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In recent years, much has been made of the ability of Australian manufacturers of pumps and associated equipment to continue to export their equipment in the face of the rising Australian dollar and increasing competition from global manufacturers. Pump Industry met with some of the key players in the Australian market about their experience in exporting in the current economic climate.

For the 2013/14 financial year, the value of exports from the Australian pump manufacturing industry was estimated at $415.3 million dollars. This is compared with the value of imports into the Australian market, which are forecast at $2 billion – almost quadruple the value of the equipment being exported.

According to IBIS World, 12.4 per cent of exports are to Indonesia; 12.1 per cent are to New Zealand; 10.9 per cent are to Papua New Guinea; and 8.4 per cent are to the United States. Thus we can see that almost half (43.8 per cent) of Australia’s pump industry exports are to close neighbours in the Oceania region.

Australian exports up close

Pump Industry approached three companies operating in the pump industry for their take on the current state of play in the export market. Our three respondents are Weir Minerals Slurry Pump Product Manager Martin Naimo; Sterling Pumps Managing Director Anton Merry; and Crusader Hose Managing Director Francois Steverlynck.

Our respondents are all exporting a wide variety of products. Sterling Pumps are exporting submersible and vertical turbine pumps, primarily for the oil and gas industries; while Crusader Hose exports layflat hoses in large diameters. For Weir Minerals, it’s a varying range of products including Warman centrifugal slurry pumps, Linatex rubber products, hose and screen media, mill lining solutions, Isogate and BDK slurry valves, Cavex cyclones, Enduron comminution equipment including screens and crushers, and Aspir centrifuges.

There are some notable trends as to where Australian manufactured pump equipment is being exported, with Asian markets being the most popular export locations cited by our respondents.

According to Weir Minerals’ Martin Naimo, “At Weir Minerals Australia we focus our exports across the Asia Pacific region, including: Japan, Korea, the Philippines, New Zealand, PNG, Fiji, New Caledonia, Indonesia, Laos, Vietnam and Mongolia. In addition to these countries, Weir Minerals Australia continually looks for opportunities in other emerging Asian markets where we currently do not have an installed base. Weir Minerals Australia also supply products manufactured in Australia to our sister companies throughout the world.”

For Sterling Pumps, Europe and the Middle East are also proving to be strong export markets for the company. Crusader Hose meanwhile is primarily exporting to the US, where they are seeing a large market for their layflat hoses in the fracking of oil and gas wells.

In terms of future markets for these companies, most are expecting to continue to capitalise on the opportunities in the regions they are already exporting to; and all are expecting to increase their exports in the coming years.

According to Mr Naimo, “With a wide presence throughout Asia, we are predicting an increase in exports as a result of our service and sales presence in the region, as well as upcoming projects in the mining and flue gas desulphurisation markets. We have recently opened new offices in Indonesia and the Philippines. Projects kicking off in Vietnam and Thailand are expected to result in an overall increase in exports to the region. In addition to the growing market demand, we are also expanding our product offering to include a wider range of mineral processing equipment. We continue to offer these products based on our existing philosophy of high quality robust equipment aimed at lowering our customers’ total ownership costs.”

Anton Merry of Sterling Pumps notes that emerging oil and gas markets are expected to continue to drive export growth for Sterling Pumps; and for Francois Steverlynck at Crusader, the shale gas boom across the US is continuing to drive their growth.

Mr Naimo believes that growing geological investment into the South East Asian region, and a more open stance on foreign involvement from governments in the region, will result in an upturn in opportunities over the coming decade. “Much of this is driven by the success of other countries in the region that have successfully developed mining industries that are both profitable for the companies involved and great for the continued development of those nations,” he added.

“In terms of the challenges our exporters face, a major challenge is the remoteness of mining sites, and → the logistical barriers which need to be overcome to service these customers”.

Government policy and legislation can also pose challenges to our exporters. Mr Merry noted that “Australian autonomous sanctions can cause shipment delays of exotic materials, even if they are not bound for a sanctioned country. We need to be more in step with Europe and Asia.”

However, most agreed that certain government export programs, such as Austrade, have helped to open up international markets to Australian manufacturers.

Mr Steverlynck noted that these programs do help, with Austrade in particular supporting a wide range of industry sectors and products, and the export of intellectual property and know-how outside Australia.

When it came to the question of why international companies choose to import Australian products, several key factors stood out for all of our respondents – quality, price, service and support.

“Weir Minerals Australia is a well-established name in Australian manufacturing,” said Mr Naimo. “Warman Pumps recently celebrated its 75th year manufacturing slurry pumps in Australia and is renowned globally as the benchmark in slurry pumping equipment. Furthermore, our state of the art domestic facilities for manufacturing the Cavex cyclones components and Linatex mining hose products are producing market leading products for customers around the globe. Our customers, both domestically and overseas, recognise the expertise we have in manufacturing the highest quality products at our Australian and global facilities. Through our continuous improvement objectives with our customers we strive to improve reliability while reducing total ownership costs. Our long history, experience and knowledge base allows us to provide the best available technical solutions for our customers. It’s this combination of service and equipment quality that leads our customers to choose us.”

Added Mr Merry, “Our availability and the quality of the products we manufacture appeals to international importers. In addition, in Asian markets our location is important for product support.”

For Mr Steverlynck, the answer is simple. “It just comes down to trust in our quality and service.”

Overall market position

For the 2013-14 year, the domestic pump industry recorded revenue of $1.6 billion and profit of $195.7 million. The product and service segmentation of this $1.6 billion is shown in Figure 1.

The major markets for the Australian pump industry in turn are broken down in Figure 2.

IBIS World forecasts that conditions in the Australian pump industry will remain stable over the five years through to 2018-19, underpinned by a relatively strong economy and healthy demand conditions in most downstream markets.

Ongoing development in the resources and water treatment sectors, as well as an improving outlook for the rural economy, should stimulate demand for pumps and compressors. Revenue in the industry is forecast to increase at an annualised 1.9 per cent over the five years through 2018-19, to total $1.7 billion.

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