a finalist in the 2014 Endeavour Awards. includes the Premier of Queensland’s Export Award winner (Health and Biotechnology category), Australian Export Award finalist (Health and Biotechnology), Premier of Queensland’s Export Award finalist (Manufacturing), finalist in the Manufacturers’ Monthly Endeavour Awards (Exporter of the Year) and CEO Magazine Health and Pharmaceutical Executive Of The Year (Barry Thomas). Thomas joined the company in 2001, and has since made a name for himself as a successful manufacturing CEO and a vigorous promoter of the sector and what can be done to strengthen it. A recipient of the Export Hero Award in 2012, Thomas has been lobbying the former and current government for tax reforms to encourage export-oriented high-technology manufacturing. Thomas’s proposal, which has similarities with overseas initiatives such as the UK’s Patent Box and is also supported by groups including AusBiotech (on whose board Thomas sits), is known as the Australian Innovation & Manufacturing Incentive. “Targeted tax relief delivered through the AIM Incentive would not only help Australian manufacturers with a hand-up, rather than a hand out, it would also alleviate financial pressures on the Government by re-

ducing the need for direct subsidies,” Thomas wrote in these pages earlier this year. The incentive would help retain manufacturing in Australia, require no grants, and provide local companies with a competitive advantage. “Companies can pay a tax rate of 10% of their total qualifying IP profit derived from sources against the total amount of company tax payable for that particular financial year,” wrote Thomas. Cook’s successful approach to international opportunities involves identifying and working with a market to “to ensure the best results for both parties,” it told Manufacturers’ Monthly in the lead-up to the 2014 Endeavours. The next step was to embrace the business culture. “At Cook we do not go into a new market looking to changes the rules,” the company explained. “We respect the local culture and work with it rather than against it. “Finally, we ensure that we have on the ground experts from these new markets working with us to ensure that we have the best chance of being successful in that market.” Cook Medical Australia 07 3841 1188 www.cookmedical.com

Time to nominate! DO you have a successful business? Have you completed an impressive project or come up with an innovative environmental solution? Have you enjoyed recent export success or transformed your business into something better than it used to be? If you answered yes to any of the above, then it’s time to nominate for the 2015 Manufacturers’ Monthly Endeavour Awards. All you need to do is head to www. endeavourawards.com.au and fill in your nomination. Now in their 12th year, the annual Endeavour Awards seek out excellence in the Australian Manufacturing Industry. The awards cover 12 categories, including Exporter of the Year, Young Manufacturer of the Year, IT Application of the Year, the Lifetime Achievement Award, and Most Innovative Manufacturing Company. The big one – Manufacturer of the Year – is chosen from amongst the winners of those categories. Businesses are encouraged to nominate themselves and nominations are free. So what do you have to lose? www.endeavourawards.com.au

Manufacturers’ Monthly DECEMBER 2014 13

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NewTECHNOLOGY Five technology trends you can’t ignore

Australia’s manufacturing sector of tomorrow will involve creativity, innovation and higher value products. Bruce Minty takes a look at the technologies that will help lead us to that future.

ECHNOLOGY is transforming the manufacturing sector. According to GE Capital’s latest Mid-Market Report, technology is a $78.8 billion industry in Australia. Manufacturing makes up roughly 40 per cent, or $31.2 billion of that figure. What this indicates is that manufacturers are increasingly embracing technology. With this in mind, let’s take a look at five of the key technology trends influencing the Australian manufacturing landscape.

1) Big data, smart data

Mobile devices stand to improve efficiency for manufacturers.

14 DECEMBER 2014 Manufacturers’ Monthly

Big data has been a trend for some time now. But in recent years, there has been a shift in the way manufacturers think about the information at their fingertips. Having substantial

amounts of data is not enough. It’s how businesses analyse and give their staff access to that information that really matters. I like to refer to this as ‘Smart Data’. We’re going to see more manufacturing businesses invest in systems that help drive informed business decisions and allow employees to operate at their peak. This will give these companies substantial competitive advantage in the market. When businesses implement analytics into their operations and combine existing information with the insights from data provided, intelligent future actions can be identified. For instance, insights pulled from predictive analytics can significantly improve planning and procurement manmonthly.com.au

AM0614_000_VEG1

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Cutting-edge technology for level measurement. What morefor could you want? Cutting-edge technology level

measurement. What more could you want?

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New TECHNOLOGY decisions for manufacturers, helping them make more informed choices about how and where they invest their capital.

2) Mobility It’s easy to think that the shift to mobility is less important for manufacturers than other industries. After all, their assets, such as factories and warehouses, are static assets. But the most forward thinking manufacturers are already ensuring the digital revolution is making their work more efficient and productive. Leading manufacturers are using digital devices to control plant and equipment. Within manufacturing facilities they are often being used by staff to enable communication. Most manufacturers also have a sales team on the road and mobility is enabling them to access critical business information, wherever they are, from the device of their choice. Enhancing customer relationships through mobility extends to aftersales service for manufacturers, by enabling field technicians to be fully informed when conducting maintenance activities and warranty expirations. For example, having the access to customer service history-easily from mobile devices- helps technicians understand the customer’s history with the company before the call-out. Additionally, technicians can instantly refer to predictive Q&A responses approved by HQ when responding to customer enquiries on-site. Finally, following a service, technicians should be equipped to schedule the next appointment for a routine

Manufacturers will increasingly house systems like CRM and finance information in the cloud.

maintenance check from their mobile.

3) Software as a service We’re also going to see more manufacturing business migrate to the cloud. Many are already hosting their mail and data in the cloud. But increasingly, they will also house other essential businesses systems such as CRM and finance information in the cloud. This will allow manufacturers to more safely store critical business information, in a cost effective fashion. It is worth noting that managed services delivered through a cloud agreement not only optimises software upgrades, but also reduces security risk and disruption to the customers business. It also reduces the need for manufacturers to invest heavily on hardware, resourcing and infrastructure.

research suggests businesses need to invest more in skills development to help manage their robotic workforce. So in coming years, we’re likely to see manufacturers develop alliances with universities to allow them to gain access to the best and brightest talent so their robotic workforce is leveraged to its full potential.

5) 3D printing is coming of age The transformative potential of 3D printing is at its height in the manufacturing sector. It makes it much easier for businesses in this space to produce prototypes for new products, generate short-order runs for clients and to drive innovation in the sector. As the price of 3D printers becomes more commoditised we’re going to see manufacturers begin to explore the potential for this game-

changing technology to genuinely drive new ways of operating. While manufacturers will be familiar with many of these trends, it can be daunting to work out how to incorporate them in day-to-day business activities. So what’s the best way to build a business culture where there is an ongoing commitment in the enterprise to adopt new ways of thinking? I’m reminded of the old joke: Q: What’s the best way to eat an elephant? A: One bite at a time. It’s the same with new technologies. The idea is to build processes in the business so that new technologies are constantly being examined and assessed on a cost-benefit basis for their ability to add value. It’s also essential to work with trusted service providers that, rather than take a one-size-all approach, are prepared to build bespoke solutions that suit the business’s unique circumstances, while taking consideration of legacy systems. It’s a fascinating time in the manufacturing sector. Over the next few years we’re going to see the trends described above become deeply embedded in leading manufacturers’ operations. This will secure these agile, forward thinking enterprises’ position at the core of the Australian economy. [Bruce Minty is Business Development Manager at Pronto Software]. Pronto Software 03 9887 7770 www.pronto.com.au

4) The robotics revolution

The robotics trend can only continue.

16 DECEMBER 2014 Manufacturers’ Monthly

According to a report by professional services firm PwC and The Manufacturing Institute, 59 per cent of all manufacturers are currently using some form of robotics in their operations. This trend will only continue as robotics transforms the manufacturing sector, making it more efficient and productive. That won’t be news to most players in the manufacturing sector. But what’s really interesting about the robotics revolution, according to the report, is that it won’t necessarily mean a reduction in headcount for many businesses. In fact, the

3D Printing – watch this space!

manmonthly.com.au

MA1114_000_VEG

2014-11-18T14:43:13+11:00

The radar sensor for bulk solids Level measurement with bulk solids radar, making the impossible possible:

The radar sensor for bulk solids

The most modern radar level technology and a frequency range of 79 GHz has made the new VEGAPULS 69 radar the sensor of choice for bulk solids industries. This sensor is capable of measuring poorly reflecting bulk solids over long ranges, in narrow, or even segmented vessels.

Level measurement with bulk solids radar,▪ making impossible Measuringthe range: up to 120 mpossible: The most modern radar level technology and a ▪frequency of simplifies 79 GHz has made the new Very good range focusing: the setup VEGAPULS 69 radar the sensor of choice for bulk solids industries. This sensor is capable of ▪ Encapsulated antennas: measuring poorly reflecting bulk solids over long ranges, in narrow, or even segmented vessels. reliable results even with buildup • Measuring range: up to 120 m • Very good focusing: simplifies the setup ▪ One device for all bulk solids • One device for all bulk solids • Encapsulated antennas: reliable results even with buildup www.vega.com/vegapuls69

www.vega.com/vegapuls69

Looking Forward

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IndustryOVERVIEW Ai Group sees another tough year ahead While the Australian dollar is back to more sustainable levels, the manufacturing industry is still facing considerable headwinds as we move into 2015. Alan Johnson reports.

ITH the manufacturing industry’s barometer, the Ai Group’s (Australian Industry Group) monthly PMI (Performance of Manufacturing Index), in negative territory for most of 2014, very few in the industry are optimistic the environment will change substantially going into 2015. Innes Willox, Chief Executive of the Ai Group believes 2015 is going to be “another testing year” for the manufacturing sector. “The signs are that the economy in general, and as a result of that the manufacturing sector, will remain sluggish for some time to come,” he told Manufacturers’ Monthly. Willox said there are a few factors at play, with the sector going through a significant period of transformation which still hasn’t played out. The way Willox sees it, the industry is at the end of Act 1 of a three Act play. “The demise of the automotive sector, which hasn’t happened yet, still has to work through, and then there are changes to the structure and make-up of the resources sector, going from an investment and building phase to production, which will also impact on the manufacturing industry,” he said. While he welcomed the drop in the Australian dollar over the past few months, he warned that it will take some time to play through. “The economy as a whole is very sluggish, and if you take out resources exports, the rest of the economy is barely growing,” Willox said. “Plus we have China’s economy slowing, Europe in the doldrums, Latin America hasn’t come on as many people had thought, and the US is undergoing a very slow, grinding economic recovery, all of which will put pressure on Australia in its own way.” But on the upside, Willox pointed to our highly skilled workforce, our highly innovative companies with a

18 DECEMBER 2014 Manufacturers’ Monthly

Innes Willox does not support a natural gas reservation policy.

big focus on design, R&D, exports, the development of new products and the ability to move into global supply chains. However, unlike the federal government, Willox is not optimistic that the closure of our car industry in 2017 will have little impact on the economy. “We are seeing a gradual slowdown in the sector. The issue is whether the supply chains are able to stay as production winds down, which we are already witnessing in some cases,” he said. With over 3,200 companies in the supply chain in Australia, Willox said the question is how these companies make the transition. He admitted it does vary, depending on their reliance on the automotive sector, but said those who are heavily involved will find it very hard, if not impossible, to remain in Australia. “Already we are seeing companies moving their manufacturing facilities off-shore, closer to the markets in SE Asia – Malaysia and Thailand for instance – while others are working

hard to move into new sectors such as the defence and mining sectors or to build up the other parts of their businesses; for that’s where they will survive and thrive,” Willox said. He believes we are going to see enormous pressure on the automotive supply chain in Australia, “and they don’t have much time to find new products or new markets”. “Already companies, not in the automotive sector, are moving into value-add manufacturing. By that I mean taking advantage of Australia’s competitive strengths around the resources sector, around water and around our existing highly skilled workforce. Many feel they have to move to survive,” he said. When it comes to the controversial supply and the increasing prices of natural gas, Willox doesn’t believe a reservation policy, which is being suggested by the union movement, would work because it would be an inhibitor to investment. “We need investment in that sector,” he said. Willox instead believes we should be introducing a national interest

test, which wouldn’t be a reservation policy, but follow a similar approach to the US and Canada where before gas is exported, there would be a determination about the supply availability within Australia for domestic use, and then that product would be sold at the same price. “It’s not talking about price variation, it’s talking about supply,” he said. “We are already seeing rises in gas prices, and tightness of contracts, with a real possibility that parts of NSW, Sydney in particular, will run very short on gas through 2016-2017 under the current scenario, which would have a very significant industrial and economic impact.” Willox also believes the federal government should adjust the present industrial relations settings. “They are not right. The government is trying to move in the right direction, but they are being frustrated by the parliament. But at some point, for all our economic well-being, the government will have to move on a range of measures around unions’ right of entry, and the establishment of Greenfield sites,” he said. “We are not asking for the world, we are just asking for some balance brought back into the system, and to allow company managers to manage their companies. “The productivity commission’s enquiry into the Fair Work Act is presently with the Treasurer, and we would like to see that enquiry begin as quickly as possible, with a focus on the productivity requirements of the Act and the enhancements that could be made to the Act around productivity. But the later it’s left; it gets closer to the next election with less chance of a proper discussion. “As a high cost country, we desperately need to lift our productivity to remain competitive, and not just through IR, it can be through a whole variety of fields including skills, infrastructure, taxation regimes and manmonthly.com.au

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the like. But IR must be a key component of the equation.” Regarding the Australian dollar, Willox said there is no reason to think it will jump back up to over one US dollar, as it was a couple of years ago. “Barring any significant changes in the American economy, our view is that the Australian dollar will remain about where it is, or maybe slightly lower,” he said. “The reality is the Australian dollar is out of our hands; we can’t control its destiny, but we don’t expect it to move around too much.” Overall, Willox said 2015 is going to be another tough year for the manufacturing sector with the global economy quite slow. “Plus there’s a strong possibility that two new Free Trade Agreements, with China and the Trans-Pacific Partnership, will be signed next year which will have implications for Australia… plus the agreements with Japan and Korea coming into force,” he said. “So we will see manufacturers competing in an increasingly globalised environment.” “The key to success is developing niche value-add products, access global supply chains and finding new markets internationally…and hope that the Australian and global economies start their long path to recovery…and that the dollar remains low, for that’s the environment we are going to have to work in through 2015.” Willox was quick to praise the Federal Government’s Industry Innovation and Competitiveness Agenda, announced recently, saying it contains a sensible set of measures designed to lift productivity, encourage innovation and reduce red tape. “The Agenda addresses the need for rebalancing in our economy across industries to build an industrial base to ensure strength and resilience for the future,” he said. Willox said this is particularly important today with the mininginvestment boom winding down and commodity prices in retreat. “New sources of growth from other sectors, including manufacturing and services, need to resume their conmanmonthly.com.au

According to Innes Willox, Australia must find multiple sources of growth. tributions to economic development and the Competitiveness Agenda will help in that regard,” he said. “We are especially pleased with the range of measures aimed at stimulating the investment in new ideas and processes that are so fundamental to innovation-led improvements in productivity and competitiveness. “The proposals to build greater collaboration between Australia’s research organisations and the business community are particularly welcome as are the plans to lift the commercialisation of Australian research.” Willox also welcomed the Government’s commitment to five Industry Growth Centres to build on the success of the initiatives of the Entrepreneurs’ Infrastructure Programme. “It is vital that these centres are industry-driven, rather than researchdriven and have a clear rationale and purpose. There should be a focus on the outcomes of the network, rather than creation of a network per se,” he said. “This could be enhanced with a program designed to encourage the participation of small businesses and start-ups, and the creation of ‘linking organisations’ to facilitate the creation of partnerships between research organisations and industry. “The changes to the Employee Share Scheme for start-up companies

announced in the Agenda have the potential to improve the landscape for start-ups to attract talented employees and finance. We have some concerns that the eligibility criteria may be too tight and we will need to consult with member businesses on the design of the program.” On labour migration, Willox said the Government’s streamlining of 457 visas will help remove the compli-

“

Chinese enterprises must be required to compete on fair and non-discriminatory terms... ance burdens from businesses with a positive track record in using the program and put the focus rightly on the very few who misuse the scheme. Willox also welcomed reform to the VET system that would enable training to be industry-led, which would ensure that businesses can find or train employees in skills that will be relevant. “However we are concerned around the narrow range of indus-

tries that the Government has targeted for growth in training,” he said. “The announcement of the pilot program to provide 7,500 scholarships to small businesses in regional areas that employ and train 18-24 years is a sound addition to the established apprenticeship path.” Willow said Australia must find multiple sources of growth, rather than relying so heavily on resource and energy commodities as we have over the past decade. “A broader range of businesses need to be encouraged to step up investment, employment and productivity if we are to lift the quantity and quality of jobs and to improve incomes and living standards across the community. This rebalancing is important not only for the strength of the economy but also to improve its resilience,’ he said. Willox pointed to the latest Ai Group and World Economic Forum’s survey of Global Competitiveness Report which shows Australia’s relative Global Competitiveness Index has deteriorated since 2009-10, dropping continuously from a peak ranking of 15th place in 2009-10 to 22nd place in 2014-15. “So the need for reform is urgent,” Willox said. www.aig.com Manufacturers’ Monthly DECEMBER 2014 19

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Top 100 Manufacturers in

This time each year IBISWorld delivers Manufacturers’ Monthly something of a Christmas gift – a list of the top in proceeding pages, Alan Johnson investigates how the various sectors ranked on this year’s list and what the

VERALL, the data confirms the manufacturing industry is facing some tough times

ahead. Caroline Finch, an industry analyst with IBISWorld, said in 2014-15 the industry is forecast to grow just 0.5% in inflation adjusted terms (company data is not adjusted for inflation), and 1.8% without adjusting for inflation (comparable with company data). However, in the five years through 2014-15, it is predicted to get worse, with the industry forecast to decline 2.4% in inflation adjusted terms, growing 0.3% without adjusting for inflation. And in the five years through 2019-20, the manufacturing industry is forecast to decline 0.1% in inflation adjusted terms. “Looking at the data, one of the biggest areas on the top 100 list is one I call ‘mining winners’, which includes mining equipment manufacturers and to some extent chemical manufacturers, from our patchwork economy,” Finch told Manufacturers’ Monthly. According to Finch, the mining and industrial machinery sector has performed quite strongly over the past five years. Another on Finch’s category list is construction manufacturing. “I have them under a protected sub-heading because many of the components are really expensive to ship, or are too fragile to put into a shipping container,” she said. “The other sectors under this sub-heading are fabricated metal manufacturing and other metal manufacturing, which includes structural steel fabricators, aluminium windows and doors, which could get crumpled in a shipping container on their way to or from Australia.” However on the down side, Finch pointed out that these manufacturers are exposed to the trends in the construction sector, with only one downstream market. “What we saw coming out of the GFC in 2008, 2009 and 2010 was a lot of stimulus spending being directed 20 DECEMBER 2014 Manufacturers’ Monthly

towards educational institutions resulting in a burst of activity, and then winding back,” she said. “Though we are seeing construction indicators picking up in the current year.” On the other side of Finch’s ledger are the losers; the automotive industry. “In the view of many commentators it has been a long time coming. In the past few years the locally built cars have not been as popular in the domestic market as imported vehicles, and only Holden was able to reach export markets to a significant extent,” she said. “So it has always been a vulnerable industry.” Then there is the chemical industry, which has been making a lot of

explosives for the mining industry in recent years. However, Finch admitted it’s a bit of a patchwork industry in itself, with some sectors exporting high and importing low in terms of value add unit price. “For example pharmaceutical manufacturers, with Australia a significant producer of opiates, however we are importing a lot more soap then we ever used to, meaning our soap and cleaning compound manufacturers are doing particularly poorly, especially with several global players pulling out of Australia,” she said. She said other manufacturers moving their operations off-shore are the big energy users such as the aluminium refining industry, who have

Caroline Finch, an industry analyst with IBISWorld.

experienced a lot of volatility in the past five years. “We see this as a pattern, where an international company is faced with the decision of reinvesting in

Our top manufac Rank

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Company Caltex BP Australia Viva Energy Australia Fonterra Co-op Group Amcor ExxonMobil Australia Toyota Motor Corporation BlueScope Steel Sims Metal Management Orica Arrium Limited CSL Lion Nathan National Foods Perth Mint Coca-Cola Amatil Boral Visy Industries ConocoPhillips Australasia GM Holden Alcoa of Australia Incitec Pivot JBS Australia Murray Goulburn Co-op Ford Australia Orora

Rank

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23 27 25 32 28 26 30 29 41 — 36 31 40 39 37 46 67 51 42 44 — 59 45 35 43

Company MML Holdings Teys Australia Nufarm British American Tobacco Goodman Fielder Nestle Food Investments Inghams Enterprises Hanson Australia Holdings Carlton & United Breweries Sucrogen Mondelez Australia CSR Treasury Wine Estates Holcim Australia Ansell Asahi Holdings James Hardie Industries Unilever Australia Siemens Nuplex Industries Duluxgroup Johnson & Johnson BAE Systems Australia GlaxoSmithKline manmonthly.com.au

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rs in Australia

t – a list of the top 100 manufacturers in Australia. Here and s list and what the future holds for them. Australia or moving their operations elsewhere. Unfortunately they tend to go with the later,” she said. “We also see this pattern with metals manufacturing to an extent, which is also very energy intensive.” However the food industry marches to the beat of its own drum, according to Finch, in the same way agriculture machinery does. “It really does depend on the production volumes in Australia, which includes the processing industries such as fruit and veg, poultry and cheese processing,” she said. “It’s the performance downstream of the farmers essentially, whether they are having a good or bad year due to weather conditions, and raining or not.” Finch said it is striking to see how

many companies in the top 100 list are in the food industry, the biggest industry with around a quarter of the companies on the list. Regarding the rankings, Finch said it is no surprise to see petroleum companies at the top of the list. “They handle really high value products, however new refineries are opening up in the region which are now able to meet Australia’s strict standards on fuel,” she said. “There are now a couple of large sophisticated refineries in Indonesia, for example, which capture a lot of economies of scale, so they have cheaper production costs. “This in turn is seeing major players pulling out of Australia regarding petroleum refining, with Shell the most notable.”

According to Finch, the best performing area in the automotive sector is the motor vehicle body and trailer manufacturing industry which includes caravans, motorhomes and truck trailers.

op manufacturers Research by IBISWorld

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48 49 79 34 — 56 57 53 50 55 54 — 47 63 61 90 65 71 52 58 68 74 64 80 73

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Company

Rank

Prior Year

Company

Mars Baiada Poultry Aust Consolidated Food Investments Pfizer Australia ABB Group Manildra Group ResMed Holdings Adelaide Brighton BOC Simplot Australia Frito-Lay Australia Holdings Pact Group Bradken SunRice Bega Cheese Austal Philip Morris Parmalat Australia AstraZeneca Kimberly-Clark Pacific Holdings Thales Australia Boeing Australia Arnotts Biscuits Holdings ASC Pentair

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

66 85 78 89 75 83 99 84 95 81 86 88 94 109 93 — 82 116 91 97 102 — 101 92 103

Joy Global Australia Holding Company Ridley Owens-Illinois NH Foods Australia PACCAR Aspen Asia Pacific Aristocrat Leisure Cochlear Merck Sharp & Dohme (Australia) Australian Paper Qenos Holdings Bridgestone Brickworks Bayer Australia Roche Products Asaleo Care Norske Skog Industries Australia Warrnambool Cheese & Butter AGC Australia GUD Holdings Honeywell Fisher & Paykel Healthcare Australian Aerospace Weir Group (Australian Holdings) GWA Group

“Conversely the electrical component manufacturing sector is having a really weak year, mainly due to the slowing local car industry and often manufacturing generic parts, so they are facing a lot of import competition,” she said. Regarding machinery manufacturers in Australia, Finch expects agriculture machinery manufacturers to do a bit better than mining over the next five years as investment flows out of the mining industry. “We forecast capital expenditure in the mining industry to peak around now, and it looks like there could be a few challenging years ahead for those involved,” she said. Within the construction industry, Finch said the guttering manufactuing industry has been the highlight of that sector this year, mainly because of the cyclical recovery in residential housing. “However we are predicting the aluminium windows and doors sector to pull ahead next year,” she said. Australia’s Top 100 Manufacturers can be viewed online at www. manmonthly.com.au IBISWorld 03 9655 3881 www.ibisworld.com.au More on industry sectors follows: p.22 – Food & Groceries p.24 – Automotive p.25 – Plastics & Chemicals p.26 – Building & Construction p.27 – General Manufacturing

Manufacturers’ Monthly DECEMBER 2014 21

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Top 100MANUFACTURERS Food standing up to challenges As our largest manufacturing sector, the Food And Grocery business is a vital contributor to the wealth and health of Australia. Alan Johnson reports on the outlook for this sector.

contracting at the moment,” he said. HE Australian Food and Dawson said there is a lot of Grocery industry accounts structural change happening at the for over one quarter of total moment, driven both by external facmanufacturing and is one of the best tors and sector specific factors such performing sectors of the manufacas enhanced retail competition which turing industry overall. is driving structural change right up The Australian Food and Grocery the supply chain. Council’s (AFGC) CEO, Gary Dawson, On a positive note, Dawson said says it’s a slightly better picture for exports were up in the two largest the food and grocery industry than sub-sectors, meat and dairy. Driven general manufacturing, and pointed by the depreciation of the Australian to the organisation’s recent annual dollar in the past 12 months, they report. rose by 24.5% and 19% respectively. “While not as current as the monthly PMI survey, our annual report does show a picture of considerably more resilience than the overall manufacturing sector,” he told Manufacturers’ Monthly. Key facts from AFGC’s State of the Industry 2014 report on the food, beverage and grocery sector showed: • Industry turnover $114bn, up 0.9%; 201213 data • Direct employment 299,731, down 2,571; 2013-14 data • 45% of jobs are in rural and regional Australia; 2013-14 data • Industry made up of 27,469 businesses; Food exporters need to focus on premium products. 2013-14 data • Industry value-add “These are impressive numbers, $31.3bn; 2012-13 data with great potential to deliver jobs • R&D spend of $541.8m per annum; and growth in the future,” he said. 2011-12 data “Dairy prices have been histori• Total international trade $55.9bn cally high and are starting to come (up 7.3%); 2013-14 data off a bit which would have boosted • Food and beverage exports $21.9bn the value of dairy exports.” (up 13.5%). 2013-14 data In the meat sector, Dawson said While there was a big contraction the single biggest boost to exports in the industry in 2010-2011, around was of processed meat, which reflect7% in a single year, Dawson said it ed meat supply shortages in the US. has bounced back slightly. “There are a range of factors “Although there’s not strong there, but overall the trend now is growth there, none-the-less it’s a a positive one, with the data showing picture of some resilience, and is exports in 2013-14 across the certainly not a sector that is

22 DECEMBER 2014 Manufacturers’ Monthly

sector were up by more than 8%.” Dawson said the trade surplus for the food and beverage is around 9% per annum, and has been for each of the past four years, which is compounding growth. “There is now solid evidence that the industry’s trade performance has turned the corner, and we believe there is considerable upside there still, and that’s going to focus attention on competitiveness,” he said. “However, we won’t realise our full potential unless we address some of

the competitiveness issues in the domestic manufacturing scene, such as the key cost drivers; labour, utilities, transport and regulatory costs. These are all barriers to competitiveness.” Dawson believes the future for Australian food industry on the export front is through value adding and a premium product, rather than bulk commodity products. “In value added premium products there is a capacity to charge a premium price to reflect the higher manufacturing costs here,” he said. “But not withstanding that, there

AFGC CEO Gary Dawson is looking forward to 2015 with optimism.

will continue to be pressure on manufacturers to improve productivity and improve their overall competitiveness in order to compete effectively even in those premium categories.” Like many other Australian manufacturers, the food industry is a big user of natural gas and Dawson said the ever increasing price rises are threatening many companies’ competiveness. “This is a massive hit, and comes at the very worst time for the food industry,” he said. “We have had some relief on our electricity prices with the abolition of the carbon tax, which was very welcome. The tax was always lead in the saddlebag for food manufacturers.” However, he said the impact of higher gas prices will far outweigh the benefit of the removal of the carbon tax. Rather than call for quarantining gas, Dawson believes the answer is a combination of unlocking more gas supplies, by putting in place robust environmental safeguards to enable more gas supplies to be brought to market, and also addressing the problem of gas suppliers sitting on reserves through retention leases and not bringing them to market. He said both these issues need to be addressed urgently, along with market reforms to create a more transparent gas market on the east coast. “There is plenty of gas; it’s just a manmonthly.com.au

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matter of bringing it to market and users being able to access it,” Dawson said. He said another major issue for the food industry is the ever increasing number of Free Trade Agreements (FTAs) Australia has signed “If you look at the FTAs that we have had for a while, with Thailand for example, they have been a positive,” he said. “Plus the agreements we have made with Japan and South Korea will be net positive for the food sector, and China is still being negotiated and has great potential. “If we can achieve a good outcome with real commercial benefits in an agreement with China, then it will have broad and lasting benefits for the food sector in Australia.” China is an extraordinary market for Australian exporters, however Dawson said we have been losing market share there. “Australia’s share of food imports

Comparable sectors turnover (2012-13)

Source: Based on ABS Catalogue number 8155.0 and 7503.0 via The Australian Food and Grocery Council.

has dropped by close to half over the past decade reflecting China’s highly competitive market. Every food exporter in the world is trying boost their exports there because of

the growth in demand; unfortunately Australia is presently losing out to these other countries,” he said. “So we need a good outcome from the China FTA to improve market ac-

cess to reverse that contraction in our market share. There is considerable upside if we can achieve that.” Overall, Dawson said there are positive signs within the food and grocery manufacturing industry; he is optimistic 2015 will be positive for the industry. “It’s a sector that remains under intense competitive pressure, but there are many positive signs. In the medium to long term Australia has a competitive advantage in food production and the opportunity to value add in food processing in Australia is enormous, and in the medium to long term is a huge opportunity,” he said. “So we remain positive about the medium to long term prospects for the industry, even though it is immediate financial pressures are intense.” Australian Food & Grocery Council 02 6273 1466 www.afgc.org.au

Position of food companies in the Top 100 Research by IBISWorld

Rank

Prior Year Rank

4 13 15 22 23 27 29 30 31 32 33 35 36 37 39 42 44 51 52 53 56 60 61 64 65 67 68 73 77 79 93

— 15 14 21 24 27 32 28 26 30 29 — 36 31 39 67 42 48 49 79 56 55 54 63 61 65 71 64 85 89 116

manmonthly.com.au

Company Fonterra Co-op Group Lion Nathan National Foods Coca-Cola Amatil JBS Australia Murray Goulburn Co-op Teys Australia British American Tobacco Goodman Fielder Nestle Food Investments Inghams Enterprises Carlton & United Breweries Sucrogen Mondelez Australia Treasury Wine Estates Asahi Holdings Unilever Australia Mars Baiada Poultry Australian Consolidated Food Investments Manildra Group Simplot Australia Frito-Lay Australia Holdings SunRice Bega Cheese Philip Morris Parmalat Australia Arnotts Biscuits Holdings Ridley NH Foods Australia Warrnambool Cheese & Butter

Ownership

State

Revenue (000)

Local Foreign Local Foreign Local Local Foreign Local Foreign Foreign Foreign Foreign Foreign Foreign Local Foreign Foreign Foreign Local Foreign Local Foreign Foreign Local Local Foreign Foreign Foreign Local Foreign Foreign

NZ NSW NSW QLD VIC QLD NSW NSW NSW NSW NSW VIC NSW VIC VIC VIC NSW VIC NSW NSW NSW VIC NSW NSW NSW VIC QLD NSW VIC NSW VIC

20,541,338 5,228,600 5,119,900 3,295,479 2,947,000 2,600,000 2,273,850 2,217,100 2,150,613 2,141,035 2,100,000 2,007,800 1,894,300 1,809,691 1,798,900 1,636,359 1,573,745 1,337,325 1,330,700 1,320,100 1,250,000 1,200,215 1,181,779 1,152,720 1,145,701 1,136,216 1,120,003 997,313 879,827 842,577 611,344

Previous Year Revenue (000)

NPAT (000)

Previous Year NPAT (000)

17,164,717 5,067,900 5,175,100 3,236,815 2,390,152 2,196,488 1,960,981 2,172,400 2,092,066 2,064,536 1,840,000 2,097,300 1,820,500 1,820,715 1,738,600 1,560,351 1,566,260 1,314,547 1,285,000 851,205 1,050,000 1,165,877 1,204,436 1,069,109 1,013,460 983,682 949,267 996,064 716,701 674,914 498,577

143,550 -229,100 79,900 76,607 — — 999,214 -405,100 149,478 -24,578 — 208,700 71,400 117,703 -100,900 -156,108 57,841 138,928 — 3,471 — 41,959 36,410 29,730 66,055 522,915 56,420 65,975 17,613 59,414 21,276

656,489 -300,800 457,800 -39,021 29,396 — 691,009 102,500 107,554 -177,677 — 259,300 63,300 70,424 47,200 -495,427 43,132 126,638 — -12,049 — 26,383 49,553 32,265 25,445 428,881 38,770 59,952 -21,694 -20,403 7,490

Total Assets (000)

Previous Year Total Assets (000)

14,198,631 13,141,665 10,749,900 11,250,000 6,608,400 6,708,700 1,042,909 1,111,160 1,769,000 1,659,054 — — 3,272,224 3,072,079 2,213,200 2,776,800 1,658,061 1,614,172 1,974,620 1,914,606 — 2,000,000 14,467,700 14,724,200 2,264,100 2,254,700 1,687,401 1,902,376 3,860,500 4,128,200 2,457,170 2,444,693 829,445 643,063 1,099,111 985,954 — — 1,122,440 1,120,918 — — 811,457 860,908 1,161,093 1,119,063 840,407 966,979 548,637 549,221 455,874 507,254 805,428 675,966 1,891,329 1,764,813 423,091 410,626 318,781 230,102 311,257 306,564

Employees

Previous Year Employees

18,200 7,125 14,500 7,257 2,268 4,795 632 — — 8,000 9,000 1,847 — 3,242 — 2,500 1,581 1,700 — 4,000 1,000 2,655 1,916 2,250 1,700 — 1,847 5,000 658 1,736 —

17,500 6,534 15,154 6,701 2,100 4,500 1,200 — — 8,000 7,890 1,833 2,188 3,341 — 2,500 1,581 2,000 — 3,350 800 2,697 2,141 2,119 1,629 705 1,427 3,600 649 1,649 424

Manufacturers’ Monthly DECEMBER 2014 23

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Top 100MANUFACTURERS Auto industry prepares to meet its maker Saying 2014 wasn’t a good year for Australian car making is putting it very mildly. So what will happen to component suppliers after the car makers shut up shop? Is there a future for them? Alan Johnson reports.

ITH the car industry effectively closing its substantial doors in 2017, the push is on to transition as many automotive component manufacturers (and their workers) into as many other areas of manufacturing as possible. History shows that such transitions are difficult processes for companies. However, Ai Group’s Director - South Australia, Stephen Myatt, who is working closely with the group’s members in the car industry, is optimistic a large number will be able to diversify. He told Manufacturers’ Monthly there are three different categories of manufacturers involved. “First are the multi-national component companies whose sole task is to supply parts to automotive manufacturers, and if there are no automotive manufacturers here then they won’t be here,” he explained. “On face value, you’d think that would apply to all the multi-national component companies, but in these circumstances there are some who are allowing their local subsidiaries to search out other opportunities in Australia. That would be the second category.” Myatt said the third category includes the Australian-owned companies. “These companies are very keen to diversify their capabilities into non-automotive areas and some of

them have been working at that process for a considerable period of time,” he said. “I know of at least one company which has had two or more people working full time on the diversification project for over 18 months. “They are confident they have some ideas which they will be able to bring to fruition, but at this stage it’s a case of waiting to see, with the closure still a couple of years away; not until 2017.” However, this transition to new areas is making many non-automotive manufacturers nervous. Myatt said they are worried this diversification of automotive component manufacturers might mean they diversify into their area. “We have been talking to the Government to ensure that any diversification is into new areas of opportunity, and not just into existing markets, which will introduce competition and cut margins,” he said. The Government has established a $155m Growth Fund to support employees, businesses and regions affected by the closure of Australia’s car manufacturing operations. The fund supports initiatives to assist workers transition to new jobs; businesses find new markets and invest in capital equipment; and regions invest in infrastructure projects. Myatt said these grants are vital for this transition to work.

“The two grants that are of interest to us are the ones that apply specifically to automotive component companies to help them diversify,” he said. “The other grant that is important is for non-automotive manufacturing companies who can accelerate their growth plans, so they are in the best position possible to take up automotive workers who are looking for new opportunities.” Myatt said there are a number of companies in South Australia, not in the car industry, who are looking very seriously at that program to accelerate their growth plans. While it’s too early for feedback, he said many companies are working feverishly on their propositions. “Companies in South Australia are very aware of the programs, and those who have a viable proposition are working hard towards putting it together,” he said. Myatt said there has been a strong push in the region to move companies into high-value manufacturing.

“Over the past three or four years we have worked closely with Professor Goran Roos, an international authority on business model Innovation,” he said. “He has been working hand in glove with us to assist companies, on an individual basis, with business model innovations in a high-cost, high-wage, high currency economy. “We have been working with him, putting companies through pretty intensive courses to completely restructure business models. “Roos believes our sweet spot in manufacturing, going forward, is products that are low-volume, highly complex, highly variable, and highvalue added.” Nevertheless, said Myatt, there will be a significant hit when Holden closes its doors in 2017. “The Mitsubishi closure was in an environment where we still had Holden and Ford. Those workers had the opportunity to transition into the supply chain or other manufacturers, but when Holden goes the industry is gone,” he concluded.

Position of auto companies in the Top 100 Research by IBISWorld

Rank

Prior Year Rank

7 19 24 80 87

6 17 22 75 88

Company Toyota Motor Corporation GM Holden Ford Australia PACCAR Bridgestone

24 DECEMBER 2014 Manufacturers’ Monthly

Ownership

State

Revenue (000)

Foreign Foreign Foreign Foreign Foreign

VIC VIC VIC VIC SA

8,517,764 4,153,707 2,918,590 834,997 697,084

Previous Year Revenue (000) 9,011,373 4,114,900 3,207,460 894,100 688,439

NPAT (000)

Previous Year NPAT (000)

Total Assets (000)

Previous Year Total Assets (000)

Employees

Previous Year Employees

-437,295 -538,146 -266,724 99,601 21,421

144,533 -160,802 -141,429 112,637 14,996

2,568,085 1,887,927 1,088,219 1,149,729 443,286

2,790,716 2,317,765 1,245,236 1,135,592 429,171

— — — 778 —

— — — 822 — manmonthly.com.au

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Setting the scene for future success While there has been a decline in manufacturing in general, plastics and chemicals has fared better. As Alan Johnson writes, the sector is positioning itself for future opportunities.

CCORDING to Samantha Read CEO of Plastics and Chemicals Industries Association (PACIA), the plastics and chemicals industries are proactive and are well positioned to take advantage of a range of factors, particularly population growth and economic growth in our region. “About 12 months ago we produced a strategic industry roadmap, where the authors looked at growth opportunities for our industry both domestically and in the region,” she told Manufacturers’ Monthly. “Areas they highlighted included agriculture and food, mining, healthcare, building and construction, and materials recycling, which are the industries we play a key role in the value chain to deliver into these areas.” She highlighted the fact that the Australian chemicals and plastics industries are critical enablers and solution providers to 109 of Australia’s 111 industries. “Investment and innovation in the

Samantha Read, CEO of PACIA. Australian chemistry industry also has the power to multiply through these supply chains, exponentially increasing benefits,” Read said. “Our industry is proactive in positioning itself to take advantage of these opportunities. Because we are embedded in so many supply chains in Australia, in industries that are

growing, I think the picture is a little bit different for our industry.” While rejecting the phrase ‘environmental vandals’, Read admitted the plastics and chemicals industries do get confused with how the products are used and disposed of. “Improving the recognition of our industry as a valuable and a responsible part of the community we operate in is really important and is something the industry works hard at,” she explained. “A key part of this is the need to make sure the community understands that the products of the plastics and chemicals industries are vital to Australia’s economy and the quality of life we have.” She pointed to the humble milk bottle as a vital component to the distribution of fresh milk every day; and also highlighted the industries improvements in health and safety. “We have just released a report which looks at the health and safety performance of the industry over the past ten years,” Read said.

“We have had a decade of continuous improvement of health and safety performance within the industry with over 40% reduction in incidents over that period. A tremendous result.” While Read remains optimistic, one major issue facing the plastics and chemicals industries, probably more than most, is the unprecedented changes in Australia’s gas market. She explained that PACIA is working with the federal government looking at what can be done to address the market issues that exist. “We don’t support a reservation policy as we don’t believe it would address the challenges we have,” she said. “Our three key asks in the policy area are to ensure we have adequate supply, so increasing the supply and availability of gas, secondly making sure there is sufficient competition in the market, and thirdly making sure we have transparency in the market, and is operating as a market should. “It’s early days, but we are pleased >>

Position of chemicals companies in the Top 100 Research by IBISWorld

Rank 1 2 3 6 10 12 18 21 28 46 48 50 54 59 69 81 84 86 89 90

Prior Year Rank

Company

1 2 3 7 10 12 18 19 25 — 45 43 34 50 52 83 95 86 109 93

Caltex BP Australia Viva Energy Australia ExxonMobil Australia Orica CSL ConocoPhillips Australasia Incitec Pivot Nufarm Nuplex Industries Johnson & Johnson GlaxoSmithKline Pfizer Australia BOC AstraZeneca Aspen Asia Pacific Merck Sharp & Dohme (Australia) Qenos Holdings Bayer Australia Roche Products

manmonthly.com.au

Ownership

State

Revenue (000)

Foreign Foreign Foreign Foreign Local Local Foreign Local Local Local Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign

NSW VIC VIC VIC VIC VIC WA VIC VIC NZ NSW VIC NSW NSW NSW NSW NSW VIC NSW NSW

24,730,148 22,579,000 21,925,700 10,241,000 6,975,300 5,856,697 4,270,250 3,463,200 2,303,460 1,540,265 1,467,554 1,465,621 1,317,234 1,212,021 1,109,007 828,972 778,542 715,858 646,649 642,943

Previous Year Revenue (000) 23,566,858 23,057,000 22,197,800 8,756,000 6,774,500 5,438,142 4,193,492 3,541,300 2,218,822 1,554,718 1,382,263 1,535,594 1,892,941 1,246,113 1,242,467 762,599 809,036 688,852 552,966 614,536

NPAT (000)

Previous Year NPAT (000)

530,028 56,777 374,000 270,000 -69,900 -275,500 553,000 454,000 601,600 402,800 1,385,642 1,284,290 1,038,496 629,870 372,000 510,700 80,999 72,594 48,636 41,317 48,891 71,373 35,631 34,458 3,415 -5,566 209,932 281,376 52,360 75,807 100,161 101,129 33,465 30,751 -26,106 -101,648 18,160 5,191 24,392 22,776

Total Assets (000)

Previous Year Total Assets (000)

Employees

Previous Year Employees

6,020,870 15,085,000 4,672,200 23,676,000 8,603,300 6,655,429 16,464,677 7,683,800 3,371,669 1,114,943 942,332 1,542,303 1,770,735 2,546,074 517,450 1,388,046 655,632 895,330 385,234 289,437

5,385,636 12,683,000 4,871,400 19,493,000 7,623,600 6,333,562 16,573,042 7,013,400 2,801,268 1,168,007 821,916 1,549,749 1,802,780 2,441,707 489,246 1,228,182 555,877 806,520 315,211 248,012

3,638 7,213 — 1,929 14,500 12,196 792 5,286 — 1,900 1,600 — 1,200 — 888 837 720 697 — 337

3,610 7,640 — 1,831 15,000 11,285 — 5,242 3,400 1,900 1,600 1,479 1,356 — 876 823 805 724 — 357

Manufacturers’ Monthly DECEMBER 2014 25

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Top 100MANUFACTURERS to see a proposed gas pipeline from the NT to the East Coast, and governments are coming together to bring on new supply.” In a bid to improve the industries’ success rates in bringing research through to commercialisation PACIA recently launched the Chemicals and Plastics Innovation Network and Training Program. Read said the association has already seen a tremendous response from industry to this initiative. “This is recognition of the vital importance of strong collaboration

between academia, the research community and industry in helping to drive innovation,” she said. The role of innovation in helping to create competitive advantage for the Australian chemistry industry cannot be overstated. “Australia’s extremely valuable technology and research base relies on the strong interconnectivity of manufacturing with innovation. If we want the chance to make the next breakthrough technology in Australia tomorrow, we need to be investing in manufacturing today,” Read said.

The Program is led by Monash University and PACIA, and underpinned by support from the Victorian Government. It will have an initial investment of $5.9m including in-kind support, in an innovative co-founding partnership between over 20 industry participants, the State Government and academia. “Basically PHD students from Monash University are effectively placed into the companies and will work directly with the companies on different research projects,” said Read.

She added that she was very pleased with the contents of the Agenda on a couple of fronts. “We were particularly pleased to see the viable contribution of science and technology in driving our competitive advantage,” she said. “We were also pleased to see the government recognise the need to reduce red tape and look at deregulation issues in our industry.” PACIA 03 9611 5400 www.pacia.org.au

Building looks to a future of IR harmony Manufacturers within the building and construction sector claim they face a unique problem. Alan Johnson reports on their prospects of finally overcoming this obstacle.

ANUFACTURERS who supply the building and construction industries face the same macro-economic headwinds as other Australian manufacturers. However, they also have to overcome incomparable trade union impediments to productivity. However Mike Kane, CEO & Managing Director of Boral Limited, is optimistic the present Royal Commission into Trade Union Governance and Corruption is recognising these impediments to real productivity improvements and will deal with them. Speaking at CMIC14 (Cement Concrete Aggregate Australia Conference) in September, Kane highlighted how unproductive labour entitlements in the construction industry are costing Boral’s concrete business;

and costing other suppliers in the industry too. “In Melbourne, for example, there are 26 rostered days off (RDOs) per year, where the Construction, Forestry, Mining and Energy Union (CFMEU) controlled sites shut down. Most other sites are operational because they have built-in flexibility with their RDOs – if they have them – to ensure the entire job doesn’t shut down,” he said. “But because all work stops on the CFMEU controlled sites, demand from our affected metro concrete plants is approximately 50% less on RDOs than other Mondays. However, this only impacts us when Boral is allowed onto these sites.” Kane described this as an enforced inefficiency, at affected operations, of over 5% per annum compared to what

is possible, with weekend lock downs impacting in a similar way. He explained that there are five lockdown weekends each year outside the Easter and Christmas breaks, with demand on the Friday before and Tuesday after the lock down 50% less than normal Fridays and Tuesdays. “This is the equivalent of an enforced inefficiency at Boral’s affected operations of over 2% in any year compared to what is possible.” he said. Kane also pointed to the eight additional days taken after 4 January and between Easter and the following weekend in an average year, resulting in an enforced inefficiency of a further 2% compared to what’s possible. “All up, our concrete operations in

metro Melbourne are almost 10% less efficient than they would otherwise be because of the extra days that the major construction industry doesn’t work,” he said. He says the embedded practices in Melbourne are worse than other cities but still in Sydney there are 14 RDOs per year where the CFMEU controlled sites shut down because everyone is taking a coordinated rostered day off. This, Kane said, is the equivalent of an enforced inefficiency at Boral’s concrete operations of between 2 and 3% per annum compared to what’s possible. He said the construction industry needs to recognise the problems. Boral www.boral.com.au

Position of building companies in the Top 100 Research by IBISWorld

Rank

Prior Year Rank

8 16 34 38 40 43 58 88

8 13 41 40 37 51 53 94

Company BlueScope Steel Boral Hanson Australia Holdings CSR Holcim Australia James Hardie Industries Adelaide Brighton Brickworks

26 DECEMBER 2014 Manufacturers’ Monthly

Ownership

State

Revenue (000)

Local Local Foreign Local Foreign Foreign Local Local

VIC NSW NSW NSW NSW NSW SA NSW

8,171,800 4,496,800 2,016,300 1,805,300 1,774,388 1,617,909 1,232,700 674,249

Previous Year Revenue (000) 7,488,700 4,219,300 1,678,700 1,696,600 1,805,580 1,435,816 1,192,800 614,342

NPAT (000)

Previous Year NPAT (000)

Total Assets (000)

Previous Year Total Assets (000)

Employees

Previous Year Employees

-82,400 173,300 108,200 88,100 175,700 107,336 151,100 102,755

-107,100 -212,100 106,400 -150,000 83,958 49,083 153,000 85,165

7,518,900 5,559,100 4,171,300 2,004,900 1,823,879 2,272,387 1,633,700 2,468,600

7,330,800 6,316,400 3,507,200 2,032,700 1,942,131 2,279,615 1,613,100 2,373,103

— 8,953 — 2,985 3,503 3,140 1,300 1,478

17,063 12,610 — 3,218 3,503 2,738 1,600 1,483 manmonthly.com.au

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2014-11-19T07:43:35+11:00

Weathering the storm While this year’s industry surveys have been more negative than positive, there are still a high number of manufacturers who are bucking the trend, writes Alan Johnson.

NWARE Australia, a leading manufacturer of specialist tapware and safety deluge equipment, is one such company. The company’s Managing Director, Adam Degnan, said the company does not compete on price as a priority but on providing comprehensive quality solutions. “Our 75-year history and the strong reputation of our core products for schools and hospitals have stood us in good stead,” he told Manufacturers’ Monthly. The company recently announced its largest export delivery to date, to the $US10.8b Ma’aden aluminium complex in Saudi Arabia, where it is delivering more than 700 of its Australian designed and manufactured emergency safety showers, along with

associated safety equipment, to construction and engineering company Hyundai. “Gaining recognition and accolades from a company such as Hyundai has already seen us receive an order from another company for identical safety systems for a similar refinery in the Middle East. We have also seen an increase in Request For Tenders for overseas projects,” Degnan said. “However probably the most pleasing aspect is that Hyundai has contacted us…with the possibility of involvement in two further projects... in the Middle East.” Enware Australia 02 8536 4000 www.enware.com.au

Manufacturing employment, February 1994 to February 2014 (’000)

Source: ABS, Labour Force, Australia, Detailed, Quarterly, cat no. 6291.055.003, trend, via The Department of Employment.

Position of general manufacturers in the Top 100 Research by IBISWorld

Rank

Prior Year Rank

Company

55 94 20 82 11 91 74 66 98 85 49 72 63 83 97 95 96 76 70 26 92 25 78 75 14 57 45 9 71 17 99

— 91 20 99 11 — 80 90 101 81 35 74 47 84 — 97 102 66 58 23 82 — 78 73 9 57 44 5 68 16 92

ABB Group AGC Australia Alcoa of Australia Aristocrat Leisure Arrium Limited Asaleo Care ASC Austal Australian Aerospace Australian Paper BAE Systems Australia Boeing Australia Bradken Cochlear Fisher & Paykel Healthcare GUD Holdings Honeywell Joy Global Australia Holding Company Pty Ltd Kimberly-Clark Pacific Holdings MML Holdings Norske Skog Industries Australia Orora Owens-Illinois Pentair Perth Mint ResMed Holdings Siemens Sims Metal Management Thales Australia Visy Industries Weir Group (Australian Holdings)

manmonthly.com.au

Ownership Foreign Foreign Foreign Local Local Local Local Local Foreign Foreign Foreign Foreign Local Local Local Local Foreign Foreign Foreign Foreign Foreign Local Foreign Foreign Local Foreign Foreign Local Foreign Local Foreign

State

Revenue (000)

Previous Year Revenue (000)

NSW WA WA NSW NSW VIC SA WA QLD VIC SA NSW NSW NSW AUK VIC NSW NSW NSW NSW NSW VIC VIC NSW WA NSW VIC NSW NSW VIC NSW

1,270,607 600,219 3,694,100 821,171 6,162,600 637,165 920,570 1,145,271 583,711 775,793 1,466,214 1,024,777 1,153,982 807,792 587,957 596,703 589,848 904,024 1,097,003 2,670,261 626,515 2,675,800 878,300 907,651 5,179,759 1,236,445 1,554,472 7,165,400 1,034,929 4,400,000 580,431

1,034,130 562,466 3,276,900 588,000 6,410,200 622,206 803,768 928,828 582,766 784,858 1,890,475 907,370 1,332,022 755,759 524,409 597,035 575,292 979,745 1,129,683 2,828,565 804,276 1,732,100 871,600 919,169 5,865,660 1,129,378 1,429,391 7,255,700 977,665 4,100,000 618,852

NPAT (000)

Previous Year NPAT (000)

455 22,556 259,500 107,200 -694,700 23,056 9,862 31,548 25,415 -26,555 61,915 75,679 21,480 93,709 90,851 17,684 81,488 28,767 24 95,982 -78,898 -72,200 33,700 -27,144 17,220 326,850 44,471 -88,900 77,981 — 56,244

-3,647 7,306 139,700 45,507 57,700 -39,979 14,660 35,870 20,910 -20,302 105,057 61,558 66,937 132,563 72,129 31,464 74,684 35,357 77,756 108,710 -194,398 -50,200 -26,600 16,405 25,704 280,307 82,687 -467,300 44,683 — 66,601

Total Assets (000)

Previous Year Total Assets (000)

Employees

Previous Year Employees

1,332,043 212,580 5,799,300 873,284 8,611,600 752,983 619,644 911,297 572,536 919,380 1,182,848 1,205,592 1,530,277 789,036 590,047 443,020 627,570 784,784 2,280,028 1,629,452 939,614 2,754,000 857,600 934,266 3,023,516 1,697,470 1,045,428 2,649,400 1,129,987 — 948,039

1,321,287 184,465 5,721,600 724,787 8,931,400 677,964 616,776 944,618 478,010 877,623 1,325,050 1,211,514 1,614,611 765,260 579,069 421,698 540,693 832,926 2,143,251 1,623,778 1,016,366 2,430,800 934,700 941,628 2,572,298 1,537,315 968,633 2,917,400 1,017,771 — 861,816

2,838 2,200 — 2,173 10,078 — 2,400 — — 1,344 — 3,103 — — 3,012 1,437 1,500 1,581 1,256 — — 5,500 1,599 2,238 363 2,431 — 6,000 — 9,600 1,215

2,528 2,000 — 2,135 11,007 — 2,270 4,269 — 1,377 — 3,188 5,800 2,531 2,758 1,474 1,500 1,670 1,241 — — — 1,741 2,471 350 2,367 2,107 6,400 — 9,600 1,500

Manufacturers’ Monthly DECEMBER 2014 27

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Efficient MANUFACTURING Going green can make you money In the current challenging economic conditions many manufacturers are focusing increasing attention on the efficient use of resources, including energy and materials, as a key strategy to reduce costs and maintain or enhance their competitiveness. Hartley Henderson writes.

CCORDING to the Australian Industry Group’s (Ai Group) Manager National Environment Services, Jason Walker, the potential productivity gains from implementation of practical resource efficiency initiatives onsite are substantial for companies of all sizes. “Exposure to rising electricity costs can be reduced through a range of initiatives including upgrading production equipment to improve productivity and reduce energy use, as well as changing lighting and compressed air systems,” he told Manufacturers’ Monthly. “The Ai Group has been helping companies through the delivery of a range of industry support programs including the Resource Efficiency Assist Program in Victoria (supported by Sustainability Victoria’s Smarter Resource Smarter Business Program) and South Australia (supported by the Zero Waste Industry Program). “We have conducted over 190 energy and resource efficiency assessments nationally across a wide range of manufacturing facilities and almost all were found to have opportunities to improve their energy performance by at least 12-15 percent. Impressive savings are also being identified and made by companies that are investing in materials efficiency.” Walker believes that with raw material inputs continuing to increase as well as increases in energy costs, including the unprecedented changes we are seeing with Australia’s gas markets on the East and West Coasts, which will also result in higher gas prices, companies of all sizes should be looking to be more resource efficient businesses. Ai Group’s Environment and Energy team has a range of online tools and case studies as well as onsite assistance to help companies identify opportunities. They can also assist 28 DECEMBER 2014 Manufacturers’ Monthly

The Rae-Line Group made the decision to go 100 per cent solar. you to take advantage of government assistance programs if available.

Carpet industry action Victoria Carpets is a successful and well established manufacturer of high quality wool, wool-blend and synthetic broadloom carpet in the Australian residential and commercial markets. The company has some 200 fulltime employees at two manufacturing sites in Victoria (Bendigo and Dandenong), and has invested over $30 million to improve competiveness in all aspects of its operations. Accreditation has been achieved to ISO 9001 QAS (Quality Assurance Systems) and ISO 14001 EMS (Environment Management Systems). Environmental and OH&S Manager, David Bentley, says energy, water, wastes and emissions are continuously monitored against objectives and targets leading to development of projects to drive continuous improvement. “At our Bendigo mill for example, energy audits clearly highlighted lighting as a major use of electricity (27 percent), and other monitoring emphasised seasonal variation in gas usage primarily during colder months

when large heaters are used to heat the factory,” he said. “A project was developed to replace all lighting with the latest technology LED lighting in tubes and high bay configuration, and Skylight panelling and Lux controllers were installed to automatically turn lights on or off depending on daylight levels. Also, large inefficient gas

“

Practical resource efficiency initiatives can benefit companies of all sizes… heaters were replaced with the latest technology overhead radiant heaters throughout the mill.” Bentley says that further significant benefits flowed from a project that involved upgrading a key piece of equipment in the wool dyeing process. “A decision was taken to replace large steam coils with direct gas

burners in the dryer as well as fit the dryer with a moisture control system to automatically measure the moisture levels of the dried wool and provide feedback to the control system to adjust parameters as required. “As a result, significant benefits have flowed from converting a standard process using a secondary energy source (steam) to a much higher efficiency primary energy usage (gas),” he explained. “Savings from these projects alone equate to over $150,000 per annum and demonstrate the very real practical improvements that can be made if the principles of sustainability are used as part of everyday site management and there is a strong focus on continuous improvement.” Other resource efficiency projects undertaken by Victoria Carpets include the introduction of new procedures to recycle rinse water in the dyeing process. Bentley advises that this has resulted in a saving of some 15,000 kilolitres of water per annum and a 50 percent reduction in water costs and trade waste fees.

Free power objective The Rae-Line Group, employing 75 people, has facilities in the Melbourne suburb of Kilsyth and also at Yatala in Queensland manufacturing OEM truck trim, canvas seat covers, marine seating and trimming, as well as large scale sports venue critical fall height padding. The company’s Environmental Coordinator, Anthony Regan, says over $600,000 has been invested in projects to improve environmental sustainability through resource efficiency, and a key project was to go 100 percent solar by installing Victoria’s second largest privately owned solar power system. “At a cost of $480,000, of which $85,000 was covered by government grants, this 125KW PV solar system manmonthly.com.au

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Victoria Carpets’ energy usage, water usage, wastes and emissions are continuously monitored. will offset annual CO2 emissions from the electricity use of 15.3 homes, and will meet all of our power requirements,” he said. “While the current costs for this system equate to previous electricity bills, there is one big difference: this system will be paid off in seven years after which the business will run on free power. Other resource efficiency projects include replacing all halogen high bay lights with energy efficient LED lights, and increasing the amount of recycled cardboard and paper from 40 percent to 100 percent. Also, as part of a move to paperless operations, we are investigating replacing paper used in the production process with electronic devices such as tablets. “In addition, Rae-Line also regularly reviews product designs and processes to determine whether different solutions will save the company and its customers’ time, energy and money. For example, changes to the design of a truck interior trim panel resulted in decreases in raw material used, and in customer fitting time, leading to a combined supplier/customer saving of around $100,000 per annum.” Regan points out that dashboard displays have been developed that include

KPI’s for various areas such as quality, the amount of energy consumed, waste produced and the level of recycling. “We place a lot of emphasis on staff environmental education and involvement with a focus on lean thinking and being energy and resource conscious,” he said. [Hartley Henderson has been a regular contributing writer to Manufacturers’ Monthly for the past eight years, covering industry developments in Victoria and South Australia. Prior to that, he held senior positions in government, semi-government and business enterprises and was National Program Director with the Productivity Promotion Council of Australia]. Rae-Line 03 9728 8300 www.rae-line.com.au Victoria Carpets 03 9794 5855 www.victoriacarpets.com.au Ai Group’s Environment and Energy team 1300 733 752 www.aigroup.asn.au/environment

Victoria Carpets has invested over $30 million to improve competitiveness in all aspects of its operations.

manmonthly.com.au

Manufacturers’ Monthly DECEMBER 2014 29

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Plant & MACHINERY MAINTENANCE Stop equipment failure in its tracks Broken equipment means wasted time. And wasted time costs money. Thermal imaging technology lets manufacturers predict equipment failure and keep wasted time to a minimum.

REDICTIVE maintenance (PdM) and reliability centred maintenance (RCM) programs at manufacturing facilities regularly use thermal imaging cameras for inspecting mechanical and electrical components. Nearly all electro-mechanical equipment becomes anomalously warm before it fails, making thermal imaging cameras effective diagnostic tools in the manufacturing environment. Inspections using infrared cameras can find most problems before failure occurs. In many cases the time to failure can be projected, enabling convenient scheduling of pre-emptive repairs. This practice, called predictive maintenance, enhances both productivity and safety. Thermal imaging cameras play a major role in PdM programs in manufacturing plants, electric power transmission and distribution systems, chemical plants, paper mills, and numerous other industrial operations. Thermal imaging cameras are

Conveyor belt rollers showing overheating. also ideal for monitoring objects and arterials that present diagnostic thermal profiles, such as electricity transmission and distribution systems, material in containment vessels and pipelines, materials and associated equipment during the manufacturing

process, and breaches in security. Other well-regarded inspection tools include human senses, vibration analysis, oil analysis (tribology), and ultrasound analysis. However, infrared thermal inspections are accurate, rational, intuitively interpretable,

non-destructive, non-invasive, noncontact, and fast. They provide images and data that are immediately usable in reports, and can be easily archived to maintain a trending study of performance, which in turn may be used to project time-to-failure, enabling optimal scheduling of maintenance (based on actual operating condition) and preempting catastrophic failure. An infrared image that integrates accurate temperature data provides maintenance experts with crucial information about the condition of all kinds of equipment. As a non-contact measurement tool that also makes invisible heat issues visible, thermal cameras let technicians inspect production equipment more safely even at peak operation. Thermal imagers can also help optimise the production process itself and monitor quality control. FLIR Systems Australia 1300 564 230 www.flir.com

Thermography and manufacturing THERMOGRAPHY used to be expensive, difficult, and primarily used by large industrial facilities and the military. These days, it’s become much more affordable, easier to use and more broadly applied. Since thermal imagers work by producing thermal (heat) pictures of equipment, it is possible to immediately see the benefits. In one pass through a facility, you can usually find at least one component about to fail. Thermal imagers are typically used for predictive maintenance and troubleshooting, and sometimes during installation in manufacturing facilities. For predictive maintenance, thermal images of key units (panels, drives, motors, etc.) are taken at least once

30 DECEMBER 2014 Manufacturers’ Monthly

a year, and compared each time. Hot spots that weren’t there last time indicate potential problems to investigated before they cause failure. Software on the thermal imager helps align the images time after time and ensure consistent comparisons. For troubleshooting, taking a thermal image of a malfunctioning unit can often identify the source of the problem. For example, electrical hotspots can tell you which phase or connectors to check and motor hotspots can narrow the issue down to bearings. After repair, the problem can be followed up with another thermal image as a check. Principal thermal imaging applications:

• Electrical power distribution systems including three-phase systems, distribution panels, fuses, wiring and connections, substations and electrical vaults. • Electro-mechanical equipment including motors, pumps, fans, compressors, bearings, windings, gear boxes and conveyors. • Process instrumentation including process control equipment, pipes, valves, steam traps and tanks/vessels. • Facility maintenance including HVAC systems, buildings, roofs and insulation. Fluke Australia 02 8850 3333 www.fluke.com.au

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Warehousing& FORKLIFTS 3-wheeled electric forklifts

ARB 4x4 Accessories now runs a fleet of five 1.8 tonne, electric forklifts.

Battery-electric forklifts

HE manoeuvrability and ease of use of Toyota’s batteryelectric forklifts are helping a busy West Australian 4x4 vehicle accessories company grow its business in the state. ARB 4x4 Accessories runs a fleet of five 1.8-tonne Toyota 7FBE18 battery-electric three-wheel forklifts at its purpose-built warehouse in Canning Vale, and has used Toyota forklifts exclusively at the facility since it opened in 2010. ARB Corporation WA state manager Rick Long said ARB offers a large range of 4WD accessories to wholesale and retail markets via its branded stores and dealers located around Australia and overseas. “We deal with everything from protective and safety equipment like canopies, winches and bull bars to camping accessories,” Long said. “These products are often ‘ugly’ freight: nearly everything we do involves over or under-sized pallets making for an interesting and fairly tight warehouse layout. “The Toyota 7FBE18’s we use are perfect for this type of storage facility as they are light and nimble so our operators can easily manoeuvre them around. “The two forklifts we most recently commissioned were specially fitted with six-metre masts to take full advantage of the warehouse’s height.”

manmonthly.com.au

The 1.0 to 2.0-tonne 7FBE range of three-wheel battery-electric forklifts features the ability to make pivot turns, making them an ideal choice when operating in tight spaces while offering the proven performance, reliability and operability of alternating current (AC) power technology. Ergonomic features include a fourway adjustable suspension seat and rack and pinion hydrostatic power steering, while operator safety is enhanced by features like the System of Active Stability. All of ARBs Toyota forklifts are serviced by the local Toyota Material Handling branch in Kewdale. TMH Kewdale area sales manager Danny Carbery said ARB 4x4 Accessories’ application of its Toyota 7FBE forklifts was a perfect demonstration of their superior handling capabilities for operators dealing with confined spaces and unusual-shaped freight. “The tight turning radius of the 1.0 to 2.0 tonne 7FBE range provides the kind of manoeuvrability that makes them ideal for ARB’s needs, backed up by the same safety and comfort features you’ll find across Toyota’s range of forklifts and other material handling equipment,” Carbery said. Toyota Materials Handling 02 8706 6197 www.toyotamaterialhandling.com.au

MITSUBISHI’S FB13-20TCB series of 3-wheeled, counterbalanced electric forklift trucks are recommended for the logistics and warehousing industry. They combine clean and robust power with manoeuvrability and low maintenance operation. They are equipped with a 48 volt battery, hydraulic motors and regenerative systems. They feature an innovative AC Power control system which integrates travel, hydraulic and electric power steering functions into one consistent system. While these trucks are ideal for indoor applications where noise, pollutants or particulate contamination is undesirable, they also now meet the new IPX4 Enclosure rating, which means the forklift and its systems are protected against water spray from all directions and angles, and are safe to operate outdoors in the rain. An important feature is integrated speed control on slopes. On an upslope, if the accelerator or brake pedal is released, the truck will only roll backward at a speed of less than 1 km/h, providing peace of mind for the operator. To ensure the operator always knows what the machines are capable of, they come with a standard digital load indicator. Operators can quickly tell the weight of the load to prevent overloading and enjoy a safe, confident working experience. When overloaded, the trucks will warn the operator on display and buzzer. With safety in mind, legroom has increased by 55mm and the rear combination lamps have been relocated to the top of the head guard to improve comfort and visibility. In addition, the mast and travel interlock system disable the travel and hydraulic system when the driver has left the seat unattended; and an emergency stop allows the operator to stop the forklift’s operation with the push of a button. The rear grip horn allows the operator to reverse and signal others safely without having a hand exposed to the elements. MLA Holdings 02 9898 5844 www.mlaholdings.com.au

The forklifts have a range of safety features, including 55mm extra legroom.

Manufacturers’ Monthly DECEMBER 2014 31

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MaterialOF THE MONTH The aluminium of the 21st century In composites, its strength to weight ratio is unmatched. And if it can be made a little more cheaply, we might one day see it everywhere. Brent Balinski looks at some of the ways Australia is making use of carbon fibre.

HOUGH it’s been around in a way since the 19th Century (in lightbulb filaments), and its development began in earnest in the 1950s, there’s a mountain of potential left to exploit when it comes to carbon fibre. In terms of bringing its price down, exploiting its remarkable properties, and reaping the commercial benefits, there’s vast interest in Australia and great efforts being spent making sure we are involved in the age of carbon fibre. The production of carbon fibre begins with one of three precursor materials – pitch, rayon or polyacrylonitrile (PAN). Before the PAN can become fibres of carbon (which are about 5 to 10 micrometres in diameter), it must be mixed with a catalyst, which separate it into long polymeric chains, be fed through three different ovens, and exposed to extremely high temperatures and pressure. This “carbonises” the fibres, removing all the chemicals other than carbon from them. These are painted with resin, and will eventually be ready to be woven and put into a matrix (which can include polymeric resins and ceramics). Though the price of carbon fibre is generally decreasing, the process remains very energy-hungry and the end product expensive. Still, it is desirable for many applications, due to its stiffness and strength (often compared to steel) combined with its light weight (significantly less than aluminium). There are many places where the fibres are of great usefulness now – notably though certainly not exclusively in aerospace and automotive – and many others where there is great potential. And global demand is headed north very quickly, with one market research report tipping 13 per cent compound annual growth up to 2020.

32 DECEMBER 2014 Manufacturers’ Monthly

There are examples of local companies doing impressive things with carbon fibre composites – and who are well-placed for the rocketing demand – such as one-piece wheel maker Carbon Nexus, technology companies such as Quickstep Technologies, FCST and CST Composites, and oven maker Furnace Industries.

At the nexus One major effort at exploiting opportunities with composites is the Carbon Nexus facility, located at

Nexus’s research: low-cost carbon fibre, high-performance carbon-fibre, surface treatment and sizing, and curing times. One of the obstacles to wider adoption of carbon fibre is its price, largely related to the amount of energy spent producing it. “In the last 10 years we’ve seen the cost of carbon fibre come down from $150 per pound to around $10 per pound,” Associate Professor Bronwyn Fox, who leads Nexus’s research team, told Manufacturers’ Monthly.

Carbon fibre combines extreme strength with a low weight.

Deakin’s Waurn Ponds campus and officially opened in May this year. Equipped with a pilot manufacturing line and a single-tow research line, the centre has 16 research and technical staff. Dealing with the entire supply chain involving carbon fibre, the $34 million facility is unique in its open-access nature. The small-scale factory allows companies to monitor and test manufacturing processes in a way that also ensures intellectual property confidentiality. For example, the PLC platform at the plant is isolated from even the other facilities at Deakin. There are four themes for Carbon

“But there’s been a range of studies that show if we can get that down further to $5 per pound we’re going to see widespread adoption of this material, particularly in the automotive sector.” There’s an awful lot of room for improvement, in terms of price and elsewhere. Part of Carbon Nexus’s role is to help Geelong’s industrial transition, which has seen a move away from heavy industry (local and notable recent examples include Ford’s upcoming exit from manufacturing in 2016 and Alcoa’s closure of its Point Henry smelter in July).

Stepping up their game Quickstep’s association with Deakin University goes back until the early days of the millenium. Their Quickstep process cures resins without the conventional autoclave, which is expensive to run and maintain, using heated fluids and a clamshell-like set-up to finish a part. The process is also quicker than an autoclave by up to 90 per cent. The company announced in October that it would establish an automotive division and manufacturing site at Waurn Ponds. “The fact that now you have really this cluster of companies in terms of carbon on one side, the university on the other, and a very strong department in composites, you have companies that are more and more in there, you have people with a very good background in the car industry,” Philippe Odouard, Quickstep’s managing director and CEO, told Manufacturers’ Monthly of the appeal of Geelong for a composites company. Being situated near researchers (two Deakin PhD students are currently working on Quickstep-related projects) and industrial capability would be of benefit as the company aims to break into the automotive market with its RST (Resin Spray Transfer) technology. “It is really the material of the future,” he said. It’s been predicted that Volkswagen alone will need 187,000 tonnes of carbon fibre components by 2020. Future emissions regulation will greatly ramp up the need for carbon fibre-based components as vehicle makers make lighter and lighter cars to avoid punishing taxes. “And that’s why basically every OEM in the car industry is working on carbon fibre,” said Odouard. “And the challenge really there is to reduce the cost.” manmonthly.com.au

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Newer, cheaper, better Aerospace and automotive are two major areas offering opportunity in composites, but there are countless others where a composites solution might be worthwhile. One novel Australian-born solution involves carbon fibre in a revolutionary helmet for jockeys. Born out of a collaboration of several local manufacturers facilitated by META (the Manufacturing Excellence Taskforce of Australia) Albion’s Advanced Sports Helmet marries a small amount of carbon fibre with a high-modulus fibre and a novel UV curing technology. “The resin that I’m using is something that I’ve blended myself that allows me to cure with UV,” explained Adjunct Professor Floreana Coman, who is also a founder of FCST. “By combining this blend [there’s] the lightest and the stiffest helmet one can produce.” The Romanian-born Coman proudly notes that she was preaching the virtues of carbon fibre well before it was fashionable, and has long been developing courses involving the material, including in architecture. Her recipe of hybridised fibres and UV curing was developed during a harried, two-month period. She said it offers a superior solution in a number of ways. The UV curing rules out the need for the manufacturer to use an expensive autoclave. And the blend of materials offers a lighter, stiffer solution than any other. MA 1 1 1 4 _ 0 0 0 _ S MA “With UV you don’t need more

than a lamp, which is very cheap,” she explained. “It will work for certain products but will not work for other products. For the helmet in this particular case it will work fantastic, because it allows me to cure fast. And because the product is used outdoor, it will have an increased resistance to UV, which I think is again a [benefit].”

Limitations and improvements As with everything, there are areas where carbon fibre will make sense and those where it will not.

“

If Australia is going to be relevant in the 21st century... it should develop a strong carbon fibre industry...

performance that extra bit further,” said Fox. The other theme of their research involves sizing and surface finish. The polymer coating, which assists things such as the fibres’ handleability and leads to the weavability and preform quality, is something that can be improved. “That then also translates into getting a really good bond between the fibre and the epoxy matrix that holds the composite material together,” said Fox. “And that bond is critical for composite materials’ performance, particularly for damage tolerance. “So we’re very interested in doing some research around the surface treatment of carbon fibre – how we can improve the handleability of the fibre and also improve that bond between the fibre and the matrix.” Carbon fibre on its own would’ve been unsuitable in the Albion helmet, stressed Coman. “Carbon is not good at impact,” she said. “I’m not sure if you ever have seen before the Formula 1 racing cars. When they crash there will be everywhere pieces smashed and spread around.

Growing the number of areas where it’ll be an option is part of Carbon Nexus’s work. There are a great number of improvements that can be made, for example in tensile strength, The future which studies have shown is currently Carbon fibre is sometimes called the only 10 per cent of what it could Aluminium of the 21st Century. be. There are some who have – as with “And that tensile strength is limaluminium and steel – drawn a link ited by defects, by voids, by impuribetween the ability to create these ties in the fibre, and so our research materials and an advanced economy. is focussed on how we can nanoIf Australia is going to be relevant 1 2 0 1 4 - 0 9 - 3 0 T1 5 : 1 8 : 2 6 + 1 0 : 0 0 structure the precursors to lift that in the 21st century, the argument

goes, it should develop a strong carbon fibre industry. It appears demand from aerospace and automotive is only going to go up with the pressure to be more energy efficient. Consider the Boeing Dreamliner 787, made up 50 per cent by weight by composites. The next-generation Airbus A350 XWB is more than half made up of composites. There are other areas where demand for composites is expected to go up sharply, such as wind turbines and civil infrastructure rehabilitation, as well as in industrial use such as in pipes and pressure vessels. The link between developing a carbon fibre industry and being an advanced economy is real and worth considering, believes Fox. “I think maybe there’s a correlation and composite materials are a prime example of where advanced manufacturing is heading, and to have a thriving centre in supplying composite components is an indication that, for example, Australia is really performing in that advanced manufacturing path, that we’re really making a contribution there,” she said. Carbon Nexus: 03 522 73369 www.carbonnexus.com.au META 03 8540 5373 meta.org.au Quickstep Technologies 02 9774 0300 www.quickstep.com.au

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Quality ISO 9001

Environment Health & Safety ISO 14001 OHSAS 18001

Manufacturers’ Monthly DECEMBER 2014 33

Quality ISO 9001

Environment ISO 14001

Health & Safety OHSAS 18001

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What’sNew

Brought to you by

Safety laser scanner

Feature an almost hermetic seal against opening when in the closed position.

High speed freezer doors DMF International introduces a new range of high speed freezer doors from Efaflex designed for the extreme environment of the deep freeze industry. Efaflex TK100 deep freezer high speed roll doors are uniquely designed to address the challenge of ice formation, common in this type of application. Any air flow around a freezer door will cause ice to develop, resulting in operational problems. They feature an almost hermetic seal against opening when in the closed position. Combined with the heater elements within the door columns and the door

blade, any potential for ice formation is eliminated. The door blade is 100mm thick insulated lath, thermally separated, providing a U value as low as 0.74w/m2K, and making the door ideal for backing onto temperatures as low as -30°C. Features also include impressive 2m/ sec speed; full safety sensors included as standard; and emergency opening achieved by a quick hand lever. DMF International 1300 875 022 www.dmf.com.au

THE Pharo Safety Laser Scanner is suitable for the protection of workers exposed to risks arising from the use of hazardous machines and automated guidance vehicles (AGVs). It creates horizontal or vertical protection areas through programming or selfteaching up to an amplitude of 190°. The Safety Laser Scanner conforms to: • 2006/42/EC Machinery Directive • 2004/108/EC Electromagnetic Compatibility (EMC) • 2006/95/EC Low Voltage Directive (LVD) • IEC/EN 61496-1 Ed. 2 e IEC/TS 61496-3 Safety of machinery - Electro-sensitive protective equipment- General requirements and tests • EN ISO 13849-1 Safety of machinery – Safety-related parts of control systems • Part 1: General principles for design- IEC/ EN 62061 Safety of machinery – • Functional safety of safety-related electrical, electronic and programmable electronic control systems • IEC 61508 Functional safety of electrical/electronic/programmable electronic safety- related systems

The scanner creates horizontal or vertical protection areas. • IEC/TS 62046 Ed. 2 Safety of machinery – Application of protective equipment to detect the presence of persons • UL (C+US) mark for USA and Canada Treotham Automation 02 9907 1778 www.treotham.com.au

Position switches SUITAbLE for a wide variety of applications across all forms of plant manufacturing, Schmersal PS116 position switches are compact, very robust and extremely versatile. with a symmetrical design, a variety of contact configurations and a great selection of re-positional actuators, the PS116 offers flexible and reliable solutions for a multitude of applications. Its dimensions allow installation in confined spaces to monitor the position or presence of moving parts, work pieces or conveyed materials. All switches have positive opening NC contacts making them suitable for use in safety circuits up to PL e (ISO 13849-1) and CAT 4 (AS 4024.1). They are distributed in Australia by Control Logic. 34 DECEMBER 2014 Manufacturers’ Monthly

The machines deliver resource-efficient manufacturing with high repeatability.

Moulding machines All switches have positive opening NC contacts.

Control Logic 1800 557 705 www.control-logic.com.au

NEw to the AX series product group are the AX 450 and the AX 550, with which KraussMaffei can offer all-electric injection moulding machines expanded for greater clamping force of 4,500 kN or 5,500 kN. The machines deliver resource-efficient manufacturing with high repeatability. They earn an energy efficiency rating of 9+ according to the Euromap 60.1 standard. Against comparable hydraulic injection moulding machines, energy consumption

is often reduced by 50 per cent or greater. Incorporating precise dynamic drive technology, large platens with rolling linear guides, integrated robotics, precise injection screw drives and a comprehensive options list, the machines are intended to provide customers with a competitive edge in the high tonnage sector. HBM Plastics Technologies 03 9646 3153 www.hbm.com.au manmonthly.com.au

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C A L L I N G A L L I N N O V AT I V E A U S T R A L I A N M A N U FA C T U R E R S ! Nominations are now open for the 12th annual Manufacturers’ Monthly Endeavour Awards. Be a part of the only national awards program that celebrates the industry and recognises and rewards manufacturing excellence. Join us for Australian manufacturing’s night of nights by nominating your business or employees.

WHY NOMINATE?

• Exposure and publicity • Recognition for your hard-working team members • Valuable networking opportunities with key industry leaders

THE CATEGORIES ARE • Technology Application of the Year • Environmental Solution of the Year • Safety Solution of the Year • Industrial Product of the Year • IT Application of the Year • Global Integration Award • Exporter of the Year • Young Manufacturer of the Year • Lifetime Achievement Award • Most Innovative Manufacturing Company • Manufacturer of the Year

PRINCIPAL SPONSOR