Image courtesy of www.education.vic.gov.au.

The Australian Chamber of Commerce and Industry (ACCI) says it has been warning the Federal Government for two years that the large reductions to incentives to employ apprentices was going to result in a dramatic drop-off in the number of opportunities offered by employers.

ACCI’s director of employment, education and training Jenny Lambert said it was of no comfort that these predictions have become reality. “Last week’s budget supported funding for new apprenticeship pathways,” Ms Lambert said, “but failed to restore the incentives that establish the apprenticeship in the first place.

“Apprenticeships are an investment in the future for both the economy and for the apprentice. The government’s own advisory body on skills, the Australian Workplace and Productivity Agency in its Future Focus report released earlier this year has forecast that Australia will need to significantly step up its training effort in order to meet the needs of the future labour market, yet these figures show that we are doing the reverse.

“The apprenticeship model, which integrates structured training with on-the-job work experience, has been proven in practice and through academic evidence as the best form of skills development. Up until now, Australia has had a proud tradition of encouraging this form of training, and for most licensed trades, it is the only avenue to obtain a valuable licence. Yet, the incentive changes and recent government support in the Fair Work Commission for the ACTU’s claim to dramatically increase first-year wage rates for apprentices work in the opposite direction.

“It is illogical and unsubstantiated by research that reductions in incentives and a wage increase for apprentices would ‘fix’ the skilled shortages in this country. It will, in reality, do the reverse, by discouraging employers from creating opportunities for apprentices to be employed. At a time when most sectors of the economy are weak, the government needs to step up to the plate and incentivise more employers, rather than doing the opposite.

“Australia needs to do everything possible to encourage more businesses to employ apprentices, particularly in the many trades necessary to secure a strong a productive economy in the future, Ms Lambert said.

Business cash flow has slowed this year, placing further strain on a range of industries already experiencing low confidence because of weak trading activity and high operating costs.

Businesses are waiting nearly eight weeks to be paid by other companies according to Dun & Bradstreet’s latest Trade Payments Analysis, with the average invoice payment time rising to 55 days during the first quarter of 2013. This figure compares to a national average of 52 days in the previous quarter and 53 days a year earlier, while in New Zealand the average payment time is at 43 days.

After easing during the last half of 2012, payment times have increased this year as a combination of weak sales activity, a high Australian dollar and concerns about operating costs affect businesses’ ability to pay on time. Operational costs were identified as the biggest barrier to growth for businesses in the quarter ahead according to the latest D&B Business Expectations Survey.

The slow payment cycle, as revealed by analysis of millions of accounts-receivables records, is being felt by the nation’s businesses, with D&B finding that 56 per cent of businesses expect cash flow will be an issue for their operations in the quarter ahead.

D&B’s analysis has also found that the nation’s biggest companies are the slowest to pay, with those companies employing more than 500 employees taking 58 days to settle their accounts in Q1.

The majority of all invoice payments in Australia are being paid late, with 48 per cent of accounts settled between one and 30 days beyond standard payment terms (30 days), while 38 per cent are made on time.

“The state of late payments in Australia is a handbrake on business activity at a time when greater investment and productivity is needed,” said Gareth Jones, Dun & Bradstreet’s CEO.

“While we’re seeing more positive signs for consumers, in terms of a strong sharemarket, rebounding house prices and lower debt balances, businesses expectations remain low,” he said.

“In this environment, a slowing cash flow cycle further hits businesses. Their ability to spend money and invest in the growth of their business, and by consequence the economy, is limited when they’re kept waiting for payments.

“More significantly, however, is if late payments are impacting a business’s ability to cover its own costs of operation. We know that 90 per cent of small businesses failures are caused by poor cash flow,” Mr Jones warned.

Reflecting the importance of cash flow to smaller businesses, the Trade Payments Analysis shows that companies employing fewer staff are generally making their payments more quickly than larger businesses.

Companies with fewer than 20 staff are taking on average 53 days for payments, whereas those employing more than 500 people average more than 57 days to pay their bills. The fastest paying companies, however, are medium-sized operations employing between 50 and 199 people, which are settling their accounts in 50 days.

All industries experienced slower payment times compared to the previous quarter, with the forestry sector the slowest to pay their bills, at 69 days.

Businesses from the mining, utilities, and retail sectors were the next slowest to make payments, increasing from 55 days to 57 days for Q1 2013.

“The rise in average payment times fits with the broad themes that have been unfolding elsewhere in the economy recently,” said Stephen Koukoulas, economic advisor to Dun & Bradstreet.

“We are seeing slower economic growth, soft business confidence and, as we saw in this month’s Business Expectations Survey, a clear weakening in business investment plans, hiring intentions and expected selling prices,” he said.

“The recent cuts to interest rates will, in time, help with firms’ cash flows but a lift in economic activity is also needed to see payment times fall back to more comfortable levels.

“The recent fall in the Australian dollar, if it is sustained, might help parts of local industry, but that will take time.

“The increase in average payment times is another reason why the Reserve Bank is likely to deliver at least one more interest rate cut in the months ahead. For firms with debt, a further interest rate cut would help free up cash and contribute to improved payment times,” Mr Koukoulas noted.

The federal government’s opening of the tender process for the Moorebank Intermodal Terminal (as reported on Transport and Logistics News) has drawn praise from the rail industry, but also attracted criticism for its questionable numbers.

Rail industry

The Australasian Railway Association welcomed the federal government’s calling for registrations of interest into the development and operation of the Moorebank Intermodal Terminal.

“This project alone will remove significant numbers of trucks from Sydney’s roads, reduce the cost of transporting goods and create further export opportunities,” said Australasian Railway Association (ARA) CEO Bryan Nye.

“The market failure of our supply chains that has resulted in more and more trucks blocking up local Sydney’s roads, particularly around Port Botany, is being somewhat rectified by this project, which will generate economic and environmental benefits long into the future.”

The project involves construction of a port shuttle to take containers direct from the Port of Botany by rail to the Moorebank facility, where they are then loaded onto local or interstate rail as well as trucks. This effectively improves efficiencies and reduces costs along the entire supply chain, from the port to the final destination and vice versa.

“Well-run intermodal terminals create advantages of scale that allow rail to demonstrate its substantial competitive advantages over other forms of freight transport,” Mr Nye added.

All around the world, governments and the private sector are realising that taking the time to properly plan and design supply chains that utilise rail’s inherent economies of scale is well worth the investment, and the Moorebank Intermodal Terminal is certainly a good example of that.

The terminal will directly lead to 3,300 fewer trucks travelling on Sydney’s roads each and every day, creating countless benefits to local communities.

“This project is a clear example of government’s use of alternate funding mechanisms to build infrastructure that have a net positive economic benefit,” Mr Nye continued

“In a tightening fiscal climate, finding innovative ways to remove bottlenecks to economic productivity will be increasingly important, and we certainly welcome projects such as this as a big step along the way.”

Do the numbers add up?

Long-time Newcastle container terminal and Eastern Creek intermodal campaigner Greg Cameron has questioned the numbers behind the Moorebank terminal.

“The Australian government’s Moorebank intermodal terminal will have 1.2m TEU IMEX capacity,” Mr Cameron said. “Port Botany container movements are predicted to increase from 2M TEU in 2012 to 3.2M TEU before 2020.

“’The terminal is due to commence operations in late 2017 and will be Sydney’s major rail freight solution for decades to come,’ according to Mr Albanese.

“Surely Mr Albanese’s statement means that Moorebank will only handle the growth in TEU movements between 2012 and 2020, and that over this period, 1.7M TEU or 85% will continue to be moved by truck!

“When will the Eastern Creek intermodal terminal be built? If not by 2020, how are the additional containers to be handled?”

Mr Cameron also questioned the NSW government’s commitment to efficient container movements.

“Shipping containers are the standard form of distribution for goods worldwide,” Mr Cameron said.

“It is irrational for there to be no container terminal at the port of Newcastle and it is irresponsible to use the vacant container terminal site for other purposes, as the New South Wales government now intends.

“NSW Premier the Hon Barry O’Farrell MP is unable to explain how the state’s productivity is enhanced by using Port Botany container terminal instead of Newcastle to service the import and export needs of northern NSW.

“The NSW government’s policy to prevent a container terminal at Newcastle is without justification.

“Modern container terminals are served by railways, which transport the containers to intermodal terminals, where they are lifted onto trucks for short distance haulage to warehouses and factories. They are returned overseas the same way.

“Newcastle’s lack of a container terminal requires imports and exports for northern NSW to be transported by truck, between Newcastle and Port Botany.

“With a container terminal at Newcastle, the immediate benefits are lower transport costs and saved time. More importantly, economic growth in northern NSW would increase because a container port drives new supply chains, markets and infrastructure. Road congestion and air pollution in Sydney would be lower.

“The NSW government’s long-term plan to rail containers between Port Botany and Newcastle is ridiculous when a container terminal can operate at Newcastle.

“The government plans to reserve a corridor for building an outer western Sydney freight rail by-pass. The route would include Eastern Creek, where an intermodal terminal would be built. The government plans to build a dedicated freight rail line between Eastern Creek and Villawood to complete the freight rail line from Port Botany.

“Port Botany container movements are predicted to steadily grow from 2 million TEU in 2012 to 7 million TEU in 2030.

“The Australian government’s proposed Moorebank intermodal terminal, in southwest Sydney, will handle just 1.2 million TEU. The Moorebank intermodal terminal would be full as soon as it was completed, around 2017. There would be no change in the number of containers moved by truck compared with 2012. An intermodal terminal at Eastern Creek is required from 2017.

“By 2030, when container movements are 7 million TEU, about 70% would be railed to Eastern Creek intermodal terminal.

“By eliminating the sea journey between Newcastle and Port Botany, a container terminal at Newcastle would enable containers to be railed between the port and Eastern Creek faster than from Port Botany. The difference in cost, due to distance, would be trivial.

“Instead, the NSW government is providing a 99-year monopoly to the ‘NSW Ports Consortium’, the company purchasing the lease to Port Botany container terminal.

“No NSW politician speaks in favour of the Port Botany monopoly.

“All politicians are silent, because the monopoly disadvantages northern NSW and diminishes productivity in NSW,” Mr Cameron said.

Coles has been a focus of the TWU’s road transport campaign.

Truck drivers and their employers presented a united front at the TWU National Council in Darwin in their calls for a greater focus on road safety in the supply chain.

ARTIO (Victorian Branch) secretary/treasurer Philip Lovel AM told the National Council that the Road Safety and Remuneration Tribunal had an important job to do in protecting industry safety standards.

“The road freight industry is going through a very difficult time, and companies are under constant pressure from clients to reduce costs and increase efficiency.

“But there’s only so far that you can go in reducing costs before you start sacrificing safety standards.

“No-one is seeking to hide from competitive pressure, but competition should be on the basis of value and service – not on the basis of cutting corners or bending the rules of common sense.”

Philip Lovel also called for the government to establish a fund to support industry training and accreditation programs for both drivers and employers, and to support measures that continue to improve industry safety.

He said a recent large survey of transport operators revealed industry accreditation and training issues as critical.

“It would be great to see increased cooperation from governments, industry bodies and the companies at the top end of the supply chains on this important issue.”

TWU national secretary Tony Sheldon backed the call for Governments to support the industry in these important road safety matters.

“Drivers and road freight companies are keen to pursue new ways of working together to achieve better outcomes for the industry.

“Training and accreditation programs are vital to improving standards, but they must be properly resourced.

“The end clients in the supply chain need to get on board and be part of a holistic industry approach to safety, alongside transport companies, the union and governments.”

ATA Scania 2010 Young Australian Truck Driver of the Year award winner Rick Lockwood.

Students exploring potential careers can find detailed information on road transport jobs in the Department of Education, Employment and Workplace Relations’ 2013 Job Guide, following extensive input by the Australian Trucking Association.

The job guide provides students or those looking for a career change with information on the duties, requirements and opportunities of jobs in different employment areas.

Young workers interested in the road transport industry can use the guide to find up to date information on becoming a truck driver, furniture removalist, delivery driver or truck offsider. Specialisations such as heavy haulage driver, pilot driver and concrete agitator operator are also listed.

The Job Guide recommends that potential truck drivers should enjoy practical work and drive safely. Driver duties such as filling out a work diary, checking loads and coupling/decoupling trailers are listed, as well as the unusual hours many drivers work.

Licensing bodies and relevant courses are shown for each state and territory, making it easy for students to work out how to get the qualifications they need.

ATA chief executive Stuart St Clair said it was important that young people were aware of the great careers available in the trucking industry.

“Many parents, teachers and school career counsellors remember the trucking industry as it was in the past, and don’t recommend it to students,” Mr St Clair said.

“Today’s trucks are fitted with technology that can only be found in high end cars, and a truck driver these days can be in sole charge of a vehicle and cargo worth more than a million dollars.

“A student who starts out by getting a nationally recognised certificate in driving operations can build on that qualification to progress into supervisory roles and into management with a Diploma of Logistics.”

The Job Guide is available in hard copy or online at www.jobguide.thegoodguides.com.au.

The SCLAA, in conjunction with UQ Business School, is calling for nominations for the 2013 Supply Chain and Logistics Management Scholarship. This scholarship is a national program for all members of the SCLAA.

Scholarship value

$4,960 includes tuition, course materials, morning tea, lunch and afternoon tea each day and a formal dinner. Flights, accommodation and incidentals to attend, should the winner be from interstate, will also be paid for by the SCLAA.

1 x delegate ticket to the 2013 Queensland Supply Chain and Logistics Conference, which will be held on 29-30 August at the Sofitel Hotel, Brisbane.

Nominations close at COB on Monday, 17 June 2013.

Course date: 19-23 August 2013.

Venue:  UQ BusinessSchool, CentralPlazaOne, 345 Queen Street, Brisbane.

Benefits to be gained from the course include:

• Discover the keys to successful supply chain management.
• Develop tools and models to help you examine your current system.
• Transform your organisation to a process orientated system.
• Improve your performance in international and domestic markets.
• Learn how successful leaders engage others in the supply chain process.

One of Australia’s leading institutions, the UQ Business School is ranked amongst the World’s Top 50 providers of executive education, according to the Financial Times. The MBA program has recently been ranked number 1. in Australia and Asia Pacific by The Economist.

Course facilitators

Dr David Parker is a senior lecturer at UQ Business School specialising in project management, operations management, supply chains and lean systems. He has worked with numerous international firms and is the author of books including Managing Projects, Managing People (2008), Service operations management: The total experience (2012).

Liam Stitt is a supply chain, logistics and process improvement practitioner. His principal strengths are in developing strategic concepts and translating these visions into reality. His underlying expertise is in change management and business improvement.

Should you wish to apply for the 2013 UQ Scholarship please contact the SCLAA National Office on 1300 364 160 or email secretary@sclaa.com.au to receive an application form.

The Moorebank Intermodal Terminal is being taken to the market with the Federal Government calling for private companies to register their interest in developing and operating the Moorebank Intermodal Terminal.

Federal Transport and Infrastructure Minister Anthony Albanese said: “The Moorebank Intermodal Terminal will bring the public and private sectors together to generate around $10 billion in economic benefits through reduced freight costs, reduced traffic congestion and better environmental outcomes.

“The Terminal is due to commence operations in late 2017 and will be Sydney’s major rail freight solution for decades to come,” Mr Albanese said.

“Once up and running, it’s forecast that the Terminal could remove 1.2 million trucks each year from Sydney’s roads – that’s equivalent to 3,300 trucks per day.”

“This project is essential to delivering greater freight efficiency and competitiveness for Australian businesses and is looking to make improvements along the length of the supply chain.”

The Registration of Interest process is being undertaken by Moorebank Intermodal Company, which was established in December 2012 to take the project to market.

Since its establishment, the Moorebank Intermodal Company has engaged widely with industry. Briefings have already been provided to more than 60 Australian and international companies including large rail freight operators, intermodal users, financiers and construction companies.

“There is strong interest across the board in project participation as well as from industry players keen to use the Terminal. This reflects the commercial benefits of this venture,” Finance Minister Senator Penny Wong said.

“The Moorebank Intermodal Terminal is an example of government working with the private sector to bring about an infrastructure project in the best interest of the state and the country.”

Private sector companies and consortia with world-class expertise in the planning and management of major freight and logistics facilities including intermodals and warehousing are invited to register their interest.

“This process will assist the company to identify a global field of interested participants,” Senator Wong said.

The proposed intermodal terminal will include a port shuttle terminal capable of handling up to 1.2 million containers annually, an interstate terminal served by the Australian Rail Track Corporation network with capacity for a further 500,000 containers annually, and complementary warehousing.

The next stage in the procurement process will commence with a request for Expressions of Interest in August 2013.

Organisations that wish to respond should email tender@micl.com.au requesting a copy of the Registration of Interest documentation. Registrations of Interest close on 12 June 2013.

Further information on the Moorebank Intermodal Facility is available at http://www.finance.gov.au/property/property/moorebank-intermodal-freight-terminal/index.html

Timetable

Further market interactions following the close of the Registration of Interest.

August 2013 – Formal procurement process commences with a request for Expressions of Interest.

November 2013 – Request for Tender process commences.

Mid-2014 – Selection of Preferred Tenderer.

Mid 2015 – Defence vacates the project site and construction of the intermodal terminal begins.

Late 2017 – Intermodal terminal operations commence.

Pharmaceutical company AstraZeneca Australia is investing an additional $20.2 million into its Sydney manufacturing operation to boost production of one of its key asthma medications in response to growing demand for the medicine from China.

The company is investing in a third line at its North Ryde (Sydney) plant, which will see capacity for the one asthma medicine alone boosted by an additional 81 per cent from 240 million units currently to 435 million units per year by 2015. The company currently exports $254 million of product, which will rise to $340 million by 2015.

The high-tech machinery, which can produce 65 million units a year, will be custom built in Melbourne to AstraZeneca’s design specifications. AstraZeneca’s manufacturing expansion began last year and is the result of a global sole supplier relationship the company has with China and Japan. The company has already invested $80 million in the last five years to meet growing demand for its medicines.

Mark Fladrich, managing director of AstraZeneca Australia and New Zealand said: “We’ve been saying for some time that the country has a tremendous opportunity to get behind the Australian medicines industry as a sector. Our industry is delivering $4 billion a year in exports, more than cars and wine exports, but we need policy stability in our commercial environment if we’re to sustain this growth. That is something we’ve lacked in the past few years, and something we’re looking for from the next government.

“In an economic environment where the manufacturing environment is challenging, AstraZeneca is carrying the torch for high-end production. We are producing an Australian product on Australian built, specialist machinery which will benefit the wider Australian economy,” Mr Fladrich said.

AstraZeneca estimates that for every $1 of medicines it exports the local economy will benefit by up to $1.20, as production involves a number of niche suppliers including plastic manufacturers and delivery companies.

“We source as much plant and equipment from local Australian providers as possible. We draw on local engineers and source quality professionals to run the lines once they are up and running,” Mr Fladrich said.

The final packaging machinery, known as the Respules 4010 line, takes 40 people nine months to produce and is due for installation in 2015.

Wesfarmers’ managing director Richard Goyder has announced that Target’s outlook has been downgraded. The retailer’s earnings for the 2013 financial year to date have been affected by a number of factors, including:

• Sales performance during the second half of the year, exacerbated by a late start to the winter season impacting both sales and margin.
• Higher levels of clearance activity resulting from excess inventory.
• Higher than anticipated shrinkage rates.
• Increased costs, mainly associated with restructuring activities.

Accordingly, Target’s earnings before interest and tax (EBIT) for the 2013 financial year are now expected to be between $140 million and $160 million.

Mr Goyder said that while Target’s earnings for the current year will be disappointing, “appropriate action has been taken to improve its future earnings and competitive position and maintain its strong brand in the Australian market”.

The Australian supply chain management software market grew 17.9% to reach A$176.8 million in 2012, up from A$149.9 million in 2011.

During 2012, IT budget decision makers remained highly cautious overall, but supply chain investments kept their priority status and moved forward.

“While IT budget scrutiny and global economic conditions are moving cost-reduction back to a main business driver, supply chain remains a key source of competitive advantage in driving business growth objectives,” said Chad Eschinger, research vice president at Gartner.

“North America and Western Europe continue to be the prime consumers of SCM software, with nearly 77 per cent of market revenue. However, Western European growth slowed and Asia/Pacific continued to experience robust growth, reflecting a shift toward investment in technology in emerging-market manufacturing centres.”

SAP retained its No. 1 market share position in SCM in 2012, with an 11.6 per cent increase in US dollars. SAP held 20.8 per cent of the market and reached USD 1.7 billion in software revenue. SAP has been the market share leader within the aggregated supply chain market for more than a decade. Second-place Oracle had another good year in its supply chain business, growing 12.1 per cent and reaching $1.5 billion in revenue during 2012. JDA Software retained the third spot in 2012, exhibiting strong new sales and increased average sales price through most of the year.

Note: Gartner’s methodology, which converts US dollars from euro-based income statements for software sold during 2012 globally, has reduced 2012 growth for vendors reporting in non-U.S. dollars. Source: Gartner (May 2013)

In a highly fragmented market, the top five SCM software vendors maintained their status quo over smaller competitors in 2012, accounting for nearly 50 per cent of revenue. This consistency in share occurred despite the market consolidations that happened in 2012 — the most significant of which was SAP acquiring Ariba in October. The other major acquisition took place in December 2012 between RedPrairie and JDA Software, creating the largest supply-chain-focused vendor and further consolidating the top of the market.

Software-as-a-service (SaaS) SCM offerings showed above-market growth (13 per cent in 2012), while perpetual new licenses experienced slower growth of 3.5 per cent, as organisations focused on fast implementation at a lower upfront cost.

Additional information is available in the Gartner report “Market Share Analysis: Supply Chain Management Software, Worldwide, 2012.”

Gartner Supply Chain Executive Conference

Analysts will be discussing the future direction of the supply chain industry at the Gartner Supply Chain Executive Conference, August 12-13 at the Grand Hyatt Melbourne.