Changing values

Only four years ago, the global mining sector (defined as all Mining and Exploration stocks in the world measured by SNL Metals and Mining) was worth nearly $USD2.5 trillion. Now, the 2,684 listed companies have dropped below $USD1 trillion. This is both distressing and interesting at the same time. As exploration has continued, more resources […]

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Power to the people

Every time we get a power bill, the thought pops up how nice it would be to disconnect from the grid and become totally self sufficient. After all, we’ve all heard the news that there are now battery solutions coming onto the market that will make this option a possibility in the not too distant […]

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D10 with full fire suppression system

Burning out of control

 

Weather Vanes

Something dawned on me last week – we need things to have gone too far and be so visible we can’t possibly turn a blind eye before we do something meaningful about them. Apparently there were two major new events: people leaving their home country for a better future (the refugees from Syria and other nations), and domestic violence.

Both are very sad and should never happen. But the most telling thing is that neither event started last week, and has in fact been going on for years, if not decades. Seems like a lot of people just woke up to it though, the media jumped on board, and like weather vanes, we had politicians swing into action to outshine each other about how caring they were about these matters – even though they’d done nothing about it previously. The result? They needed to be seen to be “doing something”, and within hours, there were quite radical commitments supposedly ready for implementation.

Unfortunately this was done without taking enough time and thought to develop a strategy of how to deal with the matters in the most effective way. For instance, not much thought was given to the fact that of the over 50,000 boat asylum seekers that settled in Australia since 2007, over 88% still rely on Government welfare as their main source of income, and only 6% work. Despite having been here for a few years now, 40% still don’t speak English, and almost half have never had a job in their lives. So the real problems that are still unanswered are: how do we integrate people into our society, before we can take more? And how do we stop these issues escalating or indeed occurring in the first place?

So how is this relevant to our industry? If an issue is raised at “the right time”, maybe the winds will blow strongly enough for change. Our industry has been subjected to change in the past with all too many people thinking we don’t have a voice, only to later complain when things become legislation and we pay the price with increased costs. Think for example about much of the compliance burden placed on us, adding up to about one third of the cost of doing a job, and for very little actual improvement. As a result, we’ve become uncompetitive with the rest of the world.

In the same week as the above, I was reminded that many of the access systems that had been a requirement on machinery on many sites are now being removed. They were once put onto machines at great cost to remove some hazards (with 2 in 3 people in our population now overweight or obese, many operators could no longer safely climb a rope ladder), but introduced new issues. The nail in the coffin seems to have been the unreliability and maintenance costs, meaning machines are better off without them.

Light the wick

The last straw for me in the last week was to receive a copy of a Draft Revision to Australian Standards AS5062, Fire Protection for mobile and transportable equipment. Apart from being poorly written (100 pages and with contradictions in for instance Testing frequencies), the draft seems to have been simply compiling different concepts from different fire regulations. Enough, already! I’m not sure who drives or writes these things. Someone suggested the Insurance industry, but if the cost of claims goes down (which I question that it would, the systems are purely designed to suppress the fire to buy a bit more time, not put it out), so too does their ability to charge (and thereby they reduce their profits). My guess that it was driven by the Fire Industry is a possibility still, but having talked to some industry professionals, they say it’s more like a mashing together of popular phrases than something workable.

In any case, I urge you to read it (click here to view the draft) and provide your input. What the Draft is heading towards is to match the highest current standards (Coal industry, but snippets from other areas), but to apply it to all mobile and transportable equipment:

  • A requirement for automatic fire suppression systems on all mobile equipment, including on all road haulage, registered plant, earthmoving equipment, trucks, 4WD’s and forklifts etc. An approximation is that this will add about $8-11,000 to the cost of an average machine.
  • Whilst the standard is for new equipment, it is “recommended” also for existing equipment. Past experiences have shown that this means old machines need to be retro-fitted, and many sites decide that old machines are non-compliant, hence they drop greatly in value despite having a good working life left in them
  • Increased risk assessment costs, for instance getting a competent person (i.e. fire industry employee) to inspect every time there is a change of use or ownership and at least once every 5 years
  • At least one fire extinguisher located in the vicinity of the operator (agree with this one)
  • Testing requirements on all the alarms and fire systems on the machine, including daily, weekly, six monthly etc, which can be interesting to achieve depending on where your machine is located.

My big question is: to what benefit? There are some environments where there is a need for these systems (for instance underground). But of 639 work related fatalities between 2006 and 2011 (the latest proper study, released in November 2014), only 10% were design related (the biggest ones were lack of guarding, rollovers without seat belts, and electrocution through lack of residual current devices). In fact, I have been unable to find a single incident where having the fire equipment as per this draft would have stopped a fatality or even an injury. Take a look also for instance at the below photo of a D10 with full fire suppression system in place. As a picture says more than a thousand words, I’ll leave it at that.

D10 with full fire suppression system

Jump to action

So what’s my point? Like the refugee or domestic violence situation, it’s time we did something about it. The point is we continue to have bureaucrats who like to look like they are doing something by increasing the regulatory burden on business. And it is about time that we made our voices heard loud and clear, that what they are doing is NOT what we want them to be focussing on. We don’t need more costly Red Tape, nor more people who feel a need to justify their jobs with extra paperwork or inspections.

So I’m asking for your help: in isolation, one piece of legislation doesn’t seem like much. But put them all together, and it’s becoming impossible to stay in business. Don’t let yet more legislation through that increases costs on our industry for next to no benefit. Lodge your voice by responding to this draft both directly (Click here to lodge your comment) as well as raise it through your industry organisations. And maybe the best approach is for us to ask them to justify why we need more regulation at all?

As always, onwards and upwards!

Fred Carlsson

General Manager

Put to good use?

“It’s been put to good use” can mean so many things: That it’s had a good run for you? Flogged and worn out? Been used for more and better purposes than initially intended? Obviously there are many variables, and it can be difficult to objectively gauge. Looking at Utilisation is one way to measure this, […]

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tefra quick hitch1

Hill TEFRA – Leading Quick Hitch Legislation

Quick hitch manufacturer – Hill Engineering Ltd is based in Newry, Northern Ireland and has over 20 years’ experience of designing industry leading quick hitch /coupler solutions. In 2010, Hill had the foresight to redesign their hydraulic quick hitch in order to improve safety standards globally. The TEFRA quick hitch (coupler) as not only met […]

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What’s the cost to your business?

Here’s a tip for anyone selling anything: you need to understand features and benefits. Whilst features are all well and good (fastest, most compact, prettiest or whatever), it is actually the benefits that the customer pays attention to. So what if it is the fastest?

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I was wrong…

“I was wrong once. It was when I thought I was wrong, but I was actually right”. It’s a saying I’ve used many times in the past… Unfortunately I don’t know its origin, but I guess it goes hand in hand with a reluctance to admit fault.

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Be a Budget winner!

Because Budgets bore most people, here is a short summary for our industry on how you can be a winner from last nights’ Federal Budget.

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The Contrarian View

Several miners are divesting non-core operations so they can concentrate on running their other ones better. Bigger has proved not always better. As highlighted in my June article (click here), many of our Miners have been working for about 2 years now on improving their cost structures, but still need to slash costs by a third just to match the second most expensive country.

How are our Miners doing?

Australian Mining companies are going through their annual reporting, with announcements of record production and overall fairly good results considering the falling commodities market. Well, sort of. As new mines come on line, our production volumes have increased, and hence so has turnover. Several miners are divesting non-core operations so they can concentrate on running their other ones better. Bigger has proved not always better. As highlighted in my June article (click here), many of our Miners have been working for about 2 years now on improving their cost structures, but still need to slash costs by a third just to match the second most expensive country.

Since writing that article, two further studies have been released on Australian Mining Productivity. Ernest and Young (EY) studied labour productivity in Australia. They found that productivity had declined by roughly half between 2001 and 2012. That is, per hour worked on our sites, we were shipping out half as much in tonnes. In another study, Price Waterhouse Coopers (PWC) analysed equipment usage at 136 mines over 5 continents. Australia had better equipment productivity than Africa, but was behind South America, Asia and about 30% below North America. From 2006 to 2013, Australia’s equipment productivity for open cut mining equipment fell 18%. Investment in new earthmoving equipment increased 17% annually, but output increases didn’t follow. The report identified several reasons for this, including:

  • that benchmarking was based on how much was produced compared to the prior year without considering how it was done (and what it cost),
  • for a period some mines were forced to acquire equipment that was available rather than what they really needed.
  • Talent shortages meant less skilled persons were used to run the equipment.
  • In some instances, similar mines in similar locations had almost half the productivity of others. They should ask themselves why.

I’d add that a major cost of machinery is depreciation and interest costs, and many times there are cost savings available by maintaining existing machinery rather than replacing it with new. RD Williams can help with providing excellent used machines to overcome these cost problems. We can also help reduce another major cost (maintenance) by providing you with competitive top-quality parts and components to help give you an edge. Smart businesses are making these adjustments now, and as an Industry, we should be able to right some of these issues, so we have a strong and sustainable Mining industry for the future.

Bad news sells, while good news stays under the sheets!

Reading the daily paper is depressing. The covers are dominated by negative headlines. But when you look under the sheets, there are largely positive messages out there. Here are some, in case you fell for the shock titles:

  • 109,900 new jobs have been created in Australia in the seven months from January 2014. The reason the Unemployment rate increased is due to changes to the participation rate, that is, trying to get people off welfare and into meaningful employment.
  • Inflation is steady, interest rates have been at record lows and are expected to stay there, Business lending is up 12.1%, and construction lending is up 7.6% in the last year.
  • Dwelling approvals rose 16% last year. Dwellings started were 48,964 in the March quarter, the highest level since records began 30 years ago.
  • ANZ’s job ads index has risen for the last 9 months in a row. The stock market has risen 17% last year, and national capital city house prices 10.2%.
  •  Employment numbers in the Australian Mining Industry have increased by 106,700 jobs in the five years to May 2014. We hear about all the jobs being lost, but not about the ones being created. Qld was up 28,400, of which 9,900 were added in the last two years, largely in the LNG industry. As the transition from Construction to Production finishes, 16,000 jobs across Australia are expected to disappear by 2018, but contrary to popular headlines, this still means the sector has added over 90,000 jobs over the last decade.

Not everything is positive of course. Business and Consumer confidence is below where it should be (but improving) because we are sick of political games, and we could do with more Infrastructure investment actually kicking off. There is also something wrong when the highest average wages in our capital cities are in Canberra because of (as the Australian Bureau of Statistics said) “the high proportion of public sector workers, who traditionally earn more than those in the private sector”. Maybe EY or PWC could look at turnover and productivity here too? (and I wasn’t thinking of number of pieces of paper produced).

Our own Power Station

The Carlsson Family has now become the proud owner of our own Power Station! With the household roof now “decorated” with this fashionable household accessory, we “look forward” to receiving our next power bill. I’ve never believed in buying into Government induced markets (look at Pink Batts, Water Tanks etc for other examples) because the schemes distort markets, bring in shonks, and can be changed at any time.

One of the leading power suppliers completed a study recently that found some areas where shoddy installers had been active had as many as 30% of the new systems faulty, with most owners none the wiser. In another study, the Sydney Olympic village which was one of the first places (before 2000) in Australia to install solar systems (certainly on a larger scale), a recent investigation found 25% of those systems were no longer operational. When owners were notified of the failure, only 11% made repairs (mainly inverter failures). These systems were small (0.5-1kW), hence possibly why the owners hadn’t noticed they weren’t working, and inverter technology has now improved.

So why did we do it now, when the schemes are largely wrapped up? Well, compared to the price we obtained about 3 years ago, we now bought a system twice the size for half the money. I have no doubt system prices will continue to fall as technology improves and the market matures, but the decision to do it now was that overall Australia is reducing its Power Consumption, and with more people on this scheme, the overcapacity in the market will fall on a smaller number of users, hence excessive future price rises are almost guaranteed. We designed the system to match our usage (facing East and West, not North – giving more power in mornings and afternoons when we consume more). Whilst it is still winter, performance so far is that the 5.5kW system gives between 15 and 20kWh per day, or probably making me a cup of coffee each day (about $4 – maybe it sounds more impressive to say $1,500 per year, but I like my coffee). It’ll be a bit more in summer, so I believe the true payback time all costs included will be about 5 years, which means an annual return of 20%, much better than the interest you can get in the bank.

Clearly, with over 1 million Australian households now having solar panels, I’m not an early adopter in this field. And proud of it. It makes more sense for businesses to get solar (that generally operate at the times when the panels produce power). The problem is that the building owner (who would generally install the system) and the business owner (who gets the ongoing benefit) are usually separate entities.

Blood sucking parasites?

For about a year now, RD Williams have had the Red Cross Blood Service come to our site so our staff and local businesses can donate blood to help those in need. We are now broadening the initiative by also inviting all our valued customers to join us any time on Monday the 1st of September. Please contact Samantha on 3875 1358 to make arrangements, and let the Red Cross suck your blood!

As always, onwards and upwards!

Fred Carlsson

General Manager

Why so Gloomy?

I Love returning to work after being overseas. Truly, I do, because I work with great people in a great company and we make exciting things happen. The trip overseas reminds me that we live in a great country with so much going for it – we have the best environment and climate, world leading […]

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