Manufacturers' Monthly July 2013

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ANALYSIS >> TECHNOLOGY >> SOLUTIONS

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Publisher: Martin Sinclair martin.sinclair@cirrusmedia.com.au Managing Editor: Cole Latimer Ph: (02) 8484 0652 Fax: (02) 8484 0722 cole.latimer@cirrusmedia.com.au Editor: Matt McDonald Ph: (02) 8484 0645 Fax: (02) 8484 0722 matthew.mcdonald@cirrusmedia.com.au Journalists: Brent Balinski Ph: (02) 8484 0680 Fax: (02) 8484 0722 brent.balinski@cirrusmedia.com.au Alex Heber Ph: (02) 8484 0884 Fax: (02) 8484 0722 alex.heber@cirrusmedia.com.au Editor-at-Large: Alan Johnson Ph: (02) 8484 0725 alan.johnson@cirrusmedia.com.au Graphic Designer: Dave Ashley david.ashley@cirrusmedia.com.au Creative Director: Julie Coughlan Production Co-ordinator: Mary Copland Ph: (02) 8484 0737 mary.copland@cirrusmedia.com.au VIC/Overseas Sales: Michael Northcott PO Box 3069, Eltham, VIC 3095 Ph: 0448 077 247 michael.northcott@cirrusmedia.com.au NSW Sales: Anthony Head Tower 2, 475 Victoria Avenue, Chatswood, NSW 2067 Ph: (02) 8484 0868 Fax: (02) 8484 0722 Mobile: 0414 644 664 anthony.head@cirrusmedia.com.au QLD Sales: Sharon Amos PO Box 3136, Bracken Ridge, QLD 4017 Ph: (07) 3261 8857 Fax: (07) 3261 8347 Mobile: 0417 072 625 sharon.amos@cirrusmedia.com.au NSW, SA/NT & WA Sales: Cirrus Media Ph: (02) 8484 0868 anthony.head@cirrusmedia.com.au Published 11 times a year Subscriptions $140.00 per annum (inc GST) Overseas prices apply Ph: 1300 360 126

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JULY 2013

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6 Editorial

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■ Manufacturing reaches crisis point

8 Comment

■ What differences can

manufacturing expect from Rudd?

10 Analysis News ■ What’s happening

14 IT@MM

■ Protecting control systems

16 Materials Handling

■ Designing a better warehouse

■ ■ ■ ■

How Australian manufacturers can benefit from the Asian Century

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18 What’s New

Jacks and pumps Automated weighing Linerless labelers Racking and shelving

Proudly sponsored by

the news for those who are paving the way for the industry

20 ManMonthly On Site

■ Innovation at Australian foundry

42 Q&A

■ Face to face with Black Widow’s

Jason Oliver

24 Metalworking

■ Quality assurance in welding

28 Leaders’ Summit

■ Manufacturers’ Monthly brings you Cirrus Media Tower 2, Level 3, 475 Victoria Avenue, Chatswood, NSW 2067, Australia Locked Bag 4700, Chatswood Delivery Centre, NSW 2067, Australia Ph: (02) 8484 0888 Fax: (02) 8484 0633 ABN 80 132 719 861 ISSN 0025-2530 www.cirrusmedia.com.au © Copyright Cirrus Media, 2013 18,170* CAB Audited Distribution (*last two issues of Oct-Mar 2013) 16,448, CAB Oct-Mar average Printed by Bluestar Print 83 Derby Street, Silverwater, NSW 2128 Ph: (02) 9748 3411

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ANALYSIS >> TECHNOLOGY >> SOLUTIONS

Est. 1961 JULY 2013

Vibration Vibration testing. testing.

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INSIDE Warehouse Design for Efficiency >> Process Control >> Leaders’ Summit – Wrap up Metalworking >> Automation & Robotics >> Industry Q&A

44 Product Focus: Process Control ■ Hygrometers ■ Media inverters

■ Thickness measurement ■ Rheometers

46 Automation & Robotics ■ Getting head of the game ■ Configuring the floor for

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48 Compressors & Pneumatics ■ Getting more out of your

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Editorial

COLE LATIMER – Managing Editor

editor@manmonthly.com.au

Manufacturing reaches crisis point A perfect storm is brewing.

T

here are dark days ahead for automotive manufacturing.

A series of unfortunate events have culminated into what even the Australian Motor Industry Federation chief has labelled a ‘perfect storm’.

So how did we get here, and where to next?

This is what we are asked here time and time again.

The ‘how did we get here’ question is obvious, a high Australian dollar, cheap foreign imports, a lack of support for the continuation of the manufacturing industry - there are a number of well known factors that caused this current situation.

The only upside for Australian manufacturing is the fact that it seems to be a global phenomenon, and not just a localised one.

But that does little to salve the pain of the manufacturing contraction.

After all of this, the question that everyone is asking, and not many seem to have an answer for is ‘where to from here’?

Where do we go now, and how can we do that in the most painless way possible; because the current M A 0in7 the 1 3industry, _ 0 0 0 _noTmatter UR situation what way we look at it, will only be

Manufacturing is going through a major transition period. resolved by much belt tightening, the industrial revolution, and this more than likely a few more job change will be hard. cuts, and a Federal Government Yet the hardest part won’t be that realises the importance of the for the actual car manufacturers – industry to Australia – the most Holden, Ford, and Toyota. Their fate difficult part of it all. is basically already written. Those Manufacturing is going through that will be hardest hit and need 1a major 2 0 1transition 3 - 0 6 -period, 1 1 T the 1 5 likes : 2 0 : 1 to 6 look + 1 0at: how 0 0 they can continue of which has not been seen since into the future will be the Australian

companies that supply automotive components to these manufacturers.

People such as Futuris, SMR Automotive, Precise Global, and Quality Plastics and Tooling are the ones that will feel the brunt of it, company wise.

In fact Futuris has seen a downturn already.

One commentor on our website, manmonthly.com.au, made a cogent point – “If we have manufactured components for cars in the past, what is stopping us exporting them even if we no longer produce cars?” he asked.

“What’s happened to reverse engineering? We did it with things like crusher wear liners, so why not with car parts? After all, buy one car and strip it down and get the information we need to produce replacement parts. No industrial espionage, just genuine reverse engineering,” the commentor states.

Is this possible?

Can Australia become an exporter of quality automotive components and somewhat weather this ‘perfect storm’?

Not without government support.

And in the run up to the election we will see just how important manufacturing really is.

What do you

need to know when your

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Industrial COMMENT What differences can manufacturers expect from Prime Minister Rudd?

Will the second coming of Kevin Rudd be good or bad news for the struggling manufacturing sector? Will he be around long enough for it to matter? Matt McDonald writes.

S

o it finally happened. Farwell former Prime Minister Gillard and welcome back Prime Minister Rudd.

Making the (big) assumption that the Labor Party now has a chance in the upcoming election, what difference will the leadership change make? And more specifically, what difference will it make for manufacturing?

Following his victory, Rudd repeated a comment from his first press conference as Labor leader.

Back in 2006, he said he “didn’t want to be a prime minister of a country M A that 0 7 1didn’t 3 _ 0make 0 0 _things KEL anymore”.

8 JULY 2013 Manufacturers’ Monthly

And he offered an olive branch to manufacturers who like the look of business groups whose relationships the current European carbon price of with the government have become around $6 a tonne. strained.

Manufacturing hasn’t fared well More specifically there is since Rudd was last PM. When he speculation that Rudd will act on last contended the leadership, he Carbon Pricing. He could bring promised to restore funding to the forward plans to float the carbon industry. But it is too late to save price. Currently, the price is fixed at Ford, and the jury is still out on $29 a tonne until June 2015. whether other car manufacturers At that time it will float in will survive. accordance with the international The leadership change has also carbon price. seen other faces topple from the Given that the opposition has Cabinet. devoted a lot of time criticising Greg Combet, a Gillard supporter the carbon tax, this would help the has stepped down from the position on: top 1government 2 0 1 3 -politically.

0 6 - 1 9 And T1 4 3 5 : 3 of 5 Minister + 1 0 : 0for 0 Climate Change, of that it would be welcomed by Industry and Innovation.

No announcement on his replacement had been made at time of publication, but there is speculation that key Rudd backer Senator Kim Carr may be given the industry portfolio.

In the speech following his ballot victory, Rudd made all the right references. He mentioned the end of the resources boom in China; new challenges; and new opportunities in manufacturing.

But whether it will be business as usual for Labor is yet to be seen.

And, more importantly, whether Rudd will be around for long enough to make a difference is far from assured.

manmonthly.com.au

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Analysis NEWS Perfect storm to hit automotive industry

A

ustralian Motor Industry Federation chief Richard Dudley has predicted that the future is very dark for the Australian automotive industry.

Speaking at the national Press Club, Dudley said that the entire automotive industry, not just car manufacturers, is facing a “perfect storm”.

“So critical are the issues facing the entire industry that AMIF demands that within the first 100 days of the 44th Australian Parliament, the Government engages with industry and starts the development of a Green Paper (a preliminary report) and, ultimately, a White Paper, on the future of the

automotive industry to be delivered within 12 months,” he said.

Dudley emphasised that the industry includes more just manufacturing and noted that the automotive workforce decreased by 16,000 people last year.

He added, “Unless a more strategic, whole-of-industry approach is taken, then the resulting deluge may impact our ongoing reliance on road transport and the social and economic wellbeing of the nation.”

Recently, Ford Australia decided to cease all automotive manufacturing in 2016 and Holden is aiming to renegotiate working conditions with its workforce in an effort to reduce costs.

Manufacturing results and expectations remain mixed THE manufacturing sector improved slightly during the June quarter, as the Australian dollar dropped sharply.

However, further results from the June quarter 2013 Australian Chamber of Commerce and Industry (ACCI) - Westpac Survey show that manufacturing sector outcomes and projections have remained mixed with several disappointing aspects.

While remaining marginally positive, the General Business Expectations indicator for the next six months has softened and the employment outlook continues to deteriorate. However, demand and production indicators have strengthened with stronger forward projections.

As such, economists expect that there will

be further interest rate cuts by the Reserve Bank of Australia (RBA) in coming months.

The composite index for survey rose to 51.7 points in the June quarter. This was an improvement on the figure of 46.5 points in the previous three months.

A figure of more than 50 points means that the sector is expanding.

Mr Greg Evans, Chief Economist, Australian Chamber of Commerce and Industry, said in a statement, “This Survey clearly underscores that conditions have become increasingly challenging for Australian manufacturers amid weak demand, rising production costs, the lack of pricing power and a still historically strong currency.”

AAP reports that Evans told reporters in Canberra that a composite index in the September quarter of 54.5 points was expected.

This is because of depreciation in the dollar and its flow on impact to future competitiveness.

However, he added that there is a still a way to go in the transition from mining investment to Manufacturing improved in June. broader economic growth.

10 JULY 2013 Manufacturers’ Monthly

Holden is aiming to renegotiate conditions with its workforce.

Psychological distress behind ‘ghost’ at Bangladeshi factory CLAIMS by Bangladeshi workers that their garment factory is haunted by a ghost may be a sign of a mass psychogenic illness.

As AFP reports, 3,500 workers stopped work at the plant in Gazipur, north of Dhaka on Tuesday. They smashed furniture as they protested and demanded action to remove the ghost.

“The agitating workers refused to join duty and vandalised the factory after the management did not take any steps to drive out the ghost,” Gazipur industrial police inspector Showkat Kabir told AFP. According to a medical expert, this behaviour may be a sign of psychological distress within the workforce.

The Bangladeshi garment industry is still recovering from the April collapse of a garment factory which killed 1,129 workers. In addition, there have been several recent cases of factory fires and water contamination for the workers to deal with.

“The garment workers are panicked. The memory of the death of so many of their colleagues at Rana Plaza is still fresh,” Mahmudur Rahman, director of the Institute of Epidemiology, Disease Control and Research (IEDCR) told AFP. He suggested the ‘ghost’ could point to a “mass psychogenic illness” or “mass hysteria”. What’s more, recent illnesses experienced by workers could have been caused by this condition which affects groups of mentally and physically vulnerable people.

“One worker might have hallucinated on a ghost-like object and as the news spread other workers started to think that they also saw that ghost or (thought) it attacked them,” Rahman said.

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Australian Advanced Manufacturing Council announced A lobby group featuring some of Australia’s leading manufacturing CEOs has been announced.

It is intended that it will promote Australia’s comparative industrial advantages.

As reported by Manufacturers’ Monthly and others, the Australian Advanced Manufacturing Council was announced at the Australian Industry Group’s Melbourne office.

“What we are about here in this group, which represents companies from across industry from a range of sectors in Australia, is developing those enablers that allow industry to flourish, grow and create jobs and create wealth in Australia,” said Innes Willox, CEO of the Ai Group and a member of the new council.

Willox told AAP that the group is non-political, and was concerned with policy settings that would benefit the industry. Willox would not discuss what specific government support the council would be seeking.

Another member of the council, Andrew Liveris, the CEO of global giant Dow Chemical, said that one of the things that could benefit Australia would be a proper hub for technology and manufacturing, linking researchers and the public and private sectors. He used Silicon Valley

The Australian Advanced Manufacturing Council aims to develop enablers for industry. in California as an example, saying that Australia “An innovation hub, like Silicon Valley, needs lacked a “risk-taking culture”, which such a hub to be designed and built in Australia. It won’t would help address. happen by accident.”

D _ M A N get M N P A A U GThe _ 1 Council 1 . p d also f P a g e John 1 Pollaers, 8 / 7 / 1CEO 1 , of 8 : 5 7 “Typically, great AustralianAinventions includes innovated and monetised overseas,” he said.

Pacific Brands and Chris Roberts of Cochlear.

A coalition government would remove the carbon tax.

Abbott says he would help steel industry OPPOSITION leader Tony Abbott has said that removing a price on carbon and red tape would be a boost to the steel industry.

During a fundraiser held in Wollongong, Abbott said that the price on carbon had caused enormous harm to steelmakers, and high power prices and regulation were hurting BlueScope.

“If we can get the price of power down, if we can try to ensure that the cost of doing business is reduced, if we can get the red and the green tape off, if we can get the workplace relations pendulum back to the sensible centre, manmonthly.com.au

we give them a level playing field, we give them a fighting chance,” the ABC reports Abbott as saying.

“Government policy has been to make energy so expensive that we have other red tape challenges which mean Bluescope are in trouble as a steel maker and I want to change that.”

Labor’s local MP, Sharon Bird, dismissed the visit and the Coalition’s commitment to the steel industry.

“Mr Abbott turned up in Wollongong to hold a fundraiser and then immediately left the place,” Bird said.

“They voted in the parliament against the steel assistance plan.”

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Analysis NEWS Thales Australia marks delivery of 1000th Bushmaster THALES Australia has delivered its 1000th Bushmaster armoured vehicle to the Australian Defence Force (ADF).

The vehicle was officially handed over to the ADF at an event held at Thales’s Bendigo facility in June.

Bushmaster armoured vehicles have been exported to the UK and the Netherlands; and have been used in East Timor, Iraq and Afghanistan.

In addition, the vehicles which provide defence personnel in war zones with high levels of protection have been credited with saving lives. “This is a very important day because the Bushmaster has become such a recognised lifesaving vehicle thanks to its performance on overseas operations with the ADF and other customers,� Chris Jenkins, Thales Australia’s CEO said. “To have produced 1,000 vehicles is a testament not only to the Bushmaster’s innovative design and technology, but also to the high quality of its manufacturing. “Australian industry has played a vital role in this achievement. There are around 120 companies in the Bushmaster supply chain, many of them local SMEs whose hard work, innovation and commitment toEdelivery A D _ MA N M C I F E have B _ 1helped 3 . p make df Pa the Bushmaster what it is today.�

Bushmaster armoured vehicles have been exported to the UK and the Netherlands.

Miller said Thales was optimistic about its future in Bendigo.

He said that the company is currently in the tender evaluation stage to supply more vehicles to the ADF and that a number of new prototypes are being developed.

Thales Australia also formally launched its partnership with Soldier On, an organisation gwhich e 1supports 1 0 / wounded 0 1 / 1 3and , sick 9 : soldiers, 5 9 A at M the event in Bendigo.

Victoria Carpets factory closure to cause job losses THE Victoria Carpets factory in Castlemaine, Victoria will close by the end of June and twenty one employees will lose their jobs.

Victoria Carpets Managing director Phil Smith blamed the competitive market for the decision and said that the demand for woollen carpets was falling.

In addition, he pointed out that most manufacturers have moved production overseas.

Workers will have a meeting with representatives from the company’s head offices in Dandenong today and another with Textile, Clothing and Footwear Union of Australia representatives tomorrow.

Smith assured workers that they would receive all entitlements.

Union national and state secretary Michele O’Neil said that the decision to close is a terrible one and added that the redundant workers would find it hard to get new jobs.

Referring to thirty-two jobs which were cut from the Castlemaine business in the previous round of redundancies, she said. “This follows the company already halving the workforce in April last year.�

O’Neil said the union had a redundancy and training support office to help workers to find new jobs.

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Barnett says foreign investment rules discriminate against China

Australian Made launches new website and product directory

WESTERN Australian Premier Colin Barnett has claimed that Australia’s foreign investment rules discriminate against China.

The ABC reports that Barnett, who is currently in China discussing trade issues, said yesterday that restrictions on Chinese investment in Australia should be eased.

As it stands, privately-owned Chinese companies can invest $248 million in Australia without it being reviewed by the Foreign Investment Review Board (FIRB).

However, the United States and New Zealand can invest more than $1 billion in Australia without being scrutinised by the FIRB.

THE Australian Made Campaign has launched a new website, featuring thousands of Australian manufacturers, producers and processers.

According to the campaign, www. australianmade.com. au has over 10,000 products and social media integrated, as well as monthly promotions offered at the Australian Made Club.

“Australian shoppers are looking for local products and they are looking for them online – this website provides a gateway for Australian businesses of all sizes to connect with those shoppers,” said Ian Harrison, the Australian Made CEO, in a statement.

The company cites research by pollsters Roy Morgan finding 87.4 per cent of Australians want food made in their country, and 88.5 per cent would be more likely to buy good made in Australia.

“We need to continue to support local products and produce – and the manufacturers and growers behind them – because reinvestment in our communities is the key to securing local economic development; jobs, training and career opportunities for our kids; and a better future for all Australians,” said Harrison.

And, in the case of Chinese state-owned enterprises, all investments must be approved by the FIRB. Barnett says that this threshold needs to be changed because it is holding back potential investment.

“Chinese investors are going to be a lot more discerning,” he said. “The government has got to change the threshold of FIRB.” “There were certainly problems three or four years ago where Chinese state-owned enterprises were very unhappy with Foreign Investment Review Board procedures and rules.”

NZ light bulb maker to sell Chinese joint venture factory stake CHRISTCHURCH-based light bulb maker Energy The sale price is in line with the estimate which Mad has agreed to sell its 20 per cent stake in its Energy Mad made last month. It will mean that the Chinese joint venture factory for NZ $1.7 million ($1.4 company will clear $400,000 profit from the recovery million). of investment loan capital in the joint venture which As part of the agreement, the company will retain its was impaired in the company’s 2008 financial preferential supply, payment and exclusivity terms with statements. the factory.

The company said the sale will add strength to The a good A purpose D _ M Abuilt N Mfactory, B A C AFujian P R _Ecobulb 1 1 . Co p dLtd f P a the g ecompany’s 1 9 / balance 0 3 / 1sheet 1 , and2 leave : 3 3it in P M specialises in energy efficient light bulbs. position to expand into the US and Australia.

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TechnologyIT@MM Protecting control systems Managers are increasingly concerned with protecting their control systems from intrusion from inside and outside, but there are tools available to reduce exposure. Jason Urso* writes.

T

o start addressing security challenges, organisations will benefit by implementing a security feedback loop that operates on the following premise: Threats intending to exploit vulnerabilities require counter-measures to minimise risk to assets. That’s the Threat/Risk Assessment portion of the loop.

One of the logical first steps in determining the exposure of a control systems environment is a Risk Assessment, providing a summary of risk areas and actionable recommendations to either remove or neutralise the risk.

And as technology advancements are introduced into the control systems environment, we’re seeing requirements for increased vigilance and the application of best practices and techniques that will continue to offer increased peace of mind.

I propose four areas that will play a significant role in security improvement over the next five years: whitelisting, encryption, incident detection and response, and increased usage of remote security operations centres.

Whitelisting We see whitelising today as a way to prohibit unapproved software/ applications from running on the protected system.

“Good” software makes its way onto the white list, while unauthorised software is prohibited from executing and doing whatever “bad thing” it was intended to do.

Many enthusiasts believe whitelisting is a good defence against “zero day” intrusions – preventing some, but not all.

Forward-thinking whitelisting advocates in Australia are looking at advancements in whitelisting as a way to quarantine unauthorised software upon discovery, quarantine after blocking, enhance whitelist management, and as a way to produce a file system inventory that can accelerate verification of 14 JULY 2013 Manufacturers’ Monthly

The security feedback loop represents an on-going process. software on a hardware platform.

Regardless of the depth of initial usage in control systems, whitelisting is a technology that provides another layer of defence and will be available for process control systems.

Encryption A key issue we are seeing today is that almost all communication on a control system is clear text, sometimes used synonymously with plain text.

With this situation, a man-in-themiddle (MITM) attack, a form of active eavesdropping, is possible.

This type of attack allows the intruder to “fake out” its victims, passing information as though it were a trusted endpoint, operating in a “trust the sender” scheme.

A solution is to adopt encrypted communications. Encryption is the process of transforming plain text, using an algorithm, to make “the message” unreadable to anyone, except those possessing the encryption key.

It is a common method for protecting information in commercial systems and with wireless communication.

One of the questions is where to encrypt the data – at rest or in transmission.

Encryption, by itself, can protect the confidentiality of messages, but other techniques are needed to protect the integrity and authenticity of a message.

For process control, we

recognise the need to protect against modification from sender and receiver end-points. Today, with Internet Protocol security (IPsec), we can perform end-toend authentication, allowing the protection of the message without encrypting the data. As an IPsec configuration option, data can be encrypted as well.

One point to be considered, however, is how some network intrusion detection features are implemented. For example, encrypting data can cripple network intrusion detection capabilities.

The security strategy for the control system environment must balance the benefits and select the appropriate set of options. manmonthly.com.au

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Incident detection and response Intrusion Detection Systems (IDS) are applications that can include both hardware appliances and software solutions. The IDS resides on the network and is useful in detecting attempts to access the network.

An IDS will act to alert the network administrator of intrusion attempts and record all alert information, according to parameters set by the administrator.

There are network-based as well as host-based IDS’. Some control systems today are integrated with network-based IDS. However, over time we expect to see a migration towards greater pervasiveness of this technology as well as the application of host-based IDS. IDS’ have the capability to inspect the network packets as they flow through the system.

Today very few control system protocols are understood by IDS’ and we see that changing in the future as more of the protocols are defined and implemented making the IDS for control systems more effective.

In addition to intrusion detection, the idea of intrusion prevention is very attractive. Intrusion Prevention Systems (IPS) are relatively new to the world of incident detection, and offer the benefit of preventing the intrusion, not just detecting an intrusion and reporting on it after it has occurred.

Remote security operations centres Remote centres for network and

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and made on the server. In the future, these change points will move closer to where the impact of the change resides; closer to the controller.

For role-based access control, a way of increasing individual accountability, we will see encryption used as a step in the right direction.

We need to adopt a security mindset, based on the premise that all trust is limited. One element of that mindset is compartmentalisation in order to minimise what must be defended, minimising the increment of potential loss.

Another aspect of a security The plant of the future will see more individual accountability. mindset is Defence in Depth. Trust is Future plant security security management help to an important element in our security ensure optimal performance and The Plant of the Future will be mindset, but we must understand administration of a process control compliant with IEC 62443, plus that unverified trust decays over network and security infrastructure we will see more individual time. Verification testing then via a set of remote services. accountability, which will be becomes an important aspect – we Many process control achieved through more role-based must re-verify the basis for trust and organisations today are challenged control and access-enforced end our verification testing should not be to address areas requiring points instead of “in the middle� predictable. specialised skills – skills that approaches.

A D _ M A N M B O K N O V _ 1 2 . p d*Jason f PUrso a g ise Chief 1 Technology 3 / 1 0 / Officer 1 2 , 1 1 : 1 7 are more closely aligned with Today, change points are detected with Honeywell Process Solutions. the IT organisation. While these capabilities are both valuable and necessary, focusing on business results ranks higher with in-house resources.

For these reasons, many organisations will turn to a solution that provides the skills and services necessary to keep the process control network running in a secure environment. Over the coming years, we expect to see an increased utilisation of this type of remote service.

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Materials HANDLING – WAREHOUSING Designing warehouses for efficiency Manufacturers looking to reduce their operating costs, should not ignore their warehousing and storage operations as considerable savings can be made there. Alan Johnson reports.

W

ith warehouses and distribution centres now a key part of manufacturing supply chains, especially with the dramatic increase in on-line shopping, it is increasingly important that these facilities operate as efficiently as possible.

In recent years there have been some major advances in picking technologies to reduce costs and improve accuracies and efficiencies.

According to Larry Sweeney, Senior VP and Co-Founder of US-based Vocollect (a division of Intermec), a leading provider of voice technology, the increase in on-line shopping is changing the face of warehousing as it becomes more complex.

“For example, many consumers are now doing their grocery shopping on-line, then going to the store to pick the groceries up.

“We are now seeing the retail store becoming a small warehouse where a worker takes a grocery list and picks the groceries from the aisles.

“We are also starting to see more multi-channel supply chains where consumer orders are being fulfilled through multiple channels whether they physically go to the store or do that on-line.

“Having the capability and the flexibility to respond to these dynamics both in the warehouse and in the retail store is a key focus for us going forward,” Sweeney told Manufacturers’ Monthly on his recent trip to Australia.

Voice-directed warehousing Sweeney says more and more companies, especially in Europe and the US, are taking advantage of voice picking technology and applying it across the board.

“We have a vision, which we call the voice centric distribution centre, where voice technology is used as a receiving tool, in the put away replenishment processes, 16 JULY 2013 Manufacturers’ Monthly

Latest wearable voice system includes integrated hands-free scanning. plus picking, loading and inventory functions like cycle counting and inventory counts.

“We have several customers who are 100% voice in the warehouse,” he said.

According to Sweeney, alternative picking systems are either too expensive or not as efficient.

“For example, on first examination pick-to-light systems appear to be more productive, but that is this not the case.

“Comparing one person using pickto-light to another using voice, you could look at them and think they are operating at the same speed, in fact the pick-to-light person might be a little faster.

“But in an actual warehouse scenario, with five or six zones for example, it’s a different story with the balance of products picked in each of the zones changing over time

with one picker eventually becoming a bottleneck.

“While the picker in that particular zone is working as fast as they can, they are the throttle on the system, with pickers in the zones either side of that picker having to slow down.

“So when you look at the average pick rate across all pickers in a pickto-light situation, it can be very low, whereas pickers using voice just keep rolling.”

Sweeney says voice technology is applicable for all types of warehouses and DCs; “from 3 or 5 people right up to warehouses and DCs with 300 plus workers in them”.

“It is economical across the scale, with payback periods of nine to twelve months on our voice systems on average,” he said.

According to Sweeney, training for voice systems is now also shorter.

“We use a system called speakerdependant recognition technology where the user trains the machine to recognise his or hers voice patterns.

“This system delivers the highest accuracy for speech recognition, as opposed to speaker independent systems, with no training.

“Problems arise with those systems when the user has an accent or a dialect, and don’t recognise what is said accurately.

“With our system, it only takes about 20 minutes to familerise the user with the equipment and to create a voice pattern, and that’s it.”

“And with the increasing use of seasonal (un-trained) workers in warehouses, it’s important to keep training to a minimum,” he said.

“One of the concepts we are working on at the moment is ‘zerotraining’, which should be available next year. manmonthly.com.au

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“With this system, a worker can start working within a minute, using a training template. Then as they are going through their different work functions that template is learning their speech patterns on the fly,” Sweeney said.

Recent advances from Vocollect include a wearable voice system with integrated hands-free scanning - the Talkman A700.

Sweeney says the system facilitates hands-free scanning for process steps such as inducting totes at the beginning of assignments, batch-picking, and product traceability, while remaining a compact, purpose-built mobile device.

“Users now have one device with the ability to integrate voice and bar code scanning. Companies can now reduce the number of additional devices that a worker has to be assigned.

“The devices also provide eyesfree and hands-free scanning so users don’t have to remove the device from their belt to complete the scanning.”

For companies looking to invest in voice picking systems, Sweeney advises them to go and visit voice sites and see for themselves how the system works.

“Let the actual users do the talking, let them show you what they like about the system, the advantages, how simple the system is and how fast it is.

“Before you commit to any picking system go to different sites and ask the users what they like or dislike about the system they are using, then ask the operation managers, get the real inside information,” Sweeney said.

Automated order fulfilment systems Mike Khodl, VP Solution Development with Dematic, a global leader in intelligent logistics and materials handling solutions, says multi-channel distribution is driving important changes in the industry today.

“Retailers want to fill orders for large and small store formats and e-commerce from a single inventory cube.”

To do that, he said, they need manmonthly.com.au

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The all-new design Standard, Flex and Belted Multishuttles enable the system to be tailored to meet each user’s unique product handling requirements.

With telescopic arms that automatically adjust to the width of the load to be handled, Multishuttle 2’s Flex option enables the rapid retrieval of variable load sizes and types of packaging, without the use of trays.

The eight-finger design of the load extractor and overlapping telescopic arms enables Multishuttle 2 carts to store products single, double, or multi-deep.

Load capture fingers are carbon fibre reinforced for long-term performance, while the new load Multishuttle systems use a fleet of self-propelled carts to retrieve and put goods away in a extractor design minimises space space-efficient storage system, at very high speeds. between products, maximising storage density, and can be to transition from batch-based to fulfilment, pick face replenishment configured to handle loads up to dynamic, on-demand workflows or mixed case palletising, 50kg in a range of widths from because they no longer know what Multishuttle 2 can be utilised 150-650mm, lengths from 200-875mm, their workload will look like ahead in a wide range of applications and from 50-600mm high. of time.” from M Ashort-term 0 7 1 3 _ buffer 0 0 0 storage _ B O Gto 1 Vocollect 2 0 1 1300 3 - 304 0 6468, - 1www.intermec.com.au.

8 T0 9 : 0 4 : 4 2 + 1 0 : 0 0 “Our solutions for multi-channel production support.

Dematic 02 9486 5555, www.dematic.com.au. distribution operations are centred around modules that scale to changing operational needs and growth, and have peak capacity flexibility built in to accommodate seasonal, promotional and weekly order volumes,” Khodl said.

The company’s Multishuttle automated order fulfilment system, for example, offers the storage, handling, buffering, staging and sequencing of totes, cases and trays in high volume order fulfilment operations.

Instead of the cranes typically used in automated storage and retrieval systems (ASRS), Multishuttle systems use a fleet of self-propelled carts to retrieve and put goods away in a space-efficient storage system, at very high speeds.

Lifts at the end of each aisle transfer goods in and out of the system via integrated conveyors.

In a significant upgrade, Dematic’s second generation Multishuttle 2 incorporates advanced engineering, lightweight aluminium construction and a new load extractor for faster operating speeds, higher payload capacity and multi-deep storage capability. Designed to supply FOR YOUR NEAREST DEALER VISIT www.boge.net.au OR CONTACT 03 5940 3266 sequenced products for order

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What’sNew See more new products at manmonthly.com.au

Software for automating vehicle weighing METTLER Toledo has introduced DataBridge SS, the first product in a new portfolio of software solutions designed to automate vehicle weighing operations.

Suitable for businesses of all sizes, it is intended to reduce weighing errors, improve efficiency and save time and money on order processing and error correction.

When used to process weighing transactions, the software is intended to free up the scale house operator to do other work and allow for more weighing transactions per day. Using the software, orders are automatically organised and reports can be generated using the weighing data. Users also can easily export transactions directly to their accounting systems.

The software is easy for anyone to learn and use. Short videos offer step-bystep instructions through the weighing process, while lesson plans can guide new employees through using the tool.

Mettler Toledo 1300 659 761 us.mt.com

The jacks and pumps are suitable for use in sterile environments

Hydraulic water jacks and pumps MANUFACTURED from 316 stainless steel, these cylinder jacks and pumps offer outputs ranging from 10 ton through to 50 ton.

They use water instead of hydraulic oil as their hydraulic medium.

Available in Australia from Stainelec Hydraulic Equipment, they are particularly intended for use in situations where the use of hydraulic oil may represent an OHS problem, such as in the mining sector or in oil and gas plants.

Given that they are made from 316 stainless steel, these jacks and pumps are also suitable for use in the pharmaceutical, medical and food manufacturing industries.

As they use water instead of hydraulic oil, these jacks and pumps negate the risk of fire or explosion and satisfy the relevant OH&S requirements. They are manufactured in Japan.

Stainelec Hydraulic Equipment 02 9824 2499 www.stainelec.com.au

Compact metal halide lamp DEVELOPED for long life performance, the Aura Crystal TC long life compact lamp has a lifetime of 30,000 hours.

A high pressure ceramic metal halide discharge lamp, it is based on the Aura Long Life technology with two arc tubes mounted inside. This is intended to provide it with double the lifetime of standard products.

The lamp’s 30,000 hour lifetime provides A seven D _ Mto A eight N M Pyears R I of M use A Rin_ 1 3 professional applications. Furthermore,

in installations where lamp replacement is difficult and costly the long burning time of the lamp enables more cost effective lighting and reduces the need for maintenance.

It has been developed for applications where high quality white light is important, such as task area plant lighting and high traffic pedestrian zones.

JT Day . pdf P a g e 1 1 1300 1 / 0294 2 237 / 1 3 , www.jtday.com.au

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18 JULY 2013 Manufacturers’ Monthly

The label printer can handle labels of various lengths.

USING a backing-paper-free labelling material, the new Avery 81x Label Printer Applicator (LPA) radically reduces energy and material use, hence waste, for carton, tray and pallet labelling.

The LPA uses a backing-paper-free label material for carton, tray and pallet labels via LightSmart Technology.

Unlike traditional pressure-sensitive labels, the label material does not need backing paper. Coated on the reverse with a non-tack adhesive, the labels become sticky through heat activation after the print and cut. This is a key differentiator to existing linerless LPA solutions.

In addition, manufactures are able to print different-length labels, because the material is on one roll that can be cut to the desired length.

This also allows them to change message lengths with little notice.

Therefore, they can create marketing messages or simply change label formats without worrying about changing the label stock.

The LPA is suited to secondary packaging (such as cartons and shrink trays) with content and shipping labels.

Matthews Australasia 1300 405 347 www.matthews.com.au manmonthly.com.au

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Racking and shelving system THE BAC ‘Series 77’ racking and shelving storage system has been designed to not just comply with, but surpass the requirements of Australian Standard 4084-2012.

The racking series features fully enclosed sidewalls, which inhibit the flow of dust and also provide a protective barrier against falling objects.

As such, they are particularly suitable for use in warehouses with heavy pedestrian traffic.

The racking is also fitted with the patented gravity safety clips that are intended to prevent the accidental dislodgement of pallet beams through an automatic locking action.

Large pallets can be stored on the

pallet racking and bulky hand-load items may be put on the longspan, geometric smaller boxes on the dividable steel shelves, and small items can be stored in the high-density drawers.

The system’s vertical drawers and dispenser rails take care of the irregular shapes and ugly objects that need to be hidden away from sight.

This hybrid storage system can be used to cater for large warehouses with uniform storage requirements; or be used in a parts store with a few pallets, some long-span and some drawer storage requirements.

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The items mounted within the bench include a liquid level gauge, a thermometer, an electric motor with vibration and isolation mounts, and more.

Constructed with code gauge steel and finished in instrument tan enamel, the mobile bench is sturdy. It also features two fixed and two swivel locking casters and a storage cabinet with adjustable shelf and locking hinged door.

The bench top has a replaceable nonwoven absorbent mat which is replaceable.

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ManMonthlyON SITE Keech keeps moving Manufacturers’ Monthly took a tour of Keech’s Bendigo site recently. CEO Herbert Hermens and COO Cameron Watts told Brent Balinski about the investment efforts the steel castings company has made to boost its competitiveness.

A

s the steel industry shrinks globally, one Australian manufacturer is showing the industry how to ride the downturn successfully.

Why improvement matters “We’re spending more than seven and a half per cent of our revenue on R&D; this includes a strong commitment to process improvement,” explained Herbert Hermens, CEO since 2008 at Bendigo’s Keech Australia.

Keech is a third-generation Australian maker of castings. Most of these are wear parts such as ground-engaging tools used in the mining sector, where durability and effectiveness mean big loads of earth and big bucks for the user.

“We know what to do, that improves process, develop new products and leverage our patents.

We need to add value for our customers,” said Hermens.

“So the products we produce here have got to be able to be demonstrably value adding. How’s that possible? by making them more efficient, more competitive and simpler.

The company operates two

Keech’s No.2 foundry is designed for specialised products. foundries producing heavy metal products designed to burrow into the earth, an exercise with a lot more science and research behind it than the average person might guess.

The last few years have seen

The company has a major focus on ground engaging equipment.

20 JULY 2013 Manufacturers’ Monthly

Keech outlay millions upgrading its No. 2 Foundry – with advancements it hopes to bring to the main foundry – as well as open a wholly-owned Chilean subsidiary and launch an Innovation and Quality centre.

Business Review Weekly last year named Keech regional Australia’s “Most Successful Privately Owned Business”, and described the company as pursuing an “aggressive strategy of innovation, global growth and investment” under Hermens. It exports around 20 per cent of what it makes to markets including Canada, Kazakhstan, Japan, the Middle East and elsewhere.

“Our focus is to build a world-class, world-competitive and sustainable production process here,” Hermens told Manufacturers’ Monthly.

“That’s our absolute commitment to sustain a manufacturing business here in regional Victoria.”

Part of what’s been the result of all these improvements and

investment will be available in “the next few months” for those in mining and construction, this has been engineered in response to client-led problems.

From 2 to 1 Hermens described how their foundries have responded to demands. “Our No. 2 foundry is a small foundry and it was designed for specialised products,” Hermens said. “We’re able to invest close to $4 million in that. In that, it started off with much less, but our ambitions were able to grow.”

The company is able to trial processes at the small foundry before bringing them to the larger one, where better processes that have been trialled can really start to pay off.

“Our No. 2 Foundry has moved from a production of 250 kilograms a day to potentially seven tonnes a day, so the multiple is fantastic and manmonthly.com.au

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we’re talking about the same type of multiple happening but on a higher scale in our number 1 foundry,” said Hermens.

Chief operating officer Cameron Watts also mentioned the importance of upgrades – which have included a complete overhaul of what’s done at No. 2, including cooling, moulding and shakeout systems, and enabling workers to recycle almost all of the sand used in production – to the business’s efficiency.

“It was single-cavity, one casting per mould,” he told Manufacturers’ Monthly of the way things have been done.

“Now in the new development of our main foundry we’re talking multi-cavity, and anywhere from four up to eight castings within the one mould as he pointed out, takes the same amount of time to process, so the return on that investment – you need to have the handling equipment to do that at that scale and obviously there’s a lot more output with the same sort of energy.”

Though the effort to improve efficiency and productivity is extensive, there’s one area where the company won’t try and save money.

Keech has produced axes used by world-champion woodchoppers, and although these items are sought after for their quality, Keech doesn’t sell many. Their historical significance to the eight-decade old, thirdgeneration family company means they must be retained and plan to keep manufacturing this product ad infinitum.

“It ties right back to the beginning. It ties right back to Keech. It’s important to keep that history going. While this is a family company they want to keep that history. I love that.” said Hermens.

Bendigo hasn’t always been Keech’s headquarters, with the company relocating from Sydney – where it was founded in 1934 – in 1994. It purchased and moved into a site formerly owned by Mason & Cox, and employs over 160.

The regional location can make it a challenge to attract the best engineers.

“Once you get them to Bendigo new comers quickly find it’s an attractive in which area to live,” said Hermens. manmonthly.com.au

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efficient, science-based (and sustainable – it aims to be carbon neutral in the future) operation, there will be no surprise that its CEO has some strong views on how manufacturing can and should be carried out if its to be successful.

Issues facing manufacturing

The updated foundry can do up to eight castings within one mould.

“There are certainly some structural issues we need to deal with in Bendigo. But in terms of liveability it’s a great city.”

Getting it right Though it can sometimes be difficult recruiting the right staff, the science behind Keech’s products and the expertise of their staff are put on a pedestal.

“We have people say manufacturing is not a high-tech industry,” said Hermens.

The technology of what Keech produces is difficult to replicate.

The dimensions can be recreated, sure, but the quality of metal and the processes behind this are much harder to copy. There are over 300 or so types of steel, Hermens pointed out. Use one that’s too hard? It’ll be too brittle and break. Too soft? The sacrificial components will degrade too quickly, leading to excessive downtime and lost money for the end user. Then there are considerations like flow, and attachment strategy.

“But how you actually

manufacture that casting, what methods go with that to actually produce a sound casting is the secret,” explained Watts.

“People can copy, but there are things that we’ve got expertise in.

And that’s not necessarily easy to copy. Although people try.”

For a company that has spent so heavily on making a thoroughly

“For our company the biggest challenge is ensuring that our labour efficiency is maximised,” he said.

“It’s too glib – you always hear the comment being made that our wages are much higher than elsewhere.

That’s a fact. So what do you do about it? You protect people’s wages, but you allow them or enable them to be as efficient, relative to other people’s salaries. In other words if another person’s salary is one quarter, our people have to be four times as efficient. That really is the key.”

Of course energy costs are an issue, he added, but being productive is where the major difference is made: enabling a company’s workforce to do its job properly.

“Manufacturing’s biggest issue is labour flexibility. And that doesn’t equate to reducing labour prices. It is the effective price, which is the imperative. But it gets lost in the discussions. You say ‘I want more flexibility’ and the first thing people come back with is ‘you want to cut people’s salaries’. No we don’t. What we want is to be able to use our labour most effectively.

“Which means that we need to train our people, we need to be able to encourage them to be trained because that’s not always a given.

It operates two foundries from its Bendigo site.

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WorkplaceSAFETY Safety standards – do your electrical goods comply?

Electricity is a serious business. It requires standards and regulations to ensure that it’s safe. A new scheme is hoping to ensure that all electrical goods used in Australia meet safety standards. Matt McDonald reports.

E

lectricity can kill you. We all know that. Our parents told us that when we were kids and we’ve seen the cartoon – Man sticks his hand in toaster. Man flashes up like an X-ray and you can see his skeleton. Man falls over, looking like a very, very well-barbecued chicken.

That’s not quite how it happens.

In reality, electricity doesn’t fry you unless you get an extremely large hit of it. It kills you by interrupting your heart rhythm.

Significantly, any electrical device used on a house wiring circuit can, under certain conditions, transmit a fatal current. And every house or place of work has these devices.

And, on top of that, there is the issue of fire. Electrical fires can be caused by things as simple as equipment placed in dangerous positions or by the fitting of light bulbs with inappropriate wattages to light fittings.

They can also often caused by

faulty electrical outlets and old, outdated appliances. Or they can be started by faults in appliance cords, receptacles and switches.

According to statistics from The Electrical Regulatory Authorities Council (ERAC), there were 67 fatalities between 1999 – 2003 resulting from electrical fault in Australia and New Zealand.

And between 2002 – 2007 in Australian and New Zealand, there were 11,260 fires attributed to electrical equipment faults.

Apart from the human cost, the economic cost of these fires and fatalities is estimated to be $489 million per annum.

Thankfully, the number of deaths by electrocution is trending downwards. During the 2000s, there was an average of 25 deaths recorded in Australia and New Zealand each year. During the 1990s, there were, on average, 49 deaths per year.

Of the 28 fatalities in the

Non-compliant electrical goods can cause fire.

22 JULY 2013 Manufacturers’ Monthly

Workers are at risk if goods aren’t up to code. period 2009-10, seven involved the electricity supply network. (In most cases, death was due to accidental contact with electricity supply overhead conductors). And 21 deaths involved customer’s applications, appliances, or equipment.

So it is important that electrical equipment and devices are used correctly and meet safety standards.

E-commerce is blurring national boundaries in a lot of ways. It has meant that ‘global sourcing’ is becoming more widespread throughout the industry. This has thrown up the issue of non-compliant products finding their way into Australia.

A survey recently conducted by the National Electrical and Communications Association (NECA) shed light on the extent of the problem.

According to the survey, 75 per cent of electrical contractors questioned said that they had come across non-compliant products being used in Australia.

It is important for such contractors to understand their legal responsibilities and obligations in the area of compliance of electrical goods.

Firstly, the liability for products that are found to be non-compliant

to Australian standards falls on the manufacturer or importer or the product. On top of that, if it can be proven that the electrical contractor knew that the product was non-compliant, some of the liability will fall on him/her also.

In the case that an electrical contractor purchases a product from overseas (e.g. on the internet), he/ she is considered the importer of that product and is therefore liable for damages that arise from its non-compliance.

It is important to note that the above does not cover the incorrect installation of complaint products.

Such liability falls not on the manufacturer or importer, but on the electrical contractor.

The “Does it Comply” campaign The above-mentioned survey by NECA also found that a lack of understanding about how to identify compliant products was also an issue within the electrical industry.

In addition, with 200 of the 300 respondents saying that they would only purchase compliant products, it would seem that most contractors understand the seriousness of the issue and are keen to follow the rules.

In an effort to eliminate manmonthly.com.au

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non-compliant electrical goods from the local industry, NECA and electrical industry information portal Voltimum recently launched the “Does it Comply” campaign.

The campaign coincides with the ERAC decision to implement the Electrical Equipment Safety System (EESS) where all suppliers of electrical product and some specific high risk electrical equipment will be registered on a national database.

The first stage of the campaign was to launch a website to provide the industry with a one-stop-shop for information on non-compliant products, associated electrical regulations, explain penalties and outline the overall plan on how the electrical industry is working together to eliminate dangerous counterfeits.

NECA’s Chief Executive Officer, James Tinslay, said at the launch, “The use of non-compliant products is very dangerous. Over 11,000 house fires and 60 fatalities have been linked to non-compliant products in Australia and New Zealand so it is a very important the entire industry comes together to ensure only products conforming to Australian Standards are manufactured, imported, promoted, sold and ultimately installed.”

The second stage of the campaign was to get contractors in the electrical and communications industry to ‘sign the pledge’.

Contractors do this by watching a webinar on the campaign website and then testing their knowledge with ten questions.

Those who answer the questions

correctly are asked to commit to only use compliant products, report the use of non-compliant products and make various other commitments.

And they receive marketing material which confirms their commitment to safe, compliant electrical goods.

So how can electrical contractors identify safe electrical goods? There are a number of things to keep an eye out for.

With the EESS, contractors will be able to check if a supplier is listed on the ‘Responsible Supplier’ database on the ERAC website.

Given that the database is still in its early stages of rollout, there are also several common-sense measures to follow.

Firstly, it is sensible to avoid any product that carries no brand and to purchase goods from a known and authorised manufacturer or distributor.

In addition, products with unusual trademarks or which come in packaging with blurred markings should be avoided.

And, maybe the biggest common sense call of all – beware of prices that are ‘too good to be true’ or items that fell off the back of the proverbial truck.

Finally,when purchasing from overseas, note that standards are not international but differ from jurisdiction to jurisdiction. Research is needed to verify that local standards are met by the products you buy.

Within five years, items will have to carry the Regulatory Compliance Mark (RCM).

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Beware of items purchased overseas. manmonthly.com.au

Manufacturers’ Monthly JULY 2013 23

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Metalworking: WELDING Quality assurance – from start to finish New welding monitoring programs are allowing greater tracking of weld performance and quality.

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s manufacturers become leaner, they all want to ensure they are getting maximum efficiency out of all their workers.

They need the highest quality product, but they also must ensure that the proper safety parameters are being followed.

This is true right across the entire scope of the industry.

Even in areas like welding, where the work is more like an art at times, it is still a production line with set deadlines, and safety and operating 2 0 1 3 - 0 6 - 1 8 T 1 1 : 5 3 : 3 procedures 9 + 1 0 : 0have 0 to be followed to Welders need to be safe. ensure that it is done not only to the

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With increased demand in welding management and monitoring, Kemppi has updated its welding monitoring system.

Speaking to the company at its Smithfield facility, they told Manufacturers’ Monthly that the new Kemppi ArcQuality System 2.0 (ArcQ) “takes the philosophy of welding parameter monitoring to new heights”.

The “welding equipment technology serves as a platform for collecting and analysing all relevant welding data in your production and

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The system looks at the entire welding job. enables you to know exactly where you are.

“This new system, which is improved from the previous 1.0 ArcQuality Systems, looks at the job that needs to be done, the quality of welder and whether they have the skills to do that job, the quality of the procedure as it is carried out, and importantly it also looks at the quality of the materials and whether they are correct for the job,” they explained.

It does all of this in real time.

“Decision making becomes easier based on true facts and the overall performance of your welding operation improves dramatically.”

The system can also be tailored to suit specific situations and procedures as they vary from company to company.

It uses simple equipment to record pre-set barcodes that are attached to every object, from the wire, to the WPS, to the welder, and the welding machine, which enables management to follow the welder’s tasks and sees that the right equipment is being manmonthly.com.au

used and that the right procedures are adhered to – from choosing the correct wire, having the necessary skills, to keep the welding arc at the right amps.

Walking Manufacturers’ Monthly through the procedure from start to finish, Kemppi started with scanning the barcode of the welder (which immediately alerts management whether the welder has the appropriate qualifications for the job, and whether they need to be changed out for the right person).

Then the WPS’ barcode, which has been pre-entered and may be used at multiple sites is scanned.

After this the operator scans the welding machine (after which the appropriate amps are given for the job), and the wire used.

If all these criteria have all been cleared as the correct materials for the job then they are able to weld.

Kemppi added that “all this information is fed back into a central database in real time and action be taken,” – this means managers are able to track defects as they happen.

This allows for non-destructive testing to be carried out, as the initial control measures ensure that the work is tracked and any operation outside the set parameters, or non-conformances, has been recorded.

“The productivity benefits come from increased quality and effectiveness of the welding work, automated monitoring and faster and easier collection of project documentation.

“The system provides clear costs savings by automating a considerable amount of arduous manual work involved in the collection, interpreting, and storing of information for welding quality documentation. Also production control becomes easier when you have precise records of who has done what, how, and when.”

This system would have ensured that the pipe’s welding was monitored and carried out correctly from the first stages, while its smart scanning device is able to collect quality related documentation that allows the traceability of each weld.

“Essentially, it is about ensuring quality from the moment you begin to think about work through to the end of the job and afterwards.”

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How Australian manufacturers can benefit from the Asian Century Proudly sponsored by

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northern neighbour is providing a whole new, untapped market for Australian manufacturers.

Editor Col Latimer’s address to the summit on the state of the industry

34 How Futuris drove into Asia

Despite the mining boom grabbing the headlines and the public’s attention, manufacturing has continued to support our nation’s consistent growth.

32 The view from the Leaders’ Summit What needs to be done to take advantage of our position in Asia, and how can policy affect change for the industry. The industry speaks.

33 Indonesia opportunities Despite being overlooked in the growth of Asia, our manmonthly.com.au

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30 Manufacturers’ Monthly’s NMW Leaders’ Summit opening address 31 Manufacturing: The silent workhorse of the Australian economy

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The first hand account of how manufacturing can get it right in entering Asia, and the need for thorough planning, patience, and the right strategy.

36 Austrade’s Asian transformation With Asia posing an opportunity as well as a threat to Australian manufacturers, how can your business avoid the pitfalls encountered in the region.

38 From building and shipping to global supply chains No manufacturer can enter Asia alone. EFIC’s Robert Dravers used the Leaders’ Summit to explain how to win and finance export opportunities overseas when the private market fails to provide.

Manufacturers’ Monthly JULY 2013 29

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Leaders’ SUMMIT

Manufacturers’ Monthly NMW Leaders’ Summit Opening Address As part of National Manufacturing Week, Manufacturers’ Monthly hosted the Leaders’ Summit where manufacturers and the industry gathered to discuss what’s really happening in the industry. Below is the opening address by Manufacturers’ Monthly editor Cole Latimer.

W

elcome Ladies and Gentlemen to Manufacturers’ Monthly’s Leaders’ Summit, where we will discuss the state of Australian manufacturing in the Asian century, what we can do to take advantage of this new market, and what it means for our future.

Firstly I’d like thank our speakers at the event, from Futuris Automotive Mark de Wit and Dexter Clark, from EFIC Robert Dravers, and from Austrade we have Phil Bourke.

Hopefully today we can all come away with a better understanding of our position in this current market, as we experience the massive global shift towards Asia.

As manufacturers in Australia we also need to shift our perception of how and where we operate.

Australia is part of Asia.

This is now a fact.

We can no longer view ourselves as a nation apart – a piece of the West in the East, and in turn we need to embrace our role in the growing Asian sphere of influence; as we can all agree that this is the Asian century.

The rise of the Asian Tigers in the 90s, followed by the unstoppable growth of China that has now slowed but in turn aided the rise of its South East Asian neighbours, has cemented this.

Previously Australia has attempted to compete against manufacturing nations such as China or Japan.

But with the high Australian dollar, the high cost of labour, and increasing energy costs going head to head with these low cost nations - despite our manufacturing excellence and capabilities means we may have to either lower our quality (which we can’t do) or we have to think smarter.

So how does an Australian manufacturer work smarter?

We trade on lower costs offshore, while we utilise our reputation.

However we have to be careful not to trade our reputation.

Australia is known across Asia as a nation of high quality products, our food, beverages, pharmaceutical products, and proficiency in design set us apart.

If a product is known as an Australian product then it is held in high esteem in Asia; the end users know that their product is made to the highest standards.

We can utilise this reputation to gain a greater foothold in Asia, to use what is now the largest 30 JULY 2013 Manufacturers’ Monthly

growing middle class in the world – these people want the top quality products and equipment that their newly found money can buy, and Australia is in a unique position to provide this.

This new demand is essentially an untapped market that we as Australians can enter, riding on the back of our already high reputation.

On top of this is our capacity for additive manufacturing, taking a fairly basic product and providing additional manufacturing, processing.

We have the capability to turn good products into great products.

But how else can Australians develop this position in the Asian economic sphere?

Offshoring – possibly.

Recognising where new opportunties lie, in

terms of cheaper manufacturing, free trade agreements, and manufacturing locations that open up markets that would simply be unobtainable by manufacturing solely in Australia.

For instance, Australian automotive components manufacturers are looking to new opportunities in Thailand, as there exists a free trade agreement with one of the world’s largest car manufacturers – Japan.

This means that their components are able to go straight into Japanese built cars that are later exported back in to Australia, essentially coming full circle from Australian design, Thai built, added to Japanese cars, and ending up on Australian roads.

Realising that Australia is part of a wider economic sphere that now allows us to play within that market as never before is something that our manufacturing space needs to do.

However this does not mean that we should echo the US where all manufacturing is shipped offshore, only to create such an economic blackhole where it eventually becomes cheaper to manufacture in the US again, thanks to generous subsidies and overwhelming governmental support.

We have to be careful that all of our manufacturing and in turn our experience and unique skills are all exported as well, essentially causing a brain drain and removing all our manufacturing capabilities.

Australia can not leave itself vulnerable by moving our entire industry offshore.

There are so many opportunities available, but we mustn’t ignore what it means for Australia.

We can continue to manufacture in Australia, and use Asia as a new market for our goods, providing the high end, quality manufacturing that these nations just can’t provide or assure without Australian input.

However we won’t be able to do it without government support.

A government that looks at the rising energy costs, addresses the carbon tax, and provides the kind of backing the industry needs, as well as, dare I say it, continued subsidising.

We are here to discuss the potential, the possibilities, what it means for manufacturing, and how we can do it.

Because we need to embrace the Asian century, before it leaves us behind. manmonthly.com.au

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Manufacturing – “the silent workhorse of the Australian economy” Following is a statement given by Manufacturing Australia’s chairman, Sue Morphet in Canberra on March 18.

M

anufacturing is the silent workhorse of the Australian economy.

Through job creation, import replacement and maximising the value of our natural resources, manufacturing delivers tremendous benefits to the nation.

Our sector employs almost 1 million Australians, contributes more than $160 billion into other sectors of the economy and creates an additional 2 to 5 jobs outside the sector for every job within it.

I strongly believe that there is a positive future for this sector and I want to help ensure that we have the right type of manufacturing in Australia: manufacturing that takes advantage of our natural competitive advantages to create stable, rewarding employment not just in our cities, but also throughout rural, regional and outer-suburban Australia.

Manufacturing Australia is here today to release its policy

manifesto, Australia’s Manufacturing Advantage, which advocates for three key areas of reform that we believe help Australian manufacturers to compete in this global sector.

Certainly we face formidable challenges: among them the high Aussie dollar, high input costs, increased imports, which are sometimes “dumped” in Australia, the cost of running and constructing manufacturing plants in Australia and excessive or inconsistent regulation.

But we also have significant advantages, and manufacturing flourishes in those countries that identify and exploit their natural advantages. For some nations that advantage is cheap labour.

For others, like Australia, those advantages include our abundant energy resources, our highly skilled workforce, our ties with Asia, our capacity for innovation and research and our stable governance.

Through smart policy and strategic

Manufacturing can flourish in the right circumstances. manmonthly.com.au

Manufacturing Australia’s chairman, Sue Morphet. investments, our sector can in the next decade directly and indirectly create 100,000 new jobs and drive a manufacturing resurgence throughout rural, regional and outersuburban Australia.

So to our three priority areas of reform: First, we must better capitalise on Australia’s energy advantage.

Australia is an energy and resources superpower, but currently our domestic energy policies largely fail to capitalise on our energy advantage. The most important way we can do that is by creating a domestic gas market that enables value-adding manufacturing alongside gas exports.

Secondly, we must restore fair trading conditions. Great improvements have been made to Australia’s anti-dumping regime in the past 18 months, but more needs to be done. Mismanagement of open trade can easily lead to unintended consequences such as dumping and exclusion of domestic manufacturers from domestic markets. Through changes to coastal shipping regulations, further anti-dumping reforms and stronger industry participation schemes, we can ensure

we are competing on a level playing field with our overseas competitors.

Finally, we need to invest for manufacturing growth. It’s time for governments and communities alike to get over the perception that manufacturing in Australia is a “sunset” industry, because it’s not. Advanced economies around the world are growing their manufacturing capacity through deliberate, smart investments in the sector. In Australia that means investment in infrastructure, better industry links for R&D, industry linked training, increasing the flexibility of our manufacturing workplaces and strengthening regulations that stimulate demand.

With the right policies, and the right investments, manufacturing can and will continue to flourish throughout the boom and bust cycles of other industries. These policies, which we have provided to members of the Federal Government this morning, and will provide to the Federal Opposition this afternoon, can help to achieve that.

This statement has been republished here with permission.

Image: Manufacturing Australia website Manufacturers’ Monthly JULY 2013 31

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Leaders’ SUMMIT

The view from the Leaders’ Summit What might need to be done to take full advantage of Australia’s position in the Asian Century? To do nothing could be to miss out, so what policy areas need attention? We opened up the floor at the Leaders’ Summit and a few themes emerged. By Brent Balinski.

U

nsurprisingly, the conversation at the Summit swung towards a few key areas of concern for Australia’s manufacturers, such as strategic investment, free trade and, of course, energy policy.

“I think as a manufacturing community we have to stand up and say ‘governments are making strategic choices where they spend taxpayers’ money; we give $1.7 billion generally to industry in R&D tax concessions,’” suggested Bruce Grey, the managing director of the Advanced Manufacturing Cooperative Research Council.

Both sides of politics support targeted investment, though with a few differences, for example the Coalition’s pledge – if it wins office in September – to take $500 million out of the assistance currently on offer to automotive makers up to 2015.

And then there’s the federal government’s Plan For Australian Jobs suite of policies, budgeted at $1 bn, which the opposition is critical of. It will be funded by taking money usually tied up in the R&D tax concession for companies with revenues greater than $20 billion a year (estimated to include 15-20 firms).

Both sides of politics have their own ideas of what makes for effective targeted investment. It’s a question of what is seen as providing the best bang for the taxpayers’ buck.

“We also give $1.4 billion to National Health and Medical Research Council, for example, and $800 million to the Australian Research Council. I don’t know how many billions to the car industry. But is this spending leveraging our export capabilities?” asked Grey at the summit, suggesting we might also look to Asia, specifically Taiwan.

“If you look at Taiwan, that’s a good example.

The Taiwanese have a population similar to Australia, in a country smaller than half the size of Tasmania, and last year they exported $320 billion, and we export $280 billion, and we’ve had the resources boom on.”

Other countries provide incentives for manufacturers. Notably, Dexter Clarke, head of corporate affairs at Futuris and a presenter at the Summit, mentioned the tax break given to automotive firms opening plants in Thailand.

“It’s an amazing advantage [in Thailand] Tax-free for eight years,” said Clarke.

“But there are conditions. It is based around the investment you make as well and it’s not just a free grab.”

A major issue for the industry is the affordability and availability of energy. The 32 JULY 2013 Manufacturers’ Monthly

Technology and free trade were a couple of topics of interest. massive investment in east coast gas development is for LNG that will be exported to Asia, where, due to the lack of gas availability in countries such as Japan, it can be sold for prices higher than it could in Australia.

Many high-profile manufacturers have spoken about the situation, which – according to research commissioned by the Plastics and Chemicals Industry Association (PACIA) forfeits $21 in potential value-add for every $1 exported – is frustrating to those struggling to secure long-term contracts to run their factories.

The keynote speaker at the Endeavour Awards dinner the day after the summit, Sue Morphet of Manufacturing Australia, warned of dire consequences for industrial users if action is not taken. Later she put the cost of inaction at 200,000 jobs.

Another critic of Australia’s gas policy settings, Dow Chemical CEO Andrew Liveris, said “the sky is the limit” for Dow’s investment if Australia made its energy policy more favourable to industrial users.

Ian Harrison of Australian Made mentioned the disincentive to invest in major projects in Australia created by the cost of gas. “You look where the energy prices are going and think ‘this is crazy?” said Harrison.

“Why would I invest – or if you’re a shareholder you would say ‘why are you investing my money in this environment when there is so much uncertainty about the cost structure beyond which you can control?’

“I don’t know why you want to export your gas

from the Eastern Seaboard. The Western Seaboard, sure, but why don’t you make that available, thinking of your own energy, to your manufacturing base. So you can say we’re going to enjoy – in the secondary rather than the primary industry – some of the benefits of what’s around here.”

The Asian Century has created challenges as well as opportunities for Australian manufacturers. The demand from Asia – and the resulting lack of access for local users – for the country’s natural gas is one of the most notable.

“You’ve got to become a bit more strategic about how you develop the economy – and that’s what scares me,” said Harrison. “You’ve got all that stuff on the Eastern Seaboard and you’re going to ship it forever to China or Japan and they’re subsidising their manufacturers and you wonder why you’re going backwards.”

As well as concerns about where investment is best aimed and energy prices, another theme when the floor was opened up was free trade.

“It goes back to the point about being strategic,” said Grey.

“The Americans targeted the industry in terms of manufacturing many years ago, and they started with pick-up trucks, and you had all the three major Japanese auto makers making pick-up trucks in Thailand, and we negotiated a free-trade agreement.

“And you look at the tariffs on pick-up trucks in the US, that bastion of free trade, and they have a 25 per cent tariff on pick-up trucks, which is what they make the most of. On everything else it’s five.” manmonthly.com.au

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Indonesian opportunities Indonesia is often overlooked in conversations on the Asian Century. Though there are difficulties (and misconceptions) involved in trading with our northern neighbour, there are also great opportunities for advanced manufacturers. By Brent Balinski.

T

hough China usually dominates dinner party talk when guests start to wax lyrical about demographic shifts that will favour our exporters (and which are expected to bring some two billion people to live in Asian cities by 2025) Indonesia is also a market where demand is on the way up for manufacturers.

Figures from the Department of Foreign Affairs and Trade for 2011-12 show low unemployment (6.6 per cent), strong GDP and import growth (6.5 per cent and 30.3 per cent respectively), and the “lowest volatility in economic growth compared to OECD and BRIC countries” all point to a market in a position of strength. It’s our 11th-biggest export destination, and took in $5.3 billion worth of Aussie products in 2011-12, but, with a little help, advanced manufacturers could be doing much better in Indonesia.

“We’ve got strong, established positions in things like mining, mining equipment technology and services, and agribusiness in Indonesia,” Kym Hewett, senior

trade commissioner in Jakarta, told Manufacturers’ Monthly.

“Where the unfulfilled potential resides is in the consumption sector.

So at the moment consumption accounts for something like 60 per cent of GDP in Indonesia and more than 60 per cent of growth, and it’s the area of the economy that’s prospering.”

Although 250 Australian companies are already doing business in the world’s third-most populous democracy, but getting established there can have its difficulties.

“There are initial challenges that make it difficult, firstly, the playing field tends to strongly favour local players, so there’s a fact of life that Indonesia has a strong protectionist sentiment and inclination,” explained Hewett.

“But if you can work your way through those and become established in the market, then I would describe the competitive environment as pretty favourable or benign.”

As well as this, bureaucracy is complex and multi-layered in

Next stop Jakarta. manmonthly.com.au

Austrade says there will be huge Indonesian transport growth.

Indonesia, and gaining approval for importing can be complicated.

Besides having to convince local buyers and bureaucrats, widespread corruption is another issue that doesn’t make trade any easier.

Transparency International accorded Indonesia a score of 32 out 100 at the end of last year, with 0 being “highly corrupt” and 100 being “very clean”. And stories like one earlier this year of Indoguna Utama (which ships beef for a number of Australian exporters) directors being caught trying to offload a car boot full of cash to an Indonesian MP to get around import quotas do little to boost the country’s image.

Hewett said that there’s increasing awareness of the problem, and “you need patience and principles to navigate your way through that.”

Austrade has identified automotive and aerospace as two manufacturing sub-sectors that are positioned to do well out of Indonesia’s growth story.

“Automotive is one of the booming sectors in Indonesia at the moment. Indonesia is set to become the the biggest automotive market in ASEAN,” said Hewett.

Last year the Australian

Automotive Aftermarket Association pointed out the huge opportunities available to auto parts makers, for example in in-car entertainment, wheels, oil and other products.

Their research predicted that the country’s car sales are to increase by up to 50 per in the next half a decade. Four-wheel drives and SUVs are categories tipped for especially strong growth.

Increasingly affluent populations need transport, of course, and Indonesia’s airline grew by 20 per cent last year, according to an Austrade briefing held in March.

Accordingly, opportunities for “MRO [maintenance repair and overhaul]; aircraft components, pilot training and simulation; electronic systems – on ground traffic control, radar, sonar and systems integration” are also increasing sharply, according to the same presentation.

“The Indonesian fleet is growing very strongly, and there’s extensive development in their air force underway,” said Hewett.

“There’s a big opportunity there.

And also for any of the technology and services that go into modern airport, an area, again, where we have a lot of capability.”

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Leaders’ SUMMIT

How Futuris drove into Asia The Asian Century is nothing new for the Automotive sector. Auto parts maker Futuris is a case study in how one Australian company got it right, through planning, patience and the right strategy.

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uturis Automotive creates automotive interior solutions and components, including steering and pedal systems and airbag modules. It is the biggest automotive manufacturer in Australia, with revenues of about $400 million, and its major customers globally include GM, Ford, Toyota, Chery and Tesla.

Futuris began its move into the Asian Century in 2004, which certainly didn’t make it a pioneer, but seems prescient when comparing Australian car production numbers then and now.

“Back in 2004 there were four Australian vehicle manufacturers making 420,000 cars a year,” Dexter Clarke, the company’s director of corporate affairs, told the Manufacturers’ Monthly Leaders’ Summit in May. “Today there are three left and one is on the bones of its bum in Ford, making only 20,000 cars a year.

And overall 230,000 cars are made in Australia a year, a reduction of 45 per cent.”

Things in the Australian automotive industry haven’t gotten better since the May event, held during National Manufacturing Week. Later that month, Ford announced that it would cease manufacturing in Australia in October 2016, news that didn’t surprise anybody who follows the industry, though highlighted how important the need to operate globally has become.

“Global supply chains were developing and moving into Asia,” explained Clarke of the situation in 2004. “So if you wanted to play in a global supply chain you had to be a part of it.”

Seeing the way things were trending, Futuris, a maker of products including car interior parts (seating is their main product), decided to become a part of those global supply chains.

The Asian Century is not something new for Futuris – it’s “at

34 JULY 2013 Manufacturers’ Monthly

230,000 cars are still manufactured a year in Australia. least” two decades old – but it is critical all the same. In 2004, it was “maybe 10 or 15 years in play” for some automotive companies, said Clarke.

Futuris, who employed 1,200 employees and operated only in Australia at the time, began with research and planning their strategy. There were visits to 180 vehicle producers and suppliers to understand who the competition was. They decided to enter into a joint venture with Chery, which was a smaller player, producing about 70,000 vehicles at the time.

“We developed a strategy not to compete with our bigger global competitors for the top vehicle producers – Shanghai GM, SAIC, the big joint venture businesses in China,” explained Clarke.

The company entered a joint

venture (70 per cent) with Chery (20) and the city of Wuhu (10).

Partnering with a “Rising Tiger” car-maker instead of a bigger company assisted in Futuris being underestimated.

“We were able to draw on excellent support from bodies like Austrade and others in the private sector,” said Clarke. “And as an Australian company we were flying under the radar. We were not seen as a threat entering Asia by our global competitors, who once described us as a fly they could squash whenever they liked.”

Futuris was also able to go the extra mile, setting up their first Chinese factory in a prefecture that wasn’t established as a massive industrial hub.

Wuhu, in the Anhui province, is about 350 km inland from Shanghai.

The company gained a competitive advantage by looking as far to set up their factory.

Chery now makes 773,000 vehicles a year, so Futuris was able to serve its Asian Century “apprenticeship”, as they put it, with a success story, before forming alliances with JAC and Brilliance, and are about to open their first 100 per cent-owned factory in Wuxi.

Building on its apprenticeship, Futuris opened a factory in Rayong, on Thailand’s eastern seaboard. As with its experience in China, it was careful to get to know the market and who the potential customers were before doing business.

However, in Thailand they were able to capitalise on existing relationships when setting up.

“All of the seating competitors, all of the interior component manmonthly.com.au

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competitors, we knew who the customers were there – they were people we were used to: GM, Ford, Suzuki,” he said.

“Not like China where you were exposed to Chery, JAC, Great Wall and 180 people you’ve never heard of.

“The head of purchasing in Thailand in the region is an ex-Ford Australia employee. We know him.

It makes the conversation very, very easy. And they will look after you as an Australian company.”

A number of articles have been written about Futuris’s successful move into Thailand, outgrowing its factory, opening one next door and outgrowing it, and aiming to open a new factory by the end of next year to keep up with demand.

The potential to grow in Thailand is large for those in the automotive sector, with the country expected to be producing three million cars by 2016.

However, like every other market, Clarke stresses that it’s very different in terms of scale, margins and many other regards to China.

Like Futuris did, it’s essential to put in research time before entering any new market. And, as Futuris and many other companies have learned, there will be disappointments.

Nearly every agreement reached in their original JV was broken, said Clarke, and many of the anecdotal horror stories he’d heard turned out to be true. Non-compete clauses, guaranteed margins and intellectual property were not honoured. But also to be considered is the cost of doing nothing.

“If you want to give up, you can

GM is a customer of Futuris. walk away and that’s the easiest thing to do, or you can work through all your issues and eventually be successful,” said Clarke.

Futuris, owned by agribusiness company Elders, has been up for sale since August last year. Despite the success stories, there have been difficulties, such as a $166.5 million write-down for the company in Elders’ half-year results last month.

The Ford decision to cease making cars in Australia in 2016 is of massive concern for the parts maker, and it has been reported that Ford Australia makes up about

Some of the audience at the Leaders’ Summit. manmonthly.com.au

25 per cent of Futuris’ s global sales. As highlighted earlier, the company has been spending the last decade adapting to the weakening Australian car industry.

And that brings us back to weighing up the cost of doing nothing in terms of the Asian Century, which is not something on the horizon, but already here.

“The last point I want to make is we are not the only country trying to benefit from the Asian Century,” Clarke said.

“Everybody else is there. When you are competing for business in

Asia, you are not competing against the little factory run by a mum and pop down the street, kicking chickens out of the way as you walk through the front gate anymore.

“You are competing against the biggest multinationals in the world.

They are all there and they are all hungry. And they have all the resources at hand too, to exploit that. So you have to be innovative, you have to be different, you have to be prepared to go the extra mile and outsmart them: something that Australians are very, very good at doing in business on a global scale.”

The Asian Century is not something new for Futuris.

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Austrade’s Asian transformation Asia poses both a threat and significant opportunity to Australian manufacturers, Austrade’s Phillip Bourke told the Manufacturers’ Monthly Leaders’ Summit. By Alex Heber.

B

y 2025, it is estimated there will be 2 billion people living in urban areas, or about 50 per cent of global population, and about 50 per cent of the world’s urban population will be living in Asia.

“Asia will become the centre of consumption, with a rising middle class,” Austrade trade adviser, services and manufacturing opportunities, Phillip Bourke said.

Addressing the Leaders’ Summit in Melbourne, he explained that urbanisation and increasing wealth are set to transform Asia.

“We will see changes in their desires for mobility, health, food, leisure, infrastructure and education,” Bourke said.

Currently Asia is the centre for low-cost production, and offshoring of Australian manufacturing activities is a fact of life, but Bourke explained Australia still has a valuable place hold in the sector.

“We still have a place in terms of value add technology, design some of the higher end stuff we can still manufacturer in Australia and still have a niche there to supply,” he stated.

Bourke said that although Australia’s relationship with Asia as a trade partner has “waxed and waned over the years,” it has

Asia offers opportunity for Australian manufacturers. experienced spectacular growth.

“At Federation Asian trade with Australia was less than 10 per cent of our total trade; now it’s about 70 per cent and Asian countries make up eight of our top ten major trading partners,” he said.

With the launch of the Labor Government’s Asian Century Whitepaper in October, innovation in advanced manufacturing, and a transformation of organisations like Austrade, Australia is in the right place at the right time, moving from the tyranny of distance to the power of proximity.

“Within Austrade, we’ve responded to this in the past couple of years with a significant

Austrade identifies business opportunities.

36 JULY 2013 Manufacturers’ Monthly

reorganisation of our resources, both offshore and onshore,” Bourke explained.

“Austrade is a global operation with about 1000 people; around half of which are based overseas.

“In Asia we have 44 officers in 15 countries; we have 11 officers in China and 11 in India,” he said.

Recently Austrade has also opened offices in Mongolia and Western China to support mining, manufacturing and other penetration opportunities into those growth areas.

Bourke said the organisation has undergone internal reorganisation to identify and address specific regional themes for Australian

manufacturers, outlining Singapore as an aviation and aerospace hub; as well as Singapore, Malaysia, and India for defence projects.

The organisation has also identified a strong need for health and aged care infrastructure, products and services in the Chinese and Malaysian markets.

Austrade is now geared up to assist Aussie manufacturers looking to jump into Asia, offering both onshore and offshore initiatives, including networking events such as tradeshows and conferences, and its Export Markets Development Scheme.

The organisation also has a network of business development managers who identify business opportunities for particular products or services and distribute the potential market play through Austrade’s database to facilitate exporting.

For manufacturers looking to offshore opportunities, Austrade also conducts market research, introduces companies to specific markets, and builds relationships between exporters and clients.

“When wheeling and dealing with Asian markets, relationships are all important, you can’t just expect to go there once and think everything will roll out,” Bourke said.

“Asia is not one market it’s many markets, and they’re all different.”

Austrade offers onshore and offshore initiatives. manmonthly.com.au

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We’re with you for the long haul Supporting Australian manufacturers expanding into Asia EFIC has been backing Australian exporters for more than 50 years and is proud to support Australian manufacturers as they expand into Asia.

As the Australian Government’s export credit agency, we can assist Australian-based manufacturers to win and finance export opportunities when the private market faces constraints.

As an example, tool grinder manufacturer ANCA needed working capital assistance to facilitate a new supply contract with a Chinese global organisation headquartered in Hong Kong.

Due to the high value of the export contract, ANCA sought the assistance of EFIC to secure finance.

EFIC provided ANCA’s bank, HSBC, with a $4 million Export Working Capital Guarantee (EWCG) to help fund the supply and purchase agreement. An EWCG supports working capital needs for one or more contracts and can help a company’s export growth.

Overcoming financial barriers for exporters

Visit www.efic.gov.au/asia-manufacturing

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Leaders’ SUMMIT

From building and shipping to global supply chains EFIC can assist Australian-based manufacturers to win and finance export opportunities when the private market can’t. Robert Dravers, the organisation’s director of SME and mid-market was on hand at the Leaders’ Summit to outline EFIC’s operations.

T

he way Australian businesses have changed has in turn changed EFIC, which helps many of them expand into Asia.

Under a couple of different guises, the Export Finance and Insurance Corporation has been aiming to help Australian businesses do business abroad (and at home).

Like the businesses under its jurisdiction, EFIC has changed with the times, and the times are dominated by SMEs looking to be part of the Asian Century.

“Integrating into Asia as Futuris is doing is surely the way to go,” explained Robert Dravers, the organisation’s director of SME and mid-market. “And EFIC, I’m pleased to say, is moving in that direction as well.”

“About two years ago, we started to support SMEs onshore, so not just exporters, which is what you’d expect us to do, because we are the EFIC. But we’re supporting people onshore who are supplying an exporter or an export project.”

With SMEs involved in international supply chains – especially in the case of some of Australia’s successful “micromultinational” firms – EFIC changed what it does to be of service to these SMEs. “And we moved into this onshore space because these massive resource projects we’ve seen of late in the oil and gas sector and the coal and iron ore and the like, they create very large supply opportunities for SMEs.” Now in its sixth decade, EFIC (formerly EPIC – Export Payments Insurance Corporation) had its remit broadened in 2011 under the Federal Government’s Trade Policy Statement to recognise the global supply chains that Australian manufacturers and other businesses are a part of.

Australian businesses have moved

38 JULY 2013 Manufacturers’ Monthly

EFIC helps you do business abroad. from a strictly build and ship model, said Dravers.

“Very recently with the government’s allowance we have been able to support companies who are internationalising, that is to say offshoring or setting up business operations overseas,” explained Dravers.

“So it’s in recognition that this is the way of the world now, this is happening, Futuris has made it happen and we want to support the Futurises of the future,” said Dravers.

“An SME company looking to set up in somewhere, usually in Asia – it may be China, it may be in Thailand – they are often going

to be challenged to get the funding they need from their bank. Because the assets that they have are going to be building and the bank is asked to fund are overseas, there are jurisdictional issues around for the bank around taking security, registering security in those markets and or taking control of those secured assets.

“Often the supply is going to be constrained, and that’s why there is a role for EFIC to play to support SMEs in internationalising their operations, whether they be for supplying into a regional or a global supply chain in the way that Futuris is or building a factory or a distribution centre in order to supply

their finished product, it doesn’t matter.”

This shift follows stories in recent years of successful Australian manufacturers often being of a “micro-multinational” orientation, for example in the case of ANCA, the Manufacturers’ Monthly Endeavour Awards winner for Exporter and Overall Manufacturer of The Year.

ANCA is an Australian company that supplies its high-end cutting tool technology to a number of international companies, and has been able to expand into Thailand and Taiwan. It’s headquarters and innovation muscle are in Australia, but from Thailand, they are able manmonthly.com.au

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to take advantage of a free trade agreement between that Thailand and China, from where the company has seen increasing demand in the last year (see Endeavour Awards profiles, Manufacturers’ Monthly June).

As Swee Mak from the CSIRO’s Future Manufacturing Flagship and others have noted, Australia’s manufacturing environment is a unique one, with a preponderance of specialised, nimble, internationalised companies, and no really huge industrial firms. There is no Australian manufacturing company that comes anywhere near Bosch or Siemens, for example, in terms of scale.

“We have our own unique manufacturing DNA, made up of tens of thousands of SMEs,” noted Mak last year.

“This is very different to some other industrialised countries, where there are many more large scale manufacturing enterprises.

Australian SMEs often find it difficult to embrace industrial automation because of cost and the risk of disruption to their production.”

Credit is often constrained to SMEs, with banks sometimes reluctant to fork out a loan that a promising Australian business looking to deal overseas might deserve.

“Because either the SMEs trading with a company overseas and there’s assets going overseas and uncertainty with payments from foreign companies and the like or it’s more simply a case of an SME not having physical assets to secure

Technology – the way of the future. more loan funds from the bank,” said Dravers.

There are conditions to what EFIC will support, of course.

Industry figures at the Leaders’ Summit. manmonthly.com.au

Companies considering expanding their operations overseas must be SMEs, defined as having less than $100 million turnover or under 100

employees. Also, EFIC must be convinced of an economic benefit being returned to Australia when overseas investment is being supported.

“We will be looking at issues around what income is coming into Australia in terms of payment from anything from IP to management fees, future dividends and so forth,” said Dravers.

He added that EFIC would not assist Australian companies looking to set up facilities overseas so they can fire their Australian workers.

For Australian micromultinationals, sometimes a little assistance is needed to get into a global supply chain that they would potentially serve well. And for both EFIC and the manufacturers it assists financially, things are changing, and the Asian Century has a lot to do with it.

“Clearly the way the world is moving, away from the traditional definition of manufacturing – of changing raw materials into a finished product – into manufacturers who are part of a supply chain,” said Dravers.

“And as we’ve heard from Dexter Clarke [Futuris’s representative at the Leaders’ Summit], very often you need to be close to your buyers in order to service them best and also lower your cost of getting your goods to them and ensuring that they get there on time.

“EFIC is now able to support companies that are setting up in Asia and elsewhere, and that we think is a very positive new direction for us to take.”

Business opportunities need to be facilitated.

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That wraps up the Leaders’ Summit for 2013. Manufacturers’ Monthly would like to thank our sponsors, EFIC, those who attended the event and everyone else who is playing a part in manufacturing in the Asian Century. See you next year....

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Q&A:THE PEOPLE OF MANUFACTURING Q&A: Jason Oliver, CEO As part of our Q&A series we interview you and find out what your job is day to day. In this edition, we speak to Jason Oliver, CEO at Black Widow Enterprises, designers and manufacturers of high quality 4WD and commercial/fleet vehicle storage solutions.

Manufacturers’ Monthly: What are your primary roles and responsibilities in your job? Give us a day in your working life.

Jason Oliver: I am responsible for all the daily operations and running of Black Widow. Being a smaller company (we employ 40 people) the role is very hands on. My previous role was operations manager so I still work with the team leaders on the shopfloor level to continue our LEAN manufacturing and continuous

improvement activities. We have also just employed 5 new Engineers in the past 6 months to increase new product development and I have a very hands on and active role in that.

Since moving into the CEO role, I have focused on implementing the same sort of systematic and continuous improvement approach to the admin side of the business.

Right now I am managing the implementation of an ERP system going live July 1. Setting, measuring and analysing KPIs in the business

is a daily part of establishing and managing the business.

As part of my role, I also attend a lot of trade shows and store visits, I have just got back from a week in Dubai attending Automechanika.

BW has also recently opened a retail outlet and are about to open a second branch in Ballarat so a lot of planning and driving the setup of all that.

MM: How did you get to where you are today? Give us a bullet point career path.

JO: I started working at BW after school and weekends with Dad when I was 16. At this time I was studying Hospitality in the direction of becoming a chef. When dad started the business, I was choosing my year 12 subjects and changed direction to select business studies. I started studying Business at University and continued to work at BW on days off and weekends. During Uni, part of the course was to do work placement for a year. I worked in the accounting department of

Jason Oliver: “I am responsible for all the daily operations and running of Black Widow.”

42 JULY 2013 Manufacturers’ Monthly

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ExxonMobil, learning the structures and systems used in big business.

In my final year of study I worked part time at a chartered accounting firm. When I finished my studies, my options were to continue to work at the chartered firm or start full time at Black Widow, I chose to start at BW. When I started, I felt the biggest opportunity to improve within the company was the production side of the business. The plan was to work out there for 6 months and slowly start integrating into the admin side of the business. 4 years later I was still on the factory floor. I had been working hard to develop a strong culture and good team that could continue to drive LEAN. At this stage I was starting to spend more time overseas and interstate and within the admin side of the business. 2 years ago I took over the running of the admin side of the business and took on the CEO role.

MM: What training/education did you need for your job?

JO: I have completed my Bachelor of Business at RMIT and my MBA at Deakin. As I work at a family business, these studies were not a prerequisite but I considered these studies to give me the skills needed to run a company of our size.

They have definitely helped with all aspects of my role as CEO. The MBA covered all aspects of business from Marketing, HR, Operations, Economics etc.

Working in my previous roles has also given me the experience to know how a bigger company is run and the systems are managed. As my previous roles were in accounting this has also been essential in running the finance side of the business.

MM: What tools and/or software do you use on a daily basis?

JO: For years I resisted the lure of the iphone. When we upgraded our phone plan, I was forced begrudgingly to upgrade. Now I’m never without it. Obviously now there is no disconnect from work with emails dinging all day and night. I also use a Toshiba portege manmonthly.com.au

Jason Oliver was a winner at the Endeavour Awards.

Z830 ultrabook. It is great for travelling as it’s so light and also has an inbuilt sim card for internet so doesn’t need a dongle.

JO: Finding enough hours in the day

MM: What is the one thing that you

JO: When I first started at BW in

are most proud of in your professional life?

the ops role, I was 23 and in charge of much older guys and being the boss’s son, I had a lot of resistance.

I also have had resistance from my dad on implementing LEAN and management systems as my dad is very old school and likes to focus on the entrepreneurial side of the business so we often clash. I have been able to overcome both of the challenges by working hard, gaining and giving respect and getting results on the board.

JO: I guess I am so lucky being so young and being in the position I am to make such change and have such an influence on BW. I have a goal to get the company to a certain turnover and size in the coming years.

Having set the foundations so far and seeing the growth achieved has been very fulfilling. Having this recognised by the Endeavour young achiever award recently certainly brings validation and a sense of pride to these achievements.

to get everything done.

MM: Biggest career challenge?

MM: What is your biggest frustration in your job?

JO: Like most managers, staffing MM: Biggest daily challenge?

and man management is a daily

challenge. I have been working very hard on developing a good team around me and learning to delegate to my managers. This is proving to make this aspect better but I still have curveballs coming up every day that keep me on my toes.

MM: What is the biggest challenge facing your business?

JO: With all the growth going on, cashflow is always on the agenda.

MM: Is there anything else about your job you want Australia to know about?

JO: One of the most challenging and rewarding things that has happened to me on top of all the things that go on at work is the introduction to my life of my 1 year old son. The lack of sleep has certainly added to the fun of each day. I am very lucky I have such a very supportive wife.

Manufacturers’ Monthly JULY 2013 43

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Product FOCUS: PROCESS CONTROL Portable hygrometer THE MDM300 I.S. portable hygrometer is suitable for checking the dew point in hydrogen cooled electricity generators. It is designed for fast, easy and ergonomic operation in hazardous areas.

A portable ‘spot check’ instrument, it offers a cost-effective and flexible solution which can be used across the site for periodic checking or as back-up to an online system.

The hygrometer is intended to maximise operational efficiency by taking as many measurements as required from different applications across a whole site with no waiting time in between.

Its measurements are carried out at system pressure to give true representation of the risk of condensation occurring in working conditions.

To ensure easy quality control and compliance with the requirements of local authorities, the units are supplied with traceable calibration certificates.

It is an adaptable unit with a robust casing which can withstand the rigours

Fibre optic industrial media converters

The portable hygrometer is an adaptable unit with a robust casing. of day to day operation at a power utility plant.

Customised sampling and other accessories are available to ensure spot checks are as quick and easy as possible and the unit has the added benefit of being suitable for other applications on site, such as the measurement of moisture in SF6, natural gas and instrument air.

AMS Instrumentation and Calibration 1300 316 970 www.ams-ic.com.au

Coil thickness measurement system THE Thicknesscontrol MTS 8201.LLT O-frame measurement system is equipped with laser line scanners to determine the thickness profile of individual metal strips in slitting lines.

A laser line sensor ensures a material independent measurement and higher precision which weren’t supported by laser point sensors.

In a slitting line, the thickness The measurement system is suitable for process control applications. of metal strips can be measured prior to or after the slitting operation. The frame measurement individual strips. Traversing thickness system is designed to measure material measurements cover strip widths of up with widths up to 4000mm at a precise to 4 metres perpendicular to the material accuracy from ±5µm. flow.

It is recommended for use for To save space, the measurement applications in process and quality system can also be mounted before the control as well as metal inspection in slitting shears. rolling mills and service centres.

It is then still possible to associate the Metal strip thickness measurements measurements with the resulting strips at are continuous and non-contact while different widths. due to space constraints, the strip All measurements are carried out profiles are measured before the slitting during the production process (inline). shears.

Bestech Australia The visualization software splits 1300 209 261 the entire captured cross-section into www.bestech.com.au 44 JULY 2013 Manufacturers’ Monthly

ADVANTECH’S Industrial Automation Group has added two media converters to their EKI-3000 family ‘Light Industrial’ unmanaged switch line-up.

These SC Type fibre optic industrial media converters have a compact housing that is shared with the EKI-3000 family switches.

These two models include the EKI-3541M, which is a multi-mode version to send data up to a distance of 2 km, and the EKI-3541S, which is a single-mode version to send data up to 30 km.

These units are designed to convert Ethernet networks to fibre by transparently converting the Ethernet signals to optical.

The biggest advantages are wide bandwidth, EMI immunity, and long distance transmissions.

These compact devices, with simple plug and play installation, ensure that network administrators get up and running quickly and easily.

In the event of a fault on the device network, administrators are instantly alerted through the use of Link Fault-Pass technology which sends the error signal through whichever port is still available.

The compact size also allows the devices to be installed in a small cabinet, thereby making the most of the available space.

Advantech 1300 102 896 www.advantech.net.au

Surface area and porosity system THIS surface area and porosity system is a fully automated, three-station surface area and porosity analyser intended for laboratories that require the combination of high throughput and the highest quality data.

Suitable for use in both quality control and research environments, Micromeritics’ TriStar II Plus can collect up to 1000 data points.

Fine details of the isotherm can be observed and recorded providing high resolution and revealing pore structure details.

The system has all the capabilities of the TriStar II, plus additional hardware and software features.

A new dewar design and proven isothermal jacket technology are intended to provide many extended hours of continuous temperature control.

A stainless steel manifold is corrosive resistant and designed for highlyaccurate gas management.

A dedicated saturation pressure (Po) port is standard, allowing the measurement of saturation pressure on a continuous basis.

The three analysis ports operate simultaneously and independently of each other.

The instrument also features a krypton

The surface area and porosity system is designed for gas management. option, allowing precise measurements in the very low surface area range.

It includes enhanced software capabilities, data reduction features, and instrument monitoring.

In addition, it features the utilization of the multi-adsorbate integral equation (Dual DFT) for micropore analyses of carbons.

Particle & Surface Sciences 02 4323 7822 www.pss.aus.net manmonthly.com.au

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Brought to you by

Space-qualified encoder

The industrial Ethernet switches have dual-power inputs.

Industrial Ethernet switches THE Allen-Bradley Stratix 5700 managed industrial Ethernet switch is designed to ease the integration of multiple machines onto a single network.

It includes an optional integrated Network Address Translation (NAT) feature which allows for high performance and simplified integration of IP-address mapping from a set of local, machine-level IP addresses to the end user’s broader plant-process network.

This can benefit manufacturers who are integrating identical machines into a production line, especially when multiple equipment builders are being integrated into a common production line.

The NAT feature allows OEMs to deliver their standard machines to

customers without having to program unique IP addresses into them.

The industrial Ethernet switch also allows users to have the flexibility to segment or isolate network traffic by determining which devices are exposed to the larger network.

By limiting access to certain devices, they can be isolated from broader network traffic, which can help optimise the network performance at the local level.

This line of switches is currently available with six, 10 and 20 fixed-port configurations.

Rockwell Automation 1300 319 741 www.rockwellautomation.com.au

Online rheometer THIS online rheometer (OLR) has been developed to measure the flow properties of domestic chemical products in the process pipe.

It allows the user to continuously measure, plot and report the flow properties of process liquids in the pipe.

Designed for use in the process and manufacturing of chemical products, it may be used for process monitoring, process control and quality control of liquids.

Pourability, viscosity, spreadability, tack, elasticity and other textural or flow properties are important for a range of diverse products in the production and manufacture of domestic chemicals like detergent gels, crèmes, soaps and fabric conditioners.

The OLR can measure flow properties directly related to these variables in the pipe during the production process and feed data directly to the operator in real time.

With this information, the operator can make informed process decisions about the quality of the material in the pipe and make changes as appropriate to streamline the process.

Rheology Solutions 03 5367 7477 www.rheologysolutions.com

manmonthly.com.au

THIS space-qualified encoder features high radiation hardness, high accuracy and qualification for 15 years lifetime in a GEO space environment.

The readhead is designed to survive harsh environments, with 150 g vibration resistance and wide operating temperature range, combined with an extremely robust optical detection principle.

Particular attention has been paid to radiation hardness, resulting in the encoder achieving qualification for 15 years use in GEO space conditions.

It has a mass of only 300g and power consumption is typically less than 1 W. The scale comprises a stainless steel ring with graduations marked directly onto the periphery, thus eliminating shock/vibration-induced breakages associated with traditional glass discs.

The graduations include IN-TRAC reference marks that are directly embedded into the incremental channel,

The encoder weighs just 300g arranged in a distance-coded pattern so that the distance between any two adjacent reference marks is unique.

The ring is mounted directly to the rotor, with the head mounted to the stator.

There is no contact between the two parts, so there is no need for separate bearings or flexible couplings.

This arrangement improves reliability and eliminates backlash, shaft wind-up (torsion) and other irregular metrology effects that plague traditional enclosed encoders.

Renishaw Oceania 03 9521 0922 www.renishaw.com

Turnkey Experion virtualization system HONEYWELL has launched the newest Experion Virtualization Solutions package. It is optimised for virtualisation and the needs of the process control industry.

It is designed to enable customers working in the offshore oil and gas, refining and petrochemical sectors to increase operations availability and reduce the total cost of ownership of their control system.

By applying virtualisation to industrial control systems, processing plants and refineries can simplify their computing environments and streamline maintenance and reliability.

In addition, they can reduce the amount of hardware space needed at facilities such as floating offshore oil rigs. This is significant as space is at a premium at such sites.

The newest member of the Experion Virtualization family, called the Premium

The system protects against hardware failures.

Platform, is based on blade server technology.

The system is said to reduce setup time by 90 per cent and generate 40 per cent more energy savings than alternative virtualised server platforms.

In addition, it is said to offer 22 per cent greater density than alternative virtualised server platforms and allow recovery from a processor failure in minutes.

Honeywell 02 9994 4465 www.honeywell.com Manufacturers’ Monthly JULY 2013 45

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Automation& ROBOTICS Getting ahead of the game How expert advice and automation can help Australian manufacturers improve output in today’s volatile trading climate.

M

ore than ever before, Australian manufacturers are looking to smart new breeds of technology to help them become more productive. The result: a rising number of case studies proving just how much efficiency can be gained from investing.

But as the trading climate for manufacturers becomes more treacherous, it is all too easy to succumb to the sombre mood of ‘doom and gloom’ which is doing its damndest to ensnare industry in its clutches.

According to a recent report from the Ai Group, Business prospects in 2013: Australia’s gap year?, Australia’s CEOs are expecting a tougher trading year in 2013 than they experienced in 2012.

The blame, according to the report, is with the strong Australian dollar, rising energy prices and high labour costs – which together are causing our usually optimistic manufacturing industry to exercise unheralded business caution.

According to the leader of one of the largest equipment suppliers serving the local manufacturing industry, however, businesses would do well to look at the successes of their peers, and grab with both hands the unique opportunities that are characteristic of such uncertain operating conditions.

engaging in process improvements in the areas of risk reduction, cost optimisation and improving efficiency, all manufacturers can achieve operational excellence,” Rautee advises.

Operational excellence

Investment in automation is key.

ABB Australia senior vice president and local division manager of discrete automation and motion, Jussi Rautee, claims 2013 offers unprecedented scope for companies to look inwards, and identify areas for potential improvement.

“This ‘gap year’ provides the perfect opportunity for manufacturers to review their process and strategy to work out what they want to manufacture, and where they can improve productivity,” Rautee said.

“By focusing on their core competencies and knowledge, and

In Rautee’s experience, companies that invested in growing their businesses during the ‘boom times’ are now ahead of their competition, and are finding it easier to compete with imported products.

While today’s economic climate is less stable, Rautee suggests that manufacturers can learn from these case studies, and perform similar – even smaller – improvements to help them get ahead of the game.

“The food and beverage market may not be seeing huge growth right now, but it is fairly stable.

Interestingly, this is one of the sectors that is the quickest to respond to market trends, through its uptake of innovation,” he said.

“Across the board, companies that invest in intellectual property (IP) and research and development (R&D) and more likely to be stable.

In short, manufacturers that are finding ways to provide higher value to their customers are surviving.”

One ABB customer improving its processes is Electrolux.

Its Dudley Park, South Australia

cooker plant has been home to a number of innovative upgrades in recent years, including: a new tandem press line made up of five presses and seven robots; a robotic powder coating cell for oven cavities; and a Next Generation Door Bonding Facility, housing four robots to manufacture a new door.

Worth $1.5 million and with a payback of only three years, the Next Generation Door Bonding Facility alone has helped lower the service call rate for door-related issues by a massive 75 per cent, allowing Electrolux to hit its quality improvement targets. Similarly, the new powder coating robots have allowed the company to expand its ovens offering and replace an imported product range.

Efficiency for productivity It is clear that manufacturers need to become more efficient if they hope to compete with global competition, however there are various ways companies can both improve their efficiency and lower their production costs.

For Rautee, improving efficiency in the area of energy use is one of the simplest, and also most effective, ways to get ahead.

“Get back to basics and improve what you are good at, but do it 20 percent cheaper.”

“It’s about improving processes.”

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Configuring products on the shop floor

By Mike Lorge*, Managing Director, Sage Business Solutions

F

ollowing the financial meltdown of 2008, manufacturers like many other industries now want to see a faster return on investment, and products that are quicker and easier to install and integrate.

An emerging trend in the market is the need for quick to implement, international ERP solutions that support domestic locations, as well as offering strong international features, multiple language and currency support, multiple chart of accounts, all delivered to multiple locations.

At the same time, manufacturers know well that no two products are the same and different types of products require different manufacturing processes, usually defined as process, discrete or mixed-mode manufacturing.

As a result, many manufacturers are moving final product assembly points as close to the customer as possible in order to deliver customerspecific products on a timelier basis.

They also wish to avoid having pre-assembled finished inventory sitting idle on warehousing shelves as a result of incorrect forecasting or sudden shifts in consumer preference. Ironically, this has shifted the role of the shop floor from one of serving merely as a manufacturing area to that of being a dynamic, A D _ Mvalue-added A N M R O Bcentre APR_ 1 3 for final customisation. Product

The role of the shop floor has moved from one of merely being a manufacturing area to that of a dynamic, value-added centre for final customisation. configuration tools, like those are just as important to achieving which are found in Sage ERP X3, successful fulfilment of customerhelp ensure that proposals for specific products. final product manufacturing are Depending on the industry or intelligently configured to meet type of products involved, certain customer needs. configurations might be fulfilled Companies also require additional simply by ensuring that separatelyflexibility at time of order to sell stocked, off-the-shelf products accessory items that “go with” what are picked, packed and shipped the customer is ordering, including together. pre-established “menus” of items Often, here is an intermediate step that are often sold together. of physically assembling components This helps save time-consuming together into their finished state. keystrokes, particularly for multiple In either case, it is paramount that line item orders that contain component inventory allocation products which are associated with takes into account all necessary each other in some way. constraints.

But front-office sales configuration For example, companies selling is just one part of the equation. various combinations of computer Back-office functions dealing with systems want to ensure that the same -manufacturing P a g e 1 allocation, 2 0 1 3 scheduling - 0 3 - 1 1 T number 1 8 : 0 of 0 processors, : 2 6 + 1 1monitors, : 0 0 and warehouse delivery coordination keyboards, and printers are

manufactured and delivered, even if it means shipping one or more components short of what is actually available, due to inventory shortages for one or more of the other related components.

For many companies, receiving a partial configuration is worse than receiving nothing at all, since the unmatched parts only take up unnecessary space, and must be double-handled once the remaining products arrive.

Designating that orders or individual line items should be “shipped complete-only” can protect against warehouse processing of partial orders until all quantities can be allocated to meet the given constraint.

For customers who permit partial deliveries, built-in controls ensure that only even increments of related products are picked and shipped.

It is also good business practice to prioritise the allocation of incoming components to partially allocated configurations, so that they can be shipped to the customer as quickly as possible.

Designed with manufacturing in mind, ERP software solutions can accommodate the many different types of manufacturing that support business processes.

This includes outputting the correct reports and ensuring that the manufacturing process is linked to financials, stock management and distribution type features. *Mike Lorge is Managing Director of Sage Business Solutions.

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Manufacturers’ Monthly JULY 2013 47

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Compressors& PNEUMATICS Getting the most out of your compressors Reciprocating compressors offer efficient and flexible operation, so how can you get your piston type compressors to be more efficient? Amin Almasi* writes.

R

eciprocating compressors (known also as “pistontype” compressors) are the best compressors for any service that the capacity is relatively low and the differential pressure is relatively high. Maintenance costs of reciprocating compressors are approximately 2-3 times greater than those for centrifugal compressors.

Cylinder valve selection

D _ M can A Nyou M Cuse AP WhatAmethods to O getC T _ 1 2 . p d f more operational efficiency?

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Cylinder valve defects are obviously responsible for most of unscheduled maintenance events of reciprocating compressors. Valve components should be operated (opened and closed) several billions of times during their operating life without 1 0 / 0 9 / 1 2 being , 9 affected : 3 9 by A Mfatigue or other degradation mechanisms.

The correct material selection and proper component design are keys to achieve a successful valve operation.

Reciprocating compressor valves should be supplied from a reputable valve manufacturer with proper references and a long-term successful production history. Some compressor manufacturers are also active in the cylinder valve business. Usually, cylinder valves manufactured by compressor vendors should be dealt with great care. The valve design and manufacturing should be considered as very delicate tasks.

This is only performed successfully by a few professional manufacturers.

Sometimes, for special applications, there are only three qualified cylinder valve suppliers with satisfactory references.

A New Evolution Is In The Air Ingersoll Rand air compressors have been certified as meeting the Class 0 air quality standard, limiting oil contamination in liquid, aerosol and vapour forms.

FOR 100% OIL FREE AIR, CALL CAPS AUSTRALIA TODAY ON 1800 800 878

1800 800 878 48 JULY 2013 Manufacturers’ Monthly

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www.capsaustralia.com.au

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Metal Work Pneumatic Australia Pty Limited - www.metalwork.com.au Melbourne Office - P.O. Box 4209 - Dandenong South VIC 3164 - 10 Mickle Street - Dandenong VIC 3175 - Tel.: 61 3 9706 6718 - Fax: 61 3 9706 6719 - vicsales@metalwork.com.au Sydney Office - P.O. Box 6483 - Wetherill Park BC NSW 2164 - Unit 2/504-508 Victoria Street Wetherill Park NSW 2164 - Tel: 61 2 9725 3599 - Fax: 61 2 9725 2361 - nswsales@metalwork.com.au

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Compressors & PNEUMATICS >>

Advanced polymers have excellent mechanical properties and are capable of working at hostile cylinder valve conditions which also include extreme mechanical stresses and relatively high temperatures. In most cases, modern, sophisticated, low mass polymer sealing elements can vastly increase the valve life (could reduce energy consumptions and maintenance costs). The main advantages of modern polymers over old-fashion metallic valve parts are: improved heat resistance, high fatigue life, high tolerance to dirt and corrosive traces (liquids or chemicals) particularly those in dirty gases, reduced wear and improved sealing capabilities.

Main valve types are: 1 – Ring type valve.

2 – Plate type valve.

3 – Poppet valve.

For large compressors (generally low speeds and high pressure ratios) and small machines (relatively high speeds) the “ring type valve” and the “plate type valve” are the best option, respectively.

The best valve size should be selected with respect to efficiency, reliability and performance requirements considering many operational and machine design factors such as the minimum clearance volume. An optimum valve size and an acceptable valve lift should be found for each application.

The optimum valve spring stiffness is also important. Too stiff springs can lead to the valve flutter (more compressor power and considerable wear rate) or early closing of valve (reduce the capacity). Too light springs cause valve late closing and the reverse flow (higher velocity, less reliability and reduced capacity).

Traditionally, “poppet valves” were popular many years ago.

Previous generations of poppet valves have left service because of poor performance, low reliability and operational problems.

Capacity control – Conventional vs. Step-less One of new technologies presented for reciprocating compressors is the step-less capacity control system.

A step-less capacity control system uses the finger type unloader and unloads the suction valve for only a portion of each compression cycle to achieve an adjusted capacity. This is a hydraulically actuated system 50 JULY 2013 Manufacturers’ Monthly

with a very complex mechanism and a very sophisticated control which is offered by very limited manufacturers.

The finger type unloaders have potential for damaging valve sealing elements and require more care for maintenance. Valves and unloaders cause around 44% of unscheduled reciprocating compressor shutdown.

The selection of capacity control method (the unloader system, valve types/details, and others) can affect the reciprocating compressor reliability and maintenance. In addition, the unloader selection has strong effect on performance, operational flexibility, start-up and shut-down of a reciprocating compressor. The “plug type” or the “port type” unloaders can offer better reliability and performance

capacity control configuration is the selection of part-load steps based on plug/port unloader, and if necessary the clearance pocket. Clearance pockets should also be dealt with care since they could offer some reliability and operational issues.

New technologies (such as stepless capacity control systems) are not suitable for all applications. Step-less capacity control devices are only recommended for large machines (say above 1.5 MW) with great durations of part-load operation.

The step-less capacity control system is a fast-acting, accurately controlled arrangement for the energy-saving operation and the rapid control of reciprocating compressors. The step-less capacity control system allows an operator to compress only the required amount

Understand which valve is right for your compressor. compared to the “finger type” unloaders. Great care should be taken for the unloader selection of a small reciprocating compressor.

The “finger type” unloaders are only available option for some small reciprocating compressors.

For some tiny machines (say below 100 kW), even a 100% spillback (the recycle loop) may seem an acceptable capacity control solution, because the wasted power is low. However, the “operational flexibility” generally is considered more important than around 10% added reliability and the “finger type” unloaders are provided (usually in addition of a 100% spillback loop) for small machines in critical applications such as refinery, petrochemical or gas processing plants. For medium size machines (from 300kW to 1.4 MW), the best

of gas in a very dynamic fashion.

However, this system uses special instruments and actuators and nearly always brings a long list of deviations (to compressor manufacturers and project specifications) and special requirements in design, installation and operation. Theoretically, when using the step-less capacity control system, the bypass loop could be eliminated. However, this is just theory and the best recommendation is to provide a 100% recycle loop (a 100% bypass loop) for the operational flexibility and continued operation if the automatic step-less capacity control system shows a problem. A modern step-less system is only expected in critical applications and a 100% recycle system could be justified for such critical services. Modern stepless capacity control systems are

relatively reliable devices and their record of reliability is not worse than conventional unloader systems.

On the other hand, these complex systems include various mechanical, hydraulic, electrical and control sub-systems and their reliability could not be higher than a certain limit. An important issue could be this system cannot hold its position in case of a problem. In other words, the system should be set to the “100% load” or the “100% unload” in case of a failure or a problem (such as a hardware/software issue, an actuator problem, a hydraulic system issue, an instrument failure, or another operational problem).

Modern condition monitoring Condition monitoring systems should be particularly cost effective; at the same time they should include all necessary items to identify malfunctions at an early stage. The result of an optimum condition monitoring system should be a relatively low maintenance cost and the lowest risk. An advanced vibration monitoring system includes: • The continuous vibration monitoring of the compressor and the driver. Velocity-transducers are preferred over accelerometers because of a better signal to noise ratio. For relatively large machines (>0.7MW), both (velocitytransducers and accelerometers) should be employed. An advanced configuration is the vibration monitoring at each end of the crankcase about halfway up from the base-plate in line with main bearings.

• The accelerometer at each crosshead.

Proximity probes should be located under the piston rods and used to measure the rod position (the rod run-out) and determine malfunctions such as wear of piston, rider band problems, a crack in the piston rod (or a crack in any piston rod attachment), a broken crosshead shoe, or even the liquid carryover to a cylinder. The latest recommendation is to use rod run-out measurements just for monitoring and alarm (not for trip).

Recommended limits for the cold run-out and the normal operation (hot) run-out are 60 microns and 170 microns (peak to peak), respectively. manmonthly.com.au

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Compressors & PNEUMATICS All shutdown functions should be 2 out of 3 voting to avoid unnecessary trip. Generally minimum numbers of shutdowns should be assigned for a reciprocating compressor in critical services such as hydrogen units in a refinery, gas processing crucial roles, important refrigeration modules and so on. The low pressure trip of the lubrication oil system is considered an essential shutdown case. Operators always encourage a very high vibration level for a shutdown (even sometimes 6-8 times than normal). There are always discussions about the high discharge temperature shutdowns.

Many experienced operators argue that they prefer to tolerate relatively high discharge temperatures (and high temperatures of the cylinder valves, which could result in the valve and all wearing parts life reduction), compared to an unscheduled trip of a machine that can result in a critical refinery/ process unit shutdown with production losses of an around 0.5 million dollar per day.

Of course safety risks should always M Abe 0 assessed 7 1 3 _ 0in0these 0 _ AT L 0713 HPAtlas a CopcoManMonthly.pdf situations. Consider high discharge1

system, the dummy crosshead on the one hand is attached to a movable piston assembly by a flexible member and on the other hand to the stationary compressor casing using auxiliary mechanical springs.

Masses, dimensions and stiffness are optimally calculated to offer the minimum operating vibration.

Irregularity setting

Use the right monitoring techniques ensures better compressor conditions. and medium sizes is a two-cylinder machine. For large machines, fourcylinders and six-cylinders are commonly used. Sometimes, odd number of cylinders is unavoidable.

In these cases, a dummy crosshead should be used to reduce the operating vibration. The stateof-art spring-mass-spring systems Advanced passive vibration can be studied for the passive vibration control (more reduction control This is a new 1Usually, 2 0 1the 3 - preferred 0 6 - 1 9design T 1 4 of : 3 3 : 1 in 3 the + 1 vibration).

0 : 0 0 12/06/2013 2:51:22 PM compressor for small reciprocating technology. In this innovative temperature trip (since this is a code mandatory requirement and constantly insisted by safety teams).

However, the trip level should be set properly high (based on accurate simulations and realistic thermal/safety evaluations) to avoid unnecessary shutdown.

For all reciprocating compressors, the flywheel is mandatory to regulate variable reciprocating torques.

The irregularity degree for the mechanical component reliable operation is around “2%”.

Generally in accordance with specific requirements of driver (especially the current pulsation of electric motors), torsional vibration considerations, and other operational issues, a lower irregularity value is specified. Reliability studies have indicated an irregularity value between 1-1.5%. It is strongly recommended to obtain 1% irregularity (if practically possible) for special-purpose reciprocating units for a smooth and trouble free operation.

The future of your compressors health and it’s energy efficiency, depends on Atlas Copco’s reliable Service team

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CM

MY

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CMY

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Total Responsibility Plans Complete compressor overhauls

24/7 call outs Compressed air health checks

Atlas Copco Compressors Australia 1800 023 469 ausairinfo@au.atlascopco.com

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