Suppliers urged to power up for next mining boom

While the much anticipated revival of activity in the Australian mining sector can’t come soon enough for many small businesses, one Perth business is urging suppliers to ensure they are ready for the onslaught.

Peter Gardner, Managing Director of Perth-based industrial exhaust fabrication and engine component business EPE, highlights that it is vital to ensure systems, processes, people and supply chains are in place to cope with a rapid increase in activity.

“The mining sector and many prime contractors have always operated through long-term boom and bust cycles and are accustomed to riding out the peaks and troughs,” Mr Gardner said.

“But for smaller businesses that sit at the next tier down the supply chain, the typical seven-year cycle means it’s a long time between drinks.

“The big risk is that when development activity does ramp up, it does so rapidly and in many cases, scaling up is harder than scaling down.

“It’s not just a matter of accessing human resources, but of ensuring the right supply networks are in place to deliver quality outcomes quickly.”

EPE is currently involved in the design, manufacture and supply of exhaust systems and power infrastructure for a number of WA mining projects, but Mr Gardner says it is likely to be the “tip of the iceberg” with more projects due to kick off in the near term.

“The nature of the mining industry and activity in WA today means that projects we are involved in range from small, custom fabrication jobs right up to working with international suppliers to design, manufacture and supply major power station infrastructure,” he said.

“An example of the larger scale project is our latest delivery of 24 x 450NB exhaust silencers and pipework for a new remote mine power station. The project required us to call on our engineering partners in the USA and UK to ensure the most efficient design was achieved while producing a product that will stand up to the rigours of the WA environment.

“The pressure flows on from the prime contractor, through the power producer and down to us to ensure a project of this scale is delivered on time and within budget. A late delivery is something that simply cannot be considered.

“It’s as much a case of relationship management as it is of delivering to agreed time, cost and quality requirements.”

Mr Gardner said having good relationships with suppliers was one of the keys to maintaining control in times of growth and decline.

“We’ve found that aligning ourselves to suppliers with similar values makes that a whole lot easier,” he said.

“There needs to be good communication and trust so that we can talk honestly to our suppliers about the inevitable ebbs and flows in business and work with them to stay aligned to changing demands.

“In any industry, the further those same open and honest relationships can flow up and down the entire supply chain, the greater the likelihood of project success.”

Mr Gardner also stressed the importance of having clearly defined but flexible processes in place.

“You can’t afford to adopt a ‘wait-and-see’ approach when business picks up,” he said.

“When a new opportunity arrives, you have to be ready to press the button as quickly as possible. But a degree of flexibility is also vital because requirements may change at a moment’s notice.

“For EPE, we’ve seen a big shift from diesel to gas power generation and each have their own requirements.

“Fortunately, while diesel power was far more common when we established our processes and ensured all compliance to global and Australian Standards was in place, we knew of the emergence of gas so could ensure both were catered for.

“That means switching between the different requirements comes with minimal disruption to the way we operate.”

PICTURE: FMG Cloudbreak Power Station constructed by Contract Power Group.