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?

“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.

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.

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 1^st 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

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 […]

Steven Ham has put himself back in the title fight for the Australian Top Alcohol Championship by winning round six at Darwin’s Hidden Valley Dragstrip last weekend.

All the Comedy fans out there will immediate associate “Nothing to See here, move along” with Frank Drebin in Naked Gun 2 1/2, standing in front of a burning Fire works factory. The scene tells a thousand words.

“What about me, it isn’t fair, I’ve had enough now I want my share, Can’t you see? I wanna live! But you just take more than you give” – Moving Pictures, or for our Gen Y readers – sung more recently by Shannon Noll

Request the Best

The NSW WorkCover Position Paper on Quick Hitches for Excavators and Loaders takes effect on the 1^st of May. For full details on the requirements click here. RD Williams recommends that when purchasing your new machine or replacing an existing hitch, you request the best, and insist on a Tefra quick coupler. Not all hitches are created equal, and whilst several brands will meet the WorkCover requirements, the below points should be considered when making your selection:

1. No Swinging attachment – there is expected to be an amendment to the current standard within 12 months to add the requirement that both pins are fully enclosed so that the attachment can’t swing. Don’t get caught having to replace your new hitch when the change comes through.
2. Does the Hitch Fail to Safe ? If Hydraulic power is lost in any situation, the secondary safety system should activate the hitch to lock the attachment on – from any failing position.
3. Can the hitch only release using a Safe Detach Sequence ? If not, the operator can inadvertently release the attachment, which does not improve safety at all compared to the old requirements.
4. Can the hitch accommodate Variations in Pin Centres ? Not all attachments are created identical and as a result, have pin centre variations. A quick hitch using a bar or hydraulic pin insertion design relies on the attachment having exactly the same pin centres as the hitch.
5. How will you know if the hydraulics to the hitch has failed? Failure Indication is an essential safety feature.

There has been considerable misinformation about springs on quick hitches. All Quick Hitch designs include at least one spring somewhere to function, none of which are illegal, but utilise it in different ways. The Active Protection System on the Hills Tefra quick hitch is a fully Independent secondary locking system comprising two component parts. A coil spring around the cylinder ensures that the rear hook remains in the correct position in the event of a hydraulic failure. A leaf spring on the front hook acts to maintain it in the correct position in the event of a hydraulic failure. The springs do not take the weight of the attachment, this is done by the coupler hooks, the springs are there solely to keep the hooks correctly located . In addition, the pressure exerted by the springs provides a ‘Return to Safe’ feature ensuring that the hooks always remain in, or return to, the closed position. This combination of safety features is unique within the attachment industry and now provides excavator operators with the safest coupler on the market today.

RD Williams philosophy has always been to provide a quality product at Value for money prices. As far as we know, the Tefra hitches we provide is the only quick coupler that exceeds all current requirements and meets all the above criteria. In fact, the design is so clever that the manufacturer was just awarded “The Queens Award for Enterprise: Innovation”! The judges were particularly impressed with the quick hitch being so simple (only 3 moving parts, making it very reliable), yet revolutionalising the hydraulic hitch market with features taking it to a whole new level compared to existing offerings. So, request only the best, a Hills Tefra Quick Hitch!

A Super Pension Choice

No one seems to dispute that the current Pension system is unsustainable. But equally so, nobody wants to “lose out” by changing it. The “lose out” definition seems to be more about peer comparison and jealousy, than it does comparing to the current situation. As a society, we’ve become so accustomed to demanding compensation any time a rule changes adversely, which is why the tinkering at the edges approaches over the last few years has failed. What is needed is a full rethink.

Superannuation was supposed to replace the pension for most Australians. This isn’t working, because everyone is trying to get both “their” pension (4 out of 5 Australians over 65 receive a full or part pension), and keep their super income. So through tax planning, the “rich” collect pensions by using different schemes such as cashing in super at retirement or keeping their main asset (highly valued homes) outside the pension assessment criteria. The “poor” on the other hand prefer to spend all through their working lives (knowing they’ll get a pension) rather than save, only to fall short of enough money for a comfortable retirement.

So everyone is playing the system. The “smart” decide early whether to spend now (and hope the Government Pension system will be there for them), or make a go of saving so that they’ll have enough to self-fund retirement. The “foolish” (most of the population) get stuck in between. Which is why it is refreshing to hear the Australia Institute (sometimes referred to as the loony left-of-centre think tank) suggest a different approach:  Raise the pension by 7.5%, and pay it to everyone. The kicker is to remove all other Superannuation tax concessions. This would make anyone who saves or makes investments able to spend it on whatever they like, whenever they like. With Superannuation tax concessions growing at 12 percent per year (compared to the age pension growing at 10%), the Federal Government would be better off too (the figures are rubbery, but estimated at about $35 billion per year, so a big difference).

My first reaction was that the idea was stupid. But then I realised that it is this kind of thinking that we need to start questioning the Status Quo. And who can argue that everyone receiving the same amount is unfair (except perhaps that some people contributed more or less in taxes to pay for it, but that applies to everything Government provides)? But of course we won’t have a mature discussion about “radical” ideas like this, because the $1.5 Trillion (and growing) Superannuation industry collects about $20 Billion in fees each year, and will fight any changes that reduce their market size. Since 1997, the Australian consumer financial services market has grown at ten times the rate of the population, largely on the back of compulsory super (now comprising half the financial services market). Of course, their market need not reduce in size (they just need to encourage people of the benefits of saving), but they’d need to start justifying their fee’s – and perhaps that’s hard? 1-2% (irrespective of balance) with no accountability for the results and for not really doing much at all. Alan Kohler recently suggested perhaps the Funds should be forced to invoice their customers for fee’s rather than automatically deduct it from the super account – it would highlight the fee’s to everyone, and maybe that’s a good start?

Society’s Hand Brakes

Vehicles continue to have better safety systems and our roads are progressively improving. Police enforcement is also increasing, particularly in the easy enforcement areas of speeding and drink driving (and increasingly Drug testing). This has kept the road toll fairly steady in recent years. The next area that needs to be addressed must be related to Society’s hand brakes. You know, the ones that hold everyone else back. For instance, during a recent country drive, we’d be driving in a nice 100km/h section in a long queue of vehicles stuck behind someone doing 80km/h. Technically, they are not doing anything illegal, or even dangerous. Until we hit the overtaking lane, and the same vehicle accelerates to 100km/h (or slightly more) until the lane finishes and they revert to toddling along at 80km/h again. Sometimes, they even occupy the right overtaking lane too. This selfish behaviour then “forces” others into dangerous behaviour. These hand brakes on society also take other forms, like texting at lights, hence missing the flow of traffic. Of course, they sneak through, but you don’t. So it is others that wear the consequences of their slowness and lack of presence in the moment.

Our roads would be much safer if we encouraged proper driver education, including compulsory collision avoidance training. Maybe then we could review the speed limits on our roads up from the current levels in line with the advances in road construction standards and vehicle technology. And those choosing not to be present whilst in the drivers’ seat can catch buses, planes or trains.

A Simple Health Review

How can we afford a quality Health system when the cost is increasing faster than taxes paid? Our Health system has complicated so many things that should be simple. For instance, there is a (complicated) calculator that compares an Average Hospital procedure in different states. In simple terms, the National Average is $860 per procedure. Federal Health Care funding is then based on the number of procedures times the National average. In Queensland, our average is about $1,200 per procedure, with the State Government having to fund the difference, that is about $340 per procedure. In Victoria many years ago, the Kennett Government reformed their Health services, and as a result, their average procedure now costs $600. For each procedure, Victoria therefore gets $260 extra in Federal Funding, which they can spend on whatever they like, because the system makes money for them. This funding model is a good idea in principal, as it presumes each State will try to improve their systems.

So why does it cost twice as much for a procedure in Qld compared to Victoria? I’ve given some examples in previous articles, but it would seem that it shouldn’t be particularly difficult to improve the Health Care in Qld without any increased cost whatsoever to the tax payers. So simply speaking, it may be healthy to learn half a thing from Victoria!?!

As always, onwards and upwards!

Fred Carlsson

General Manager