Australia is presently a multi-speed economy, with some sectors experiencing strong growth and others addressing systemic risks. The better businesses are all reconsidering how they can tweak operations to maintain and even increase profits. Here, Sally McPherson from iSeekplant explains how they are responding to the risks in the mining sector.
Moving ahead in mining
Sally McPherson is a director of iSeekplant, a plant hire business that supplies equipment to the mining sector, as well as other industries.
With the mining downturn as a backdrop, innovation and disruption from existing competitors and new market entrants is top of mind for the business, McPherson explains.
“Online plant hire is relatively new and we see new websites launching all the time. But when it comes to online businesses it’s a matter of go big, or go home. We’re now four years ahead in our growth path too – so there are barriers to entry even if it doesn’t look like there is to someone having a punt at an online model,” says McPherson.
“We are essentially a market ‘disruptor’ for the earthmoving industry, changing the way procurement decisions are made in earthmoving hire. A lot of competitors in our space think you can open an online business for a song, and then the market will come to you. That certainly hasn’t been our experience over the last four years,” she adds.
McPherson says their business has fought hard to get its message out there and educate the market that there is an easier way to hire plant and equipment. “To succeed with an online business you have got to have really solid backing, and a lot of investment. You have to find innovative ways to take it to market or you don’t really have a chance,” she explains.
Responding to the market
According to McPherson, the mining contraction actually increases demand for plant and equipment.
“We are an online lead generation system and advertising platform for earthmovers chasing more work. So at the moment there are a lot of earthmovers out there who are willing to try anything to improve their business prospects,” says McPherson.
“If everything was rosy in the market, then we might not have flourished, because earthmoving is not an easy industry to try and change; it’s highly antiquated, old-fashioned and there was no need for change for many years,” she adds.
During the mining boom there was a shortage of plant in many States, a situation that has now reversed. Says McPherson: “There is plant everywhere and limited quality work available. So when we come and do our pitch to an earthmover they are open to new things because they have to be. There are also some serious structural headaches in earthmoving because of the downturn, in terms of the size of machine in demand in construction.”
The most prolific projects are residential earthmoving projects and subdivisions. But the machines required for these projects are starkly different from the kinds of machines operators invested in during the mining boom.
“So, if an earthmoving business wants to change its approach to market it has to invest in a totally new fleet. We can also go some way to helping businesses find new markets,” says McPherson.
Local economic conditions
Queensland and Western Australia, which used to be the optimal locations for plant hire, are now the toughest states in which to do business.
Both the QLD and WA Governments are investing very little in infrastructure at the moment, and these are the two states most deeply impacted by the downturn and commodity price carnage in mining.
“On a local level we have customers in central QLD and the Goldfields of WA that are in dire straits. The impacts on these communities are enormous,” says McPherson.
While traditional mining businesses are still feeling the pinch as commodity prices have yet to recover, enterprises in this sector that offer value-added services are well positioned for the next upturn.