Interest rates - Driven higher by relatively high inflation
Interest rates and Australian monetary policy generally have seen the Australian dollar continue its upward surge, finding a new home above parity with the US dollar and over 70 Euro cents. As with all facets of the Australian market, the power transmission industry is reliant upon both imports and exports. Imports impact All Torque with our Bonfiglioli, Baldor, WEG, Comintec and Flender ranges, actually bringing the landed cost down across the board; whilst exports are a significant part of our customer income and directly affected by too high a local currency.
Our range of Reeves belt variators is also directly affected by the higher Australian dollar, with 90% of each unit manufactured in Australia utilising local sub-contractors (foundries, machine shops etc.). Competitors can offer their fully imported belt variators dependent on the exchange rate of the time.
Continued erosion of manufacturing customer base
More and more Australian businesses are shifting manufacturing capacity to SE Asia and China for a lot of reasons. Whilst natural and sustained growth is also on the horizon for at least the next generation, the ratio of Australian manufactured goods is only going to continue to decline.
Inability to recruit salespeople with industry knowledge
The mechanical power transmission industry is not the sexiest game in town and getting quality staff with a broad knowledge of the industry is getting harder all the time. Whilst the average age of the active workforce continues to creep higher, so too does the average age in the PT industry overall. Finding, training and maintaining quality staff is the key across all industries.
Reliance on strength of mining for continued growth
It used to be the sheep’s back that carried Australia. No one will deny that Australia is now reliant upon the strength of the Western Australian and Queensland mining industries for future prosperity. Issues with handling the two-speed economy are the biggest for any government of the day, but impact upon every business in Australia.
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