Australia’s demand for materials handling equipment (MHE) is US$2.8 billion. Imports constitute 67 percent of the market; with imported equipment from the United States totaling 19 percent. MHE has applications in Australia’s mining, farming, and manufacturing sectors. Since 2002, a nation-wide drought has adversely affected Australia’s agricultural sector. The Global Financial Crisis (GFC) briefly dampened demand for capital equipment in the manufacturing and mining sectors. While demand in the manufacturing sector is expected to recover slightly, mining companies anticipate strong demand for capital equipment, including MHE. In light of rising world commodity prices and capital spending, the future for U.S.
MHE suppliers to Australia, particularly within the mining sector, looks positive. Australian companies favor investment in cost-effective equipment that enables them to improve productivity, boost efficiency, increase safety, and demonstrate environmental responsibility. Occupational health and safety is a priority in the mining sector. Stringent regulations, influential unions, and standard codes of practice are strictly enforced on mining companies. Good opportunities exist for U.S. suppliers of automated systems that maximize worker safety.
Over half of Australia’s capital expenditure occurs in five industries: mining (16.3 percent); transport and warehousing (13.3 percent); rental, hiring, and real estate services (10.9 percent); electricity, gas, water, and waste services (9.3 percent); and manufacturing (9.2 percent). MHE has primary applications in Australia’s mining, farming, and manufacturing sectors.
Primary metal product manufacturing is Australia’s major export industry. The net capital expenditure, by manufacturing businesses in 2006-07 was US$11.5 billion. The largest contribution (US$2.8 billion or 24 percent) occurred in primary metal and metal product manufacturing; followed by food product manufacturing (13 percent), and transport equipment manufacturing (12 percent). In 2006-07, Australian manufacturers exported US$41 billion worth of merchandise, amounting to 16 percent of total production. The nation-wide drought had an adverse affect on Australia’s agricultural sector. The Australian Bureau of Agriculture and Resource Economics (ABARE) estimates the total summer crop area in 2009-10 is 845,000 hectares; a reduction of 27 percent from 2008-09. As the result of sustained hot and dry conditions during the main planting season throughout 2009, the plantation area for grain sorghum has declined; particularly, in the areas of southern Queensland and northern New South Wales. The availability of irrigation water remains critical for both cotton and rice industries. Improved water storage levels have increased field sizes, but they remain small in historical terms.
Australia consistently ranks as one of the world’s leading mining nations and mining equipment suppliers have a strong presence in Australia. Despite capital expenditure falling in the second half of 2008 and throughout 2009, the total remains 10 percent above 2007 levels. Some mining companies have chosen to defer investment plans due to the global financial crisis and weakened commodity prices. Post-GFC will see mining companies progressing forward with previously shelved projects.
The market size for mining equipment exceeds US$5 billion. The Australian mining industry imports approximately 70 percent of its equipment, and continues to be the second largest export market, behind Canada, for U.S.-manufactured mining equipment. Purchasers of MHE recognize U.S. products for their quality, and will likely pay a premium to avoid heavy losses associated with equipment failure or production delays. Despite weakened demand for capital equipment, demand for consumables remains firm. There are strong prospects for U.S. MHE suppliers arising from improving world commodity prices, surging capital expenditure, and favorable exchange rates.