After a tough year in 2013, we asked some of the leaders in the Australian pump industry for their thoughts on what 2014 may hold.
The outlook for 2014
The outlook for 2014 is one of cautious optimism with most companies noting an improvement in confidence. While some expect this to translate into a better year than 2013, others expect things to hold steady. According to John Weaver, General Manager of Xylem Water Systems, “With the Federal election out of the way we are hoping for stability to return to the market place and encourage companies to expand their operations and purchasing patterns. We are expecting growth over 2013.”
Whereas Mathew Harris of IDEX noted that “The pump industry has plateaued and 2014 outlook should be similar to our expectations for this year. Although the confidence level for many industrial customers has rebounded from the first half of this year, many customers are still reluctant to expand their businesses however as we continue to work closely with our selected distribution partners our products and customer service position us for continued growth.”
Rob Brown, Regional Managing Director – Asia Pacific, Weir Minerals Australia said that he doesn’t anticipate any major changes in the pump industry between 2013 and 2014, particularly in the new projects arena. “There are some analysts who believe there may be some increase in H2 2014, however I believe there are still too many variables at play to make this prediction with any certainty.”
Many companies also considered the impact their own plans would have. Brown noted that “Our area of focus will be on minimising total ownership costs and ensuring that Weir Minerals continues to enhance our offering across the whole mill circuit process.”
Peter Vila, Managing Director of seepex Australia said that “Globally, seepex has a positive outlook for the pump industry in 2014 and from a local perspective, we are certainly expecting an improvement over 2013, which was our inaugural year with direct seepex presence in Australia.”
Steve MacDonald, General Manager of Pump & Power at Kennards, thought that “The outlook for us will be identifying our key clients and building strong relationships. We can do this by looking into custom requests and some unique product lines. The weather combined with the resource sector downturn has made us focus on being business fit as well as equipment fit, ready for the upturn when it comes around. 2014 will be a similar business climate to what we experienced in 2013.”
Mark Woodley – General Manager – Asia Pacific, KETO Pumps Australia believes that “There are lots of doom and gloom discussions in the industry currently. Talk of cost cutting and budget slashing is rife. Historically these have been the times in which we outperform the competition.
According to Woodley “Our intimacy with the customer allows us to work with them to achieve their objectives. Tightening of the procurement purse strings means that the customer looks to suppliers to dig deep and support them or look to alternate supply. We see both of these outcomes as opportunities for KETO.”
Key factors driving the industry
Our industry leaders noted both external and internal factors as having an impact on the industry in 2014.
According to Vila, “Projects and maintenance across all market sectors have greatly influenced pump industry performance in the past and we expect this to continue. For project work, the market generally moves in cycles, where now for example, we are seeing a momentary downturn in what has been a golden era for mining, but this is being somewhat offset with increased activity within the LNG sector. We’ve seen similar in the past with water/wastewater, petro-chemical and to a lesser extent, general industry, food & beverage, all having had golden eras at some point or other. Unlike project work, maintenance for existing installations is generally far more stable, whether it be spare parts or direct replacement pumps, maintenance is essentially the heartbeat of our industry.”
Julie Truss – Product Manager – Slurry Pumps, Weir Minerals Australia said that “As our customers are primarily mining companies, the drivers for our pump business closely mirror those of the mining industry. The key factors include future metals prices, demand for metals, exchange rates, the relative cost of mining in Australia compared with the rest of the world, and the availability of capital for investment. When mining companies are pursuing fewer new projects and reducing capital spend in operating mines, this obviously has an effect on the pump industry.
“In 2014, I would expect a continued focus from mining customers on value for money and getting the most out of their existing assets.”
Weaver agreed that a stable economic environment and investment in infrastructure and business were key.
Others looked more to their own businesses with MacDonald saying “For us as an Hire Company, it has been the relationships we have with our clients, along with some company’s deciding against capital purchases on larger pumps. They have been hiring when the need arises.”
This was echoed by Harris who noted “Our growth and performance is driven by continual improvement to customer service and quality products. IDEX is proud to have strong distribution partners that focus on continuous improvement to delivering exceptional customer service.”
Woodley said “We see a shift from a focus on capital cost to through life cost, particularly in the mining sector where OPEX is so important. This means suppliers that can provide good pump efficiency and more importantly long wear life will benefit. KETO have various solutions for extending wear life and we’re responding to calls from the market for even better longevity of parts with improved designs and materials.”
Individual sector performance
The relative slowdown in mining was expected to continue, but the sector should still remain a substantial contributor. Other sectors expected to be strong in 2014 include LNG and water/wastewater.
Brown explained “the weakness in 2013 has certainly been the coal sector and is directly correlated to coal price. While all the macro indicators suggest that this is a cyclical event any recovery will be simply driven by the recovery of coal prices.”
Weaver noted “the major impact sector wise will be the mining industry having come off the boil in recent times.”
Woodley saw some positives in mining and expects that “It is likely that some new project work will be a little depressed compared to prior years, particularly in mining. Existing mine sites are looking to get more from their assets so increasing throughput and ultimately decreasing total cost of mining will be drivers. This will lead to an increased focus on pump upgrades and quality replacement parts.”
Vila said that “We expect the current focus on LNG to continue in 2014 and believe there will also be increased activity within most other sectors, particularly water/wastewater and bioenergy. Mining, though may not be quite as active when compared to the previous few years, will still remain a key sector for the pump industry.”
MacDonald also said that “The utility market has performed well as essential services and repairs still need to go ahead regardless of the economy. The civil/construction pump requirement has been picking up of late.”
Preparing for 2014
The pump industry is preparing for the challenges of 2014 by investing in products, people and customer service,
Vila explains, “Creating an Australian presence in 2013 was seen as our first step toward preparing for future economic conditions in this region. In an increasingly competitive market, we feel it’s essential for businesses to form close relationships with their customers and work in partnership to achieve mutually rewarding outcomes. The structure of seepex Australia is being modelled with this in mind.”
MacDonald said that Kennards has “been investing in newer equipment, working on our people to ensure the right people are in the right roles.
“We will be business fit in all areas, ready to make the most of every opportunity as they arise.”
“Weir Minerals has demonstrated on several occasions, including during the GFC, the ability to manage our internal economics and maintain our financial performance,” according to Brown.
“There is no magic to this. It’s about being even more vigilant on controlling cost, ensuring that we don’t compromise on safety and maintaining our focus on ensuring that we deliver on our promises and exceed our customers’ expectations.
“In addition, continuing to expand on our product portfolio including after-market will allow us to provide a wider and deeper product and service offer for our customers.”
Harris said that “IDEX’s focus for team development and lean manufacturing has helped to continue develop organic growth and increased shareholder value, this means throughout 2014 we have the ability to be more responsive to our distribution partners need to enable them to improve end user satisfaction.”
Woodley explained KETO’s strategy, saying “We will continue develop our solutions based approach to customer issues, increase our ability to service our customers in line with our strategy of increased intimacy with our chosen client base.
“We have seen that customers want one stop shop solutions, encompassing custom/bespoke packages specifically tailored for customer’s conditions, safety requirements, and standards. In this instance KETO’s size is its strength. Large enough to be considered a serious tenderer, but not so large as to be immovable, and unreactive. ”
New products and plans
The Australian market should expect to see some new and improved products in 2014.
From Weir Minerals; ” We have developed the Warman® WBV®, a self-agitating sump pump, which has had great success in solving problems where our customers have bogging sump pumps. In addition to the current models, more sizes will be released in 2014,” according to Truss.
“In 2014 we will be installing a number of our tenacious froth ‘problem-solver’ pumps around Australia. The pump is called the Continuous Air Removal System (CARS). This design retrofits to the Warman® AHF™ series of slurry froth pumps. Trials have shown this pump to be a significant leap over existing technology, giving huge improvements in pumping stability and a reduction in power usage.
“Weir Minerals also continues to invest heavily in new materials technology and industry leading design developments for the highest wearing pump applications, and we are confident of making significant enhancements in this space in 2014 as well.”
Vila explained that seepex’s “SCT” design is a relatively new product, at least in Australia. “This technology has been available overseas now for 3-4 years and has been a huge success for seepex throughout Europe and USA, but due to a lack of promotion in Australia, it is still early days here. Now, with strong local focus, we expect to see some positive changes over the coming months and years, as the market gradually begins to learn about the advantages of this technology and the associated benefits, from both an operational and maintenance perspective.”
“IDEX continues to invest in product development and 2014 will see many of our business’s release new pumping products specifically designed in consultation with our key customers to meet their demanding operating demands,” said Harris. “The introduction of expanded after sales support and service kits for IDEX and competitors pumps will help pump users extend the operational life of their current pump infrastructure and reducing the total cost of the operations.”
“KETO plan to unveil many new products to complement the core business,” said Woodley. “Again, following the strategy of providing solutions and not simply pumps. Pumps, pipelines valves, dewatering packages. Part of this strategy has been to take on the master distributorship for PexGol piping, an innovative product far in advance of the traditional ABS pipeline used in mining currently.
“Local supply to allow rapid response is something KETO are frequently asked for. To meet this demand we are investing heavily in stock and have moved to a new Australia HQ in Perth which is now the largest stocked facility for mining pumps.”
Kennards “have been exploring the “add on” to our offerings, through flow meters, test tanks and sediment tanks, etc. we have been lucky that we also hire our generators which have been growing over the last few years,” said MacDonald.
According to Weaver, “Our major plan is to increase the awareness of the Xylem name and brands across Oceania.
Conclusions
Pump Industry magazine expects a gradual improvement throughout 2014 as confidence increases and bigger projects start to go ahead. It’s clear that the ups and downs in various sectors will have an impact on the industry, but pump companies will make their own luck as well, focussing on the things they can change to improve margins and efficiency.
Weaver said that “the pump industry in this region is going to benefit from the efficiency improvements being made across all types of pump types in Europe. These improvements will ensure users will get best efficiencies at cost effective prices.”
Vila noted the benefits as well as the limiations of technology “In this age of electronic communication, the world is becoming an increasingly smaller place with respect to all things, including business. Customer expectations seem to be forever on the increase and the Australian pump industry is certainly not immune to these expectations and the associated strain it puts on our collective resources. Our challenge is to maintain a strong physical presence and close relationship with our customers, while perhaps also relaying a message, that while there are certainly advantages offered by these powerful communication infrastructures which we have at our disposal, it does not magically grant us a superhero’s ability to submit complex tender offers in a single day!” ■
Interviewees
• Rob Brown – Regional Managing Director, Weir Minerals
• Mathew Harris – Regional Sales Manager – Oceania, IDEX Fluid and Metering
• Steve MacDonald – General Manager of Pump & Power, Kennards
• Julie Truss – Project Manager for Slurry Pumps, Weir Minerals
• Peter Vila – Managing Director, seepex Australia
• John Weaver – General Manager, Xylem Water Systems Australia
• Mark Woodley – General Manager – Asia Pacific, KETO Pumps Australia
