According to all sources, Western Australia’s export future is set to explode. With natural resources leading the way, Cameron Bayley finds there’s plenty of export excitement in Western Australia.
There’s a particular statistic those involved with exporting in Western Australia (WA) are fond of: with 10 percent of Australia’s population, the state contributes around one-third of the country’s exports. “It’s one that we all know off by heart here,” says Jenny Mathews, Austrade’s state manager in WA. “That’s the stand-out.”
“The general term is, we punch above our weight in exports,” says Brian Carew-Hopkins, director of the international marketing division of the WA Department of Industry and Resources (DOIR), after quoting the statistic. “Western Australians contribute quite a lot to the national coffers.”
There’s no mystery as to the cause of this prosperity. “The state is in the midst of a resources boom,” says Mathews. “It started to heat up about two years ago and has gone from strength to strength over the last 12 months.” Iron ore, nickel, gold and liquefied natural gas (LNG) are some of the state’s prime resources. And Mathews says strong economic growth in China has meant the country has become a very large market with “strong demand for all the commodities that WA has in abundance”. The mining and resources sector currently contributes 58 percent of the state’s total exports. However, there are other shining lights. “It’s not just about the resources sector,” says Carew-Hopkins. “While there’s a boom going on there are a lot of other industries that spin off that resources sector and start to grow and get enough critical mass to begin exporting.” He points to recent growth in areas such as IT, marine engineering and shipbuilding as examples.
Mathews agrees and says the success of large companies such as Austal and Tenix, ship construction businesses based at the Australian Marine Complex in Rockingham, means there is a plethora of opportunities for smaller companies to get a piece of the export pie. “There are companies that supply the seating, the flooring, the aluminium panels, the design,” she explains. “When you’ve got a large sector like that others feed into it. And they are now exporting independently offshore.”
The mining sector is another one where several SMBs are finding their feet and developing the capability to take their products or services into international markets. Stuart Manifold, from emergency and crisis management company Risktec, says the company’s work with some big players has played an important part in getting into new markets. “We’ve had very, very strong support from some of the major oil companies around the world, who have basically taken us with them when they move.”
Specialising in crisis management and emergency response training in offshore and onshore hydrocarbon facilities such as oil rigs, some 90 percent of the company’s business is in international markets. It now has offices in Singapore, Indonesia and Azerbaijan, as well as the Perth base. “Western Australia really is a major hub for oil and gas, and it’s the perfect jumping off point to get up to South East Asia and further afield,” Manifold explains. “We’re five hours away from South East Asia; we’re on very close to, if not the same, time zone. It doesn’t take a long time to get there. It’s almost like getting a bus to work.”
While Risktec is proof there are export advantages for SMBs assisting the big guns, it’s not without challenges. “When you’re dealing with multinational oil companies you’ve got bureaucracy that would put the Australian Government to shame,” Manifold says, explaining that their standard 30-day payment terms can be anywhere up to twice as long. Risktec has also taken out insurance on their debtors, even the largest ones. “While you don’t expect a BP or a Chevron to go broke, there are political factors in some of the countries they work in that make it extraordinarily difficult to get cash out from time to time.” For any others in the same position, he recommends choosing banks and financiers that will support small businesses in both these issues.
Manifold says Risktec has made use of some of the DOIR’s representative offices around the world, which have been helpful particularly in setting up introductory meetings with local personnel. Carew-Hopkins says the network of 13 offices around the globe was set up to help SMBs in a variety of ways, such as researching potential customers, and providing representation on the ground. “One of the issues for Western Australia is that for small to medium enterprises, while there’s a very good market locally, some companies in some sectors are unable to build up the critical mass they need in order to develop export markets under their own steam.”
The DOIR also helps exporters by assisting a group of businesses to enter a market rather than focusing all their efforts on assisting a single business. With Malaysia currently looking to establish its own coastguard and augment its military defence with submarines, but lacking the necessary infrastructure, it was a perfect opportunity for DOIR to step in with some potential exporters. “Because we have an office in Malaysia we were able to open up very high level contacts with the Malaysian authorities, the Ministry of Defence and the newly formed coastguard,” explains Carew-Hopkins. The department and participating businesses conducted an exhibition of their engineering, manufacturing and related services. “There are companies that have made sales, and some of the companies ended up being short-listed to do very, very large contracts,” he says proudly. “So that’s opening up a potentially large market for a multitude of companies within that cluster.”
Export’s future
In 2004, the West Australian government released its Trade Investment Strategy—one of its aims was to broaden the state’s exports. While recognising the huge capabilities the state has in the mining and resources field, it was a commitment to achieve success in further areas. “There’s always been the adage that the resources industry is subject to a boom-bust cycle,” says Carew-Hopkins. “So that means WA’s economy is a little bit exposed if it’s heavily resource-dependent on the export side of it.”
Already the strategy is bearing fruit, says Mathews, in many areas including IT and biotechnology. “We’re getting an increasing number of medical biotech companies coming into the New Exporters program. For example, they might be producing a particular type of bandage, or retractable needle, or in some cases vaccines.” Food and beverage is another area that’s blossoming, with food and wine from the Margaret River region making a name for itself, as well as recent successes in the arts industry, in particular indigenous arts.
The other big new export sector, in line with the rest of the country, is services. “There’s certainly been strong growth in areas like business and finance services,” says Mathews. While education and tourism may not be as high as other states, they are showing particular growth. The state government recently supplied $3 million funding to the Perth Education City initiative for the recruitment of international students.
Financially, the West Australian government assists exporters through two schemes. The Market Acce
ss and Development Scheme (MADS) provides assistance to exporters to offset some of the costs of entering markets, including funding for accommodation and airfares. (Companies on the recent trip to Malaysia used the scheme for some of the associated travel costs.) The Industry Association and Bilateral Business Organisation Development Scheme provides grants to industry associations and bilateral organisations to assist the work they do in encouraging trade between Australia and foreign countries. “When we have companies here that want to access those markets, we can use the bilateral chambers as a sort of one-stop shop for them to talk to people who have contacts in those markets,” Carew-Hopkins explains.
He admits the DOIR doesn’t offer large amounts of funding to individual exporters. Instead, it concentrates on the bigger picture. “We don’t tend to give money to companies or organisation to go off and do something. What we tend to do is try and exercise leverage in the space where government can do that.” This is illustrated by the extensive network of international departmental offices. “We’re able to sustain the offices and maintain a positive relationship between governments.” And while these relationships can increase exporter access to various markets, they also allow the department to approach overseas government if exporters are having particular difficulties.
This approach also means the state government invests in long-term initiatives, like it has done with the biotechnology industry through a strategy launched in August this year. “As a government we’re able to look at industry sectors that may have a pay-off in a 10- or 20-year timeframe and provide support for those industries.”
The current boom is not expected to die out soon, with the combination of a healthy Japanese economy and a rising Chinese one providing more than one big market for WA’s natural resources and other exports. “You’ve got the two things happening at the same time, which is a bit unusual, and hasn’t happened before,” says Mathews.
Looking at the state’s three biggest markets—Japan, China, and Korea—Carew-Hopkins says all he can see there is growth. He believes China will eventually overtake Japan as the state’s biggest market, although Japan itself is getting stronger. “Japan is starting to grow, the economy’s recovering,” explains Mathews. “It’s a very, very large economy, and even to get one- or two-percent growth in an economy that size, this is also what’s driving strong demand for those resources.”
And there’s more. Mathews feels India, already one of the state’s top markets, could soon have as much demand for infrastructure development as China does. “It’s a good time,” she says. “People are pretty upbeat.”
