2015 will mirror 2014 for the Australian mechanical power transmission industry, in that times are not easy and the whole sector is reliant upon the economy overall. A lot of PT manufacturers have operations in Australia, and the next two years are shaping up as being critical on their future in this country.
Here’s a random list of what will be important for the power transmission industry this year.
Australian Dollar Finally Subsides
AUD vs USD
Fluctuating currencies have always played a part in the Australian power transmission supply landscape. Lately, a sustained period of high Australian dollar valuation has kept a lid on pricing issues from manufacturers of imported power transmission equipment.
Price increases from power transmission manufacturers who deal in USD might be expected, with the AUD to USD exchange rate dropping significantly in only the past few moths.
Manufacturers of European power transmission equipment or companies who receive payment in Euros will have less call to increase prices, with the AUD to Euro exchange rate being relatively stable since mid-2013.
AUD vs EURO
On the flip side of the coin, relief for manufacturing exporters from the weaker dollar may at least let them keep fighting on the world stage.
Mining Boom Continues to Slow
The sustained mining investment boom has been beneficial overall to the Australian economy, increasing real household disposable income per capita by an estimated 13%.
The benefits at the top end definitely haven’t been experienced across all industries, however, as the mining boom has undoubtedly hastened the steady decline in manufacturing experienced since 2008.
As far as the mechanical power transmission industry is concerned, power transmission manufacturers have wholeheartedly supported the mining industry’s premier trade show AIMEX, forsaking nearly all support for National Manufacturing Week and its more generalised manufacturing focus. They may have been right in doing this, for during the mining investment phase, expenditures continued to remain very strong.
The mining operation phase (that most projects have transitioned to) obviously requires much less capital expenditure and little maintenance expenditure whilst the plants are still new. As a result, we will see National Manufacturing Week regain support from the PT manufacturers as they look to regain a footing on industries with expenditure.
Industries In Trouble
Automotive Manufacturing
This time last year, Ford and Holden had both recently announced that they would be ceasing local manufacturing operations, with Toyota still yet to make a decision. Toyota’s decision to join the others in the manufacturing retreat came in February.
With no automotive manufacturing operations in Australia at all from 2017 (and demand for cars made locally until the closing date drying up very quickly) a big hole in overall manufacturing capacity will play a part in reducing total demand for PT equipment.
Automotive Components Manufacturing
The federal government’s Automotive Diversification Program aims at helping automotive components manufacturers to find ways to innovate to find new products and markets. We are yet to see any real gains from the initiative.
Naval Defence Manufacturing
The Collins-class submarine replacement as well as continued naval warfare capability are all coming into question for ships manufactured in Australia. Issues such as economy of scale for manufacturing, total demand by the navy, ramp-up costs and even ship performance have forced the federal government to look at alternatives to simply signing the cheques for ASC to take the contract.
Obviously, importing Australia’s warships would have a detrimental effect on the Australian mechanical power transmission industry.
Star Performers
Food and Beverage Manufacturing
The food and beverage manufacturing industry remains strong and continues to expand. Both local consumption and export demand is on the rise and manufacturers are making this industry sector one of their clear areas of concern. This should remain the case for the foreseeable future, although some individual producers have been finding things tough or retiring entirely.
Environment
Electric motor efficiency and continual improvement will shape product offerings from key manufacturers, who now fully embrace efficiency’s importance to sales.
Conclusion
So there it is, a random, non-comprehensive list of things that will play a part in the mechanical power transmission industry in the coming year. Unfortunately, most factors cannot be planned for or mitigated against as they are macro-economic concerns, so we will see how things play out in due course.
