Australia sees continued strength in construction applications

Australian is seeing continued strength in construction applications, with 2,210 new projects entered in the country’s construction work pipeline in November 2018, with a combined worth of $25 billion – nearly double the three-year median value.

Infrastructure projects continue to dominate new project work in both quantity and value, although apartments and units are a close second for quantities of projects, according to CoreLogic’s latest Cordell Construction Report.

“The number of new construction projects entering Australia’s pipeline was just below the yearly high of 2,292, which was recorded in October 2018,” said James Shang, CoreLogic commercial research analyst.

“Although the total estimated value of new projects is approximately 16 per cent lower than the yearly high, it’s a strong indicator of continued strength in construction applications.”

A stand-out infrastructure project is the Aerotropolis project in Western Sydney, which is described as a ‘game-changer’, the project has an estimated cost of $8 billion, accounts for 50 per cent of the total new project applications in NSW for November and is expected to create 200,000 new jobs.

Whilst the number of new project applications is strong, the picture for projects further down the pipeline and actually moving into construction is less positive. These projects have fallen for a third consecutive month – the impact from a tightening credit environment clearly extending beyond the residential market.

“The estimated value of projects shifting into the construction stage during November was just over $2 billion,” Shang said.

“Whilst this figure is 53 per cent higher than the recent low (in October), it’s actually low when you factor in the strong level of activity in new development applications and when compared to historic levels too.”

Civil engineering projects accounted for 52 per cent of those projects moving into construction phase, whilst 54 per cent of value for projects moving into construction was thanks to the commercial sector. Mining held the highest median project value at $4.15 million.

For detailed industry and state-wide analysis, including project specifics, head over to the CoreLogic website.

The industries set to fly and fall in 2018-19

As Australian businesses enter the new financial year, industry analysts at IBISWorld reveal which industries are set to have a bumper 2018-19, and which are likely to struggle.

“The standout performer is expected to be intellectual property leasing, with expected revenue growth of 68.2%. Other strong performers include internet publishing and broadcasting; retail property operators; pig farming; and childcare services,” said Jason Aravanis, IBISWorld senior industry analyst.

“Industries expected to decline over the next 12 months, reflecting the changing landscape of the Australian economy, include multi-unit apartment and townhouse construction; building societies; video game, DVD and recorded music retailing; house construction; and iron ore mining. These contractions are in response to changing commodity prices, consumer behaviour, and investor sentiment,” said Aravanis.

Industries set to fly in 2018-19

Industry	Revenue 2017-18 ($m)	Revenue 2018-19 ($m)	Revenue growth 2018-19
Intellectual property leasing	2,826	4,752	68.2%
Internet publishing and broadcasting	2,486	2,896	16.5%
Retail property operators	22,830	26,590	16.5%
Pig farming	1,110	1,262	13.7%
Childcare services	12,205	13,075	7.2%

Intellectual property leasing

Operators in the intellectual property leasing industry lease intellectual property — such as patents, trademarks, spectrum and other intangible property — to businesses in exchange for royalties or licensing fees.

The auction of new spectrum capacity in the industry is expected to lead to significant revenue growth in 2018-19. A spectrum auction is a process whereby a government uses an auction to sell the rights (licences) to transmit signals over specific bands of the electromagnetic spectrum, and to assign scarce spectrum resources. This process plays a vital role in the Australian economy, as the government sells spectrum rights to companies, which then provide consumers with access to services such as mobile networks.

Revenue for this industry has been extremely volatile over the past five years. These extreme fluctuations have been attributable to the auction of spectrum rights by the federal government, which occurs on an irregular basis and depends on the development of new spectrum. Large telecommunication companies, such as Telstra, Optus, Vodafone and TPG, are the main bidders for Australia’s spectrum. For example, TPG purchased spectrum rights for $1.26 billion in the April 2017 auction, in a move to build its own mobile network and ultimately shake up the Australian telecommunications sector. This auction led to industry revenue skyrocketing in 2016-17, followed by a steep fall in 2017-18. A spectrum auction for the 3.6 GHz band is expected to take place in 2018-19, which may re-allocate the 3.6 GHz band for 5G. As a result, industry revenue is expected to increase by a substantial 68.2% in 2018-19.

Internet publishing and broadcasting

The rapid expansion of on-demand video and music streaming services such as Netflix and Spotify is expected to cause the internet publishing and broadcasting industry to grow by 16.5% in 2018-19, to $2.9 billion. This growth is off the back of the continued strong performance of online advertisers, as customers have transitioned to digital services and away from print media.

Rising internet access, particularly in rural areas, and improvements in technology have driven the increasing demand for on-demand streaming services. Services are now being watched on more devices. The ability to handle higher data usage through the continued rollout of the NBN is also expected to contribute to industry growth.

The number of enterprises in this industry has increased over the past five years due to low entry barriers for internet-based businesses. Major players that offer content across multiple channels, such as smartphone apps, are likely to outperform industry growth.

Retail property operators in Australia

Revenue for the retail property operators industry is expected to increase by 16.5% in 2018-19, to $26.6 billion. Demand from retail trade is anticipated to grow in 2018-19, fuelling demand for industry services.

Growing demand from overseas investors has also contributed to the industry’s revenue expansion over the past five years. Demand from overseas investors has largely been due to improved vacancy rates over the period, and growth in Australian property prices, both commercial and residential.

Despite the industry’s strong growth, operators have continued to face pressures caused by fluctuating consumer sentiment, which can affect retail sales and business confidence. While improvements to underlying retail drivers may prompt more spending, an increasing proportion of consumers choosing to shop online may somewhat mitigate the positive effects of these drivers on the industry.

Pig farming

The pig farming industry is expected to grow by 13.7% in 2018-19. Rising health consciousness and continued marketing efforts by Australian Pork Limited (APL) are likely to continue driving consumer demand towards fresh pork. As a result, pig meat consumption is expected to continue growing in 2018-19, as consumers increasingly view fresh pork as a healthy source of protein.

With weight and wellness concerning more Australians each year, consumers are being turned away from traditional red meats like lamb and beef towards leaner sources of protein like fresh pork. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) expects beef, veal and lamb consumption to fall in 2018-19.

Operators in the pig farming industry are anticipated to increase production in 2018-19 to take advantage of this rising demand, while growing demand for premium fresh pork products is likely to boost the domestic price of pig meat. IBISWorld also expects that pig meat exports will grow while import volumes will decline in 2018-19, providing a further boost to Australian domestic pig farmers.

Childcare services

The childcare services industry has benefited over the past five years from rising maternal workforce participation rates and increasing enrolment rates. Both of these factors have been encouraged by increased government assistance packages designed to encourage woman to return to the workforce following the birth of their children.

The industry’s operating conditions are set to change again in 2018-19, with the introduction of the new single Child Care Subsidy (CCS) on 2 July 2018. In contrast to the previous child care assistance package, this new subsidy is to be paid directly to child care operators. The federal government is expected to pay out $8.0 billion in CCS payments in the first year of the policy. This is expected to contribute to the industry’s anticipated growth of 7.2% in 2018-19, to $13.1 billion.

Industries set to fall in 2018-19

Industry	Revenue 2017-18 ($m)	Revenue 2018-19 ($m)	Revenue growth 2018-19
Multi-unit apartment and townhouse construction	25,617	21,173	-17.3%
Building societies	509	436	-14.4%
Video game, DVD and recorded music retailing	1,006	927	-7.9%
House construction	44,683	41,823	-6.4%
Iron ore mining	62,994	59,494	-5.6%

Multi-unit apartment and townhouse construction

The multi-unit apartment and townhouse construction industry is expected to face deteriorating demand in 2018-19, as investors respond to the build-up of unsold stock by deferring projects. The recent completion of major apartment developments has contributed to excess supply in several capital cities, notably Melbourne and Brisbane, which is likely to dampen investment until vacancy rates gradually ease.

The scaling back of investment is also expected to coincide with weaker investment from Asia in the local real estate market, which is due to the tightening of mortgage lending practices to foreign residents by the local banks, and the imposition of additional land taxes on foreign investors. Although work done on multi-unit apartments and townhouses is expected to decline, the industry is declining from historically high levels and many of the construction contractors will look to ride out the cyclical contraction. Industry revenue is expected to contract by 17.3% in 2018-19, to $21.2 billion.

Building societies

The building societies industry has declined significantly over the past five years on the back of prominent exits and a falling cash rate. Intense competition from national banks, and low-interest rates, have placed significant pressure on the industry. Interest revenue generated by building societies on their loan books has fallen on the back of the lower cash rate, despite greater demand for mortgages.

The lack of access to further capital has been a key factor that has led to the conversion of several former operators to banks. In 2012-13, nine building societies were registered in Australia. Only three building societies remain in the current year, with the most recent exit being B&E Ltd’s conversion to a bank in October 2017. As a result, revenue from building societies is expected to decrease by 14.4% in 2018-19, to $436.3 million.

Video game, DVD and recorded music retailing

The video game, DVD and recorded music retailing industry is expected to decline by 7.9% in 2018-19. Changing media formats and the increasing popularity of online shopping are making trading difficult for retailers of products that can be accessed online. Intensifying competition from digital media formats and online-only retailers has significantly contributed to industry revenue declining over the past five years.

The industry’s largest product segment is video games. Although the uptake of video games has been strong over the past decade, the increasing sophistication of online-only stores and the advent of faster and cheaper internet connections have caused a significant portion of video game sales to occur online through platforms such as Steam.

A similar trend is occurring for films, television shows and recorded music, with online streaming through providers like Netflix and Spotify becoming the dominant mode of content delivery. These trends are cementing the industry’s decline.

House construction

The house construction industry’s revenue is expected to trend downward in 2018-19, corresponding with the anticipated rise in mortgage interest rates and some deterioration in mortgage affordability. The magnitude of the cyclical correction in demand from the house construction industry is expected to be much smaller than the slump in the aligned multi-unit apartment and townhouse construction industry, which is exposed to substantial unsold stock levels and the exit of foreign investment.

The decline in new housing investment is likely to be most evident in the first-home buyers category, as the recent increases in housing prices and the rise in mortgage repayments are likely to prevent more households from becoming home owners. The house construction industry is anticipated to decline, although continued solid population growth is expected to ensure solid underlying demand for new housing. Overall, industry revenue is forecast to decline by 6.4% in 2018-19, to $41.8 billion.

Iron ore mining

Although revenue generated by the iron ore mining industry is expected to decline 5.6% in 2018-19, this decline is from a relatively high level, and is across an industry that has expanded output dramatically over the past decade. A lower average world iron ore price in 2018-19 is expected to be the main contributor to the industry’s revenue fall. As domestic and global iron ore production volumes continue to increase, iron ore prices are expected to weaken due to oversupply.

The industry relies heavily on Chinese demand, with China anticipated to account for more than 80% of Australia’s iron ore exports in 2018-19. Slower GDP growth in China will likely hinder demand for steel, and hence iron ore. Furthermore, a stronger Australian dollar against the US dollar will reduce the competitiveness of Australia’s iron ore exports. However, as local iron ore quality is very high, and as per-unit iron ore mining costs in Australia are very low globally, the industry will remain competitive in 2018-19 and over the next five years.

7 Must-Have Productivity Apps for 2018

In the face of progressing technology, it can be easy to become cluttered and confused when trying to communicate. A phone full of confusing or only partially understood apps can seriously slow down productivity and overall workflow.

Tess Vismale of DAHLIA+ agency spoke at CONEXPO/CON-AGG 2017 on some of the most helpful productivity apps to keep the workday on schedule and even keep personal habits healthy.

Here are the top seven mobile apps for taking control of workflow:

Productive tops Vismale’s list as a brilliant tool for forming good-habits and prompting the completion of tasks. By inputting desired tasks and goals, Productive reminds the user at convenient times of their habits, whether they be professional, personal or even medical.

Slack combines the convenience of email with the flexibility of social media to create a powerful, all-in-one messaging service. Users can organize their conversations by project, department, or simply by individual, allowing for individuals to be easily added and dropped from different threads. Slack additionally provides a subscription service, in which one user can allow other users to ask common questions.

MobileDay is a conference call app that combines a user’s schedule with call functionality, allowing them to connect to everyone in the call with one button. Additionally, MobileDay can send alerts for upcoming conferences calls and allows users to notify other members of the call if they are running late.

Clarke.ai is a text-to-speech app that can be invited to conference calls or meetings to take notes and record all conversations for later use.

Outlook is an email app designed for efficiency on mobile phones; for example, a user can schedule the appearance and disappearance of emails in their inbox to allow them to focus on the most important ones when necessary. It also includes features that used to be limited to desktop computer, like integrating with Dropbox and Google Drive.

Unroll.me can organize an email inbox based upon a user’s subscriptions, sending updates on received emails either daily or weekly to cut down on distraction and wasted time. For example, a user could opt to not read their Instagram email until Friday at noon every week, to condense the amount of time spent.

Evernote creates notes with a myriad of extra features, such as stylus compatibility, document scanning and an image search engine. This means that any scanned or photographed document can be searched by the text printed on it, effectively digitizing printed business cards and spreadsheets.

The sheer volume of available apps and their many functions can seem overwhelming, but these tools can provide the edge and make the difference between a productive work week and an exhausting one.

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Federal budget 2018: $24B for new infrastructure projects

The federal government handed down its 2018-19 budget this week and $24 billion has been earmarked for infrastructure projects.

The big spend on infrastructure is forecasted provide four-fold benefit to the economy, i.e. every dollar the government invests will deliver a $4 return to the economy.

This $24 billion allocation puts total federal government investment in infrastructure projects over the next decade at $75 billion.

The 2018-19 package

Rail and road infrastructure is the major focus of this year’s budget and new national initiatives include $3.5 billion on roads of strategic importance – $1.5 billion for the Northern Australia Package, $400 million for the Tasmanian Roads Package, $100 million for the NSW and ACT Barton Highway Corridor Package and $1.5 billion for future national priorities – $1 billion Urban Congestion Fund, and $250 million for Major Project Business Case Fund.

Turning to the states and territories, the biggest winner this year is Victoria which was allocated $7.8 billion. This includes $5 billion for the Melbourne airport rail project, $175 billion for the North East Link, and $475 million for Monash Rail.

The $24 billion in new infrastructure investment also includes:

$5.2 billion for Queensland including $3.3 billion for the Bruce Highway extension, $1 billion for the M1 expansion, and $390 million for Brisbane Metro.
$2.8 billion for WA of which $1.05 billion will go towards Metronet Rail, $944 million to Perth’s congestion package, and $560 million for the Bunbury Outer Ring Road.
$1.8 billion for South Australia. $1.2 billion will be spent on the North-South Corridor and $220 million on the Gawler Rail Line electrification.
$1.25 billion for NSW including $971 million for the Pacific Highway Coffs Harbour Bypass and $400 million for the Port Botany Rail Duplication.
$921 million for Tasmania of which $461 million will go towards replacing the Bridgewater Bridge. $400 million will be allocated to a Tasmanian road package.
$259.6 million for the NT, including $180 million for the Central Arnhem Road upgrade and $100 million for the Buntine Highway upgrade.

2018-19 budget papers can be found here.

Sales trends 2018: Trend 4 – Buyer behaviours, AI and the future of sales roles

The fourth sales trend from the Barrett 12 Sales Trends Report for 2018 is about buyer behaviours and the future of sales roles.

According to Gartner Research, by 2020 85% of interactions between businesses will be executed without human interaction.

Automation has already diminished the number of people required for blue collar manufacturing roles; however, with the advent of AI (artificial intelligence), big data and algorithms, we are beginning to see sweeping changes happening across the once untouchable white collar sector, including the very people-oriented roles of sales, as many buyers shift part or all of their buying journey online.

This is really worrying people and creating lots of uncertainty, and the reality is that people are at risk of losing their current roles.

This sales trend is focused on how buyers’ behaviours are changing with the rise of digital engagement and purchasing, and the impact this is having on sales roles across both B2B (business-to-business) and B2C (business-to-consumer) channels. But before we get into the details, not all is lost.

As this sales trend highlights, there is light at the end of the tunnel and not all roles are doomed. But these dramatic changes do require many of us to step up and really bring to the fore our very best human skills in communication, empathy, kindness, ideas generation, problem solving, creativity and delivering real value.

Remember, digital is still human powered

The irony is that everybody needs to know how to sell themselves to their colleagues, clients and suppliers. The skills excellent sales people possess and cultivate are the very meta-skills everybody needs today.

Professor Bronwyn Fox, director of Swinburne University of Technology’s Manufacturing Futures Research Institute, talks about the vital need for STEM (science, technology, engineering, maths) students and graduates to also be proficient in meta-skills (soft skills). This includes effective communication and the engagement of others to generate and share new ideas; the ability to bring innovations to market and actively engage; work with each other more effectively; and to sell themselves, their concepts and the future.

However, we are seeing a polarising of sales roles and we need to be ready to adapt.

When it comes to simple transactions, buyers expect to be able to do this type of purchasing online, free from human contact. However, as soon as the sales becomes complex, or less straightforward, buyers want access to real humans.

When it comes to human-to-human interaction, whether it be B2C or B2B sales, buyers are expecting a much more sophisticated response from organisations’ sales and customer care people.

Buyers want to deal with subject matter experts (SMEs), not sales people. So sales people need to become domain experts or work with their own SMEs to help buyers move forward toward their goal.

SMEs also need to learn how to sell. How do we make domain experts sales savvy? Back to the comments by Professor Fox, we need everyone to learn how to communicate and sell themselves effectively and ethically.

Let’s take a closer look at the trends and changes in the B2B and B2C channels.

Changes to the B2B buying and selling landscape

According to Andy Hoar at Forrester Research’s “Death of a (B2B) Salesman, April 2015”, 1 million sales people (22%) will lose their jobs in the US alone and one third of B2B order-taking sales jobs will cease to exist worldwide.

B2B sales job losses predicted by 2020:

Order takers (transactional, socialiser, visitor): 33% job loss
Explainers (tactical, hunter, warrior): 25% job loss
Navigators (relationship, gatherer): 15% job loss
Consultants (trusted advisor, politically aligned, add compelling business value): 10% job gain

B2B sales people must elevate to a higher plain if they are to survive. We are seeing a distinct shift away from generalist sales people to sales people becoming business and domain experts. Businesses are now needing their sales teams to transform into ‘domain experts’, or the hackneyed phrase ‘trusted advisor’, if they are to add any genuine value. This is now very evident across almost all types of business, having started with technical types companies first.

In B2B buying and selling situations, we are also seeing more and more stakeholders involved with the buying process, which is adding more complexity and time to each sales process. Coupled with this, we are seeing buyers buying in smaller amounts, adding further cost to the sales process and eroding margin.

The B2B buying and selling paradox

Buyers have never been easier to identify but harder to engage and sell to;
No one is lonely or bored, yet the value of genuine relationships is critical to effective buyer seller relationships;
The average transaction is getting smaller but is taking longer to sell in; and
82% of sellers fail to differentiate themselves.

B2B buyers, like B2C buyers, are using omni-channels to research and make buying decisions. According to Forrester Research, 74% of business buyers conduct more than half of their research online before making an offline purchase. However, this does not mean they have not been in contact with sales people or that they have made a purchasing decision, especially if that decision is complicated and involves a range of people or processes. This is where effective B2B sales professionals can shine.

B2B sales people need to learn how to anticipate buyers’ needs and move beyond product and service. Smart companies are investing in their B2B sales people by helping them transition to human centred selling and business consulting.

Changes to the B2C buying and selling landscape

How are B2C buyers behaving?

British Telecom’s head of customer insight and futures in the BT Global Services Innovation Team, Dr Nicola J. Millard and her team, have been conducting extensive research over many years in B2C buyer behaviours and customer experience. Her latest findings reveal the following:

Making digital experiences easy for customers delivers business growth; move over net promoter score (NPS) and bring on net easy score (NES);
Businesses need to make it easier to do simple transactions, but as soon as it gets complicated they need to give their customers someone competent to talk to; there should always be a phone number so people can speak to a human being;
Interestingly, autonomous customers rely on other consumers (not brands) for product advice;
Chatbots have appeal – but with human agents checking on more complicated responses;
Proactive service expected by digital customers;
Smartphones are becoming more important in digital experience; and
Providing security for phone transactions will drive revenue growth;

But beware the omni-channel

Omni-channels shift human channels towards complexity;
In times of flux people want simple, easy, straight forward. If it gets complicated they want to talk to a human being. Customers want “immediate access to a well-trained employee e.g. someone to talk to on the phone or face to face ….”, especially if there is a crisis and you need a solution to a problem with a product or service;
Customers make decisions at each stage in the omni-channel journey based on their motivation, context and attitude; and
In digital channels, it’s not so much about demographics anymore it’s about context

Context is driving omni-channel behaviours

Here are the new buyer profiles that are appearing online:

Visionary: They are looking to improve their lifestyle by the purchase of a product or service (e.g. moving house or booking a holiday). They are in a positive and motivated state of mind and willing to invest time. They may even enjoy the experience. They want businesses to let them explore, research and get advice using a wide range of resources (e.g. online, webchat, face-to-face/ in-store assistance).

Utilitarian: They want to complete a routine, mundane task (e.g. paying a bill or buying everyday products and services). It is low value in terms of their time, they are not looking for the ‘wow’ factor or enjoyment. Businesses need to make the transaction fast and easy (e.g. an app or online self-service technology).

Customer in crisis: There is a crisis and they need a solution to a problem with a product or service (e.g. reporting a fault or getting advice). They might be frustrated, angry or worried. Businesses need to give them immediate and straight forward access to a well-trained employee (e.g. someone to talk to on the phone or face-to-face who can sort the problem).

Finally, the phone is not dead

The telephone has been around since 1876 and is still as vital as ever. The telephone today supports the digital experience but it does need strategic attention.

When people cannot complete simple tasks online, when things get more complex, they want to talk to a person who doesn’t leave them stranded ‘on hold’ and has the smarts to be able to deal with their issues and questions. This is relevant for both B2B and B2C sales channels more than ever before.

In previous sales trends over the last few years, we have reported on the rise of, and need for, higher levels of complex sales and service capability on the telephone, with the move away from simple transactions and service outcomes.

The telephone needs to be staffed by subject matter experts who are well paid and capable of ensuring buyers have a great experience with our businesses. No longer the graveyard for expired field sales people or ‘pleasant’ customer service people, call centres are becoming ‘expert hubs’ working in concert with the field sales teams of domain experts and SMEs.

There is a great future for sales with selling moving to a high-order function that involves all, and buyers will be getting what they want too. Expert care and attention that builds trust and, hopefully, loyalty.

Smart companies will allow the buyer and selling pendulum to find its equilibrium.

Remember everybody lives by selling something.

NOW READ: Twelve sales trends for 2018: Welcome to the state of flux

OPINION: Digital investments, new business models, digital twins and IoT empower mining companies to leverage industry recovery

After a tough couple of years, the recovery of the mining industry started in 2017, and now is the time to kick it into a higher gear and benefit from being an early mover. Digital investments and new charging models are a couple of the initiatives companies will be pioneering to leverage the industry turnaround in 2018. IoT in combination with digital twins and equipping users to service their own assets are also key trends, predicts Rob Stummer, managing director at IFS Australia and New Zealand.

Industry recovery will boost digital investments

The good news is that the cost cutting and downsizing of the past few years is now at an end, both for the mining companies themselves and their ecosystem of suppliers. Global demand for many commodities is growing. With the macro figures telling us this increase may last for the next few decades, industry players are ramping up their activity. However, many are playing catch-up in the digital space.

When talking to customers and prospects in the industry, I hear the need to tap into digital technologies including cloud, the Internet of Things (IoT), big data, automation, and advanced planning and scheduling to become smarter and more efficient at extracting resources. Part of this is being driven by the downsizing that has taken place over recent years; with fewer staff on site you need to maximise the human resources to hand. Thus, automating manual tasks becomes important.

Mining companies could learn from innovators in related industries, like oil and gas company Songa Offshore. The company has connected IoT sensors to 600 assets on each of their four oil rigs throughout the North Atlantic Basin. The IoT data is fed into the ERP system, IFS Applications, which forms the basis for reducing maintenance costs and increasing productivity by driving operational efficiencies. The main potential optimisation lies in the automation of work orders. If specific data points can trigger automated work orders, this will save significant time and costs.

Other potential investments may come in rolling out beacon technology to improve safety by alerting workers when they are in a restricted zone. Elsewhere, advanced visualisation and planning tools could help contractors speed up the license application process and maximise productivity by being able to better delineate which areas they are already cleared to operate in.

Mining companies will adopt a more service-centric business model

Another key evolution in the industry, driving the push to become faster and more efficient at extraction, involves a change in the way mining companies pay their suppliers and contractors. The traditional “day rate” – the flat-fee rate a contractor is paid per day is increasingly moving to a performance-based system.

Thus, where a mining company might have agreed a contract of $300,000 per day for 100 days, they may offer more or a bonus if the work can be completed in, say, 80 days. This creates new opportunities for those industry suppliers who can become more efficient. Again, the IoT and big data analytics are key enablers here, with sensors able to provide feedback on various environmental and other conditions to maximise productivity. However, technology alone will not produce the desired goals unless organisations can break down traditional siloes between teams which monitor equipment and those focused on other parts of the operation.

These trends can also be seen in terms of the gradual servitisation of the industry, with companies looking to add innovative service and asset management capabilities to their offerings to reduce their maintenance costs. Advanced planning and scheduling technologies in particular will become a game-changer for both mining companies and service providers, helping them better plan and document maintenance without the need to shut down assets as frequently. These are highly sophisticated systems, maximising the human resources on board and incorporating key risk assessments of equipment to ensure any maintenance work is done and recorded according to a strict timetable.

Companies will adopt IoT and digital twins to optimise service levels

The IoT and “digital twin” technologies are poised to have a huge impact on services; reducing costs, maximising data analytics and extending the lifespan of assets. Previously when, for example, a mining truck broke down, the company would have to schedule a service engineer reactively. This approach is highly inefficient as the individual engineer may have little idea what is wrong with the asset, leading to a low first time fix rate.

With IoT sensors, the asset or machine becomes “smart” and is placed at the centre, sending data back to the service centre enabling diagnostics to determine issues that may arise in a day, week or month’s time. It is no surprise that predictive maintenance is where the big benefits are first realised from IoT by asset-intensive companies wanting to optimise their service efforts. The Predictive Maintenance report forecasts a compound annual growth rate (CAGR) for predictive maintenance of 39 per cent over the time frame of 2016–2022, with annual technology spending reaching $US10.96 billion by 2022.

Now let us add in the concept of digital twins, which represents physical objects in the digital world. Previously, the manufacturer’s or engineer’s knowledge of an asset stopped once it was delivered. But now, via the feedback made possible through IoT, you can start to learn the usage, behaviour and performance of these assets in the real world, and even make engineering changes to improve them over time.

This is a hugely important shift that helps complete the feedback loop, leading to smarter asset design, more efficient service and better performing assets. Such an approach is already being applied in the automobile sector, where connected cars send back huge amounts of data to be analysed and used to engineer better machines going forward, as well as alerting when and where faults may start to appear.

The good news is that it can also be applied retrospectively to legacy products. Mining and construction machine manufacturer Caterpillar has plenty of equipment that is 10-20 years old. But it has been able to fit them with smart sensors to measure tyre pressure, temperature, oil levels and so on. It is a win-win for customer and service organisation alike; minimising equipment downtime and enhancing product development and improving service efficiency. The approach is said to have saved Caterpillar millions of dollars already.

Designed by engineers, operated by you: Self-servicing growing by 50 per cent by 2020

We will start seeing a lot more augmented reality (AR) experiences used to put the customer in control of operating or servicing their own assets. Just think of a Nespresso machine, or a Dyson vacuum cleaner. Both companies have invested significant sums in helping consumers – with the aid of their smartphone and a QR code – to access visually overlaid step-by-step instructions on usage and repair. The same kind of model could be applied to more complex systems within a mining environment, providing detailed and highly customised plans for users to work from – without any of the superfluous information usually found in manuals.

This AR vision shares many of the same benefits as the IoT and digital twin approaches listed above. It will help maximise the time of a limited pool of service engineers, but also create a better customer experience. We can’t underestimate the Apple effect here: with AR being built into iOS handsets, it’s only a matter of time before the firm democratises and monetises such capabilities via an intuitive, user-friendly platform. As well as downloading apps and music, think of downloading an AR experience.

How to get there in reality

There is clearly plenty of opportunity to drive better service delivery, but for mining companies to reap the benefits a few things need to happen. It is important not to think of innovative technology as an end goal in itself. First up, make a value-based business case for any new approaches. That might mean wanting to increase first-time fix rates, offer new outcome-based contract types or simply reducing costs by ensuring engineers are only dispatched when strictly necessary.

Once you have established the business case you might need to break down traditional organisational silos between engineering, design and service. An AR experience, for example, is only as good as the engineering data you are able to populate it with. It works two ways, though, as the feedback from product sensors will help engineering teams design and build better assets going forward.

It is much easier to ensure that data flows throughout the organisation if everyone is using the same enterprise system. The last thing you want is new technologies creating their own data silos. New technologies will deliver greater benefits if integrated with your ERP software, and those benefits will be easier to measure. Ideally, you should be able calculate the actual value delivered by new technology, and compare it with your business case, to maximise the value of future investments.

Ultimately, you need the people, processes, data and systems all optimised to capitalise on these emerging approaches and reap the full benefits.

About the author

Rob Stummer is the managing director, Australia and New Zealand for global enterprise applications company IFS. He has held this position for the past nine years, continually achieving significant growth annually in both revenues and EBIT. Rob holds several degrees, including a Masters from Melbourne University. See: www.ifsworld.com/au

Malcolm Turnbull says 2018 will be a year of “rewards” — including tax cuts

By Michelle Grattan, University of Canberra

Prime Minister Malcolm Turnbull will hold out the prospect of 2018 as a year of “rewards” after 2016 and 2017 were “the years of reform”, in a scene-setting speech delivered in the regional Queensland city of Toowoomba on Thursday.

Two days after Opposition Leader Bill Shorten focused on cost-of-living pressures, flat wages and rising health insurance costs, Turnbull’s pitch will be that dividends will start to flow from government policy.

“In 2018 lower tax rates kick in for businesses with a turnover up to $50 million; genuine needs-based funding begins for our schools; child care will be more affordable for low-income families from July; and we will continue to put downward pressure on energy prices,” he will say.

Without spelling out the timing, Turnbull will say the government’s “next tax priority is further tax relief for middle-income earners” – while not compromising a return to budget surplus in 2020-21.

“The stronger the budget becomes, the more we will be able to give back to hard-working Australians.”

On wages, which Shorten committed to lifting, Turnbull will say: “Let’s be very clear about this – the laws of supply and demand have not been suspended, wages growth will come because a stronger economy results in more investment, more jobs and more intense competition for workers.”

On Wednesday Labor’s workplace relations spokesman Brendan O’Connor said on Sky that one option Labor was looking at was making the minimum wage a certain percentage of the medium wage. But later Labor sources played down his comment, discounting the prospect of the ALP adopting that course.

The government is stressing the Turnbull speech is a restatement of its economic plan, not an attempt at a reset. It comes as the economic indicators have recently been encouraging.

Turnbull will say: “2016 and 2017 were the years of reform; this is the year we really start to see the rewards of that hard work.

“We are starting to see what happens when government policies are all pulling in the same direction – to build a strong and resilient economy that gives every Australian the opportunity to pursue their dreams.

“Business and consumer confidence are both up, and there has been more investment and record jobs growth.

“We are seeing growth, investment and employment right across our country – not just in the big cities.”

Turnbull will link a stronger economy to a greater ability to pay for the services people expect.

“The right mix of policies, combined with our commitment to budget repair that will return the budget to balance in 2020-21, means our economy is much stronger. And that means we can pay for the services that Australians expect.

“Put simply, a strong economy means better schools, better hospitals and better essential services that Australians use each and every day.

“We know that our plan is delivering for Australians. The challenge now is to stay the course and follow through in 2018 and beyond.”

Turnbull will reaffirm that when parliament returns next week the government will press its legislation to reduce the company tax rate to 25% for businesses with turnovers above $50 million. So far the Senate has only been willing to pass cuts for small- and medium-sized businesses.

“With the US cutting company tax to 21% the need to remain competitive is more intense than ever. We know that if you reduce business tax you get more investment and if you get more investment, you get more and better paid jobs. Don’t take my word for it – the IMF just lifted global growth forecasts off the back of the Trump tax cuts,” he will say.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

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The top mining trends of 2018

Mining is poised for growth, according to Deloitte’s 2018 Tracking the Trends report.

The latest issue of key mining trends, the 10^thedition in the series, focuses on how the Australian, and global marketplace, is navigating this expansion by identifying strategies companies can use during the ongoing industry recovery.

Click here for a snapshot of this year’s trends from Deloitte.

With this growth, rapid change will follow, Deloitte explained, adding that a common modern-day theme — digital technology — would be at the core of this transition.

The industry has progressed from the need for miners to understand and develop digital projects to how they ‘bring digital to life’ at their operations.

This is the opening trend for Deloitte in 2018, and one that offers an overbearing theme for many of the points that follow it in the report.

Digital may be an ongoing trend in the current mining environment, but Deloitte points to the importance of effectively using the data these technologies create, including the ability to organise, manage and process it.

Deloitte Australia national mining leader Ian Sanders described digital technology as an important competitive advantage that miners must capitalise on.

“If you look at the majors, yes, they have the programs of activity up and running. They are looking at their investment dollars, particularly how they invest them and the competitive nature of these investments,” Sanders told Australian Mining.

“Digital is one of those competitive elements — how much do they actually spend on automation? How much do they spend on the back office digital? how much do they actually look at their ecosystem of suppliers and customers, government, other stakeholders and co-mingle that investment within digital is really important?”

Deloitte’s report explained that transitioning to the future digital mine typically started by focusing on core mining processes with the goal of automating physical operations and digitising assets.

It believes the real value from digital technology comes from unlocking the insights within data by rethinking the way information is generated and processed.

Many major miners have been on the front foot in this area, according to Deloitte, with the report using the example of a global company that identified latent system potential across its pit, rail and port network by effectively using data.

However, the report adds that many mining organisations are not yet using all the data they are capturing from operational systems, or are still struggling to improve reporting from legacy systems.

Despite the challenges, Sanders said the full spectrum of mining companies was now looking at digital technology projects — the majors, mid tiers, juniors and services companies.

“I think you have to. Firstly, to be relevant, and secondly, to survive,” he said. “Whether you are a major, junior or mid-tier you are absolutely thinking about it because everyone is thinking about efficiency and digital is a core element of becoming more efficient.

“There are some mid tiers and juniors which are very active when it comes to digital and technology. It’s not as though they have been left behind, it’s how can they extract the investment dollar to best leverage digital within their organisation?”

Technology isn’t the only disruptor in mining — there are also emerging commodities changing the landscape of the industry, according to Deloitte’s trends.

The so-called tech metals, or Deloitte’s commodities of the future — nickel, lithium, cobalt and graphite — are another leading element of change in mining.

Deloitte Consulting mining leader David Cormack said it would have been hard to believe 20 years ago that these commodities would be an affordable way to power batteries.

“But, today that is the reality and a potential growth opportunity, particularly with the emergence of electric vehicles,” Cormack said.

“And although asteroid mining for rare metals still sounds like science fiction today, the market potential in the not-too-distant future could be huge. If mining companies want to get ahead of the trends, they need to delve deeply into emerging market disruptors.”

Deloitte’s 2018 trends include: Bringing digital to life; Overcoming innovation barriers; The future of work; Shifting perceptions; Transforming stakeholder relationships; Water; Changing shareholder expectations; Reserve replacement woes; Realigning mining boards to drive transformation; and, Commodities of the future.

Click here for a snapshot of this year’s trends from Deloitte.

The top mining trends of 2018 — a snapshot

Now in its 10th year, Deloitte’s Tracking the Trendsreport has followed the mining sector over the past decade as commodity prices reached both historic highs and lows.

After hitting the bottom of the cycle, this year’s report identifies strategies companies can take to smooth out the recovery and explores the potential industry disruptors on the horizon.

Here is a snapshot of each of Deloitte’s top mining trends in 2018:

Bringing digital to life: data – and the ability to organise, manage, and process it – is rapidly becoming a competitive differentiator. Mining companies must embed digital thinking into the heart of business strategy and practices to transform the way corporate decisions are made.
Overcoming innovation barriers: innovation is necessary for the industry to transform, and it isn’t confined to technology; it includes the adoption of more innovative approaches to engaging with stakeholders, re-envisioning the future of work, and identifying the commodities that will be in greatest demand going forward. The need to demonstrate near-term returns combined with a traditionally risk-averse culture that does not foster collaboration are hindering efforts to innovate within the industry.
The future of work: while the adoption of digital solutions, such as robotic process automation, autonomous equipment, and artificial intelligence will augment performance in the mining industry, it also has potential to cause upheaval. Rather than eliminating jobs though, it will likely translate into concerted efforts to retrain people to use technology and redesign jobs at both the mine site and in the back office.
Shifting perceptions: to rebuild trust with employees, investors, communities, governments, and the public, many leading mining companies are embarking on efforts such as taking decisive public stances around corporate social responsibility, adhering to voluntary sustainability standards, and passing shareholder resolutions regarding increased disclosure on climate change.
Transforming stakeholder relationships: rather than approaching relationships with communities and governments as a cost of compliance, companies must determine how to make a concrete social impact that adapts to the benefit of different stakeholder groups.
Water – finding sustainable solutions to a pressing issue: as the UN estimates that water scarcity impacts about 40 per cent of the global population, mining companies must enhance their approach to water management through innovative methods designed to reduce, reuse and recycle water in water-scarce regions, and to contain and treat wastewater to prevent spillage or contamination of downstream water flows.
Changing shareholder expectations: performance measures should reflect varied objectives to create value for multiple constituencies — including customers, employees, suppliers, and communities — not just shareholders. This would free up boards to focus more on long-term strategies, succession planning, and leadership development, while linking executive compensation to broader corporate goals —including those related to good corporate citizenship and ethical behaviour.
Reserve replacement woes: as supply constraints plague the industry, mining companies will need to find a more agile way of replacing reserves — one that allows them to engage in exploration and development without sinking in large amounts of capital for long periods of time.
Realigning mining boards to drive transformation: Boards mired in old ways of thinking will increasingly struggle to fulfil new mandates, such as taking a more active role in challenging the executive team on topics from corporate strategy to digital disruption, talent management, and emerging risk factors. Diverse perspectives are necessary if mining boards are to effectively challenge organisational assumptions, assess the validity of new ways of thinking, and help determine if the organisation is taking on too much risk, or perhaps not enough.
Commodities of the future – predicting tomorrow’s disruptors: Turning disruption into opportunity requires a long-term view capable of assessing how emerging market trends may affect the demand for specific commodities.

Skills gap becomes key challenge despite rising industry confidence

The dark days of mining’s downturn may be over but the industry’s leaders now have different challenges to grapple with, according to Newport Consulting.

Skills shortages and cost pressures, not unfamiliar issues for the industry, have re-emerged as the key ongoing concerns for mining leaders, Newport’s latest Mining Business Outlook Report revealed.

Despite these emerging challenges, the eighth report in Newport’s series outlines that sentiment in the mining industry is positive, with the number of miners showing cautious optimism increasing by 55 per cent since 2015.

In addition, the report found that almost three quarters of industry leaders are showing renewed confidence in the sector’s growth.

However, it looks as though skills shortages and cost pressures may be a threat to this growth in confidence continuing.

Newport consulting managing director David Hand believes a spate of mining companies are concerned that Australia will face a growing skills gap, particularly in the areas of technology and automation.

“We spoke to many companies of all sizes that voiced concern over a widening skills gap, giving way to a pressing need to upskill and re-train the workforce. Miners must be able to meet the new digital demands of Australia’s mining future,” Hand said.

With a growing gap in the number of technical employees trained to manage future autonomous roles, Hand added there were signs that mining was “getting on the front foot” to ensure its workforce remained agile and flexible.

“Rio Tinto is a prime example of a company leading the field in this area, having recently partnered with the WA Government and TAFE Australia to provide vocational training in robotics for mining workers. The government should follow Rio Tinto’s lead to close this growing skills gap, which is occurring because of technology disruption,” Hand said.

A key takeaway from the report was the push from mining leaders to embrace new technology, with automaton continuing to become vital for operations.

Automation and Big Data were the leading priorities, with 21 per cent of respondents believing automated haulage vehicles will be the top technology influence to impact the market this year.

Drones, which are used to map, survey and explore mines, were considered another key area for investment.

Meanwhile, more than half of mining leaders predicted an increase in commodity prices over the next 12 months. The exception, however, was thermal coal, which was forecast to face price challenges.

After spending more in 2016, many miners plan to continue this trend, with 42 per cent expecting to moderately increase investment in 2017-2018.