This week’s company profile is set to focus on the manufacturing sector, more specifically; stainless steel manufacturing. The manufacturing sector is an area we have yet to cover here at Shape Your World despite the value it provides to the Australian economy. Our goal is to provide an in depth analysis of the industry and market in which they operate, highlighting key issues and challenges faced by this national business in general, and propose some recommendations for the business.
Business Profile and Industry
3monkeez have been providing stainless steel products for the commercial market for over a decade, specializing in commercial tapware, sinks, trade waste solutions, and plumbing and sanitary installations. Their operation is renowned for their ability to custom manufacture any stainless steel product based on their extensive technical library or custom plans. The stainless steel market is quite competitive, and therefore a key point of difference is required to separate the bulk of the manufacturing companies from each other. The collapse of one of the country’s most prominent manufacturers of stainless steel tanks, tubes and pressure vessels last year shows that even companies with high turnover (in the region of $40 million p/year) are at risk if they fail to align their business focus. The steel services industry averages an annual revenue of $7 billion nationwide. Although annual growth according to IBISWorld is currently at -3.8%.
Key Business Issues and Challenges
- Competition: – With such a large amount of money on offer, it’s easy to see why the stainless steel market is saturated, especially when producing light commercial products such as sinks, tapware, and commercial plumbing materials. It is important to remain proactive in obtaining new business and maintaining strong customer relationships.
- Low Cost Imports: – The strength of the Australian dollar thanks to mining industry has caused the penetration of low cost, imported stainless steel commercial products to increase. This substitution of products from China has been affecting stainless steel fabricators since the late 2000’s.
- Less Market Share: – With more and more revenue being shifted overseas, manufacturers have been affected by the downturn in the commercial and industrial building sectors more than usual. A shrinking market, combined with a diminishing market share has made acquiring new work more competitive. In this case, it comes down to the company with the best marketing, not necessarily the best product.
- Employee Skills: – the skills and knowledge of a manufacturer’s workforce can present an additional barrier to entry and improvement. Many jobs are highly specific and it can be quite hard to fins skilled workers when looking to expand.
- Strengths: – Centralised Stainless Steel Manufacturing facilities along the East Coast. Possibly the biggest advantage 3monkeez has is a presence in every state, meaning quicker delivery and production of sinks, troughs, and commercial kitchen tapware for their clients.
- Weakness: – Price and visibility. As discussed earlier price points have been a highly contested issue within the industry.
- Opportunities: – With the Australian Dollar dropping below US90c. There may be hope on the horizon for local production. Of course increasing the company’s visibility is key to capturing this possible opportunity and a solid marketing plan should already be in place to ensure the success of this.
- Threats: – Imports are the number one threat to the stainless steel manufacturing industry in Australia.
Capital investment is the most obvious challenge for further expansion in a shrinking market. Setting up capable stainless steel manufacturing plants that are able to open up other revenue streams requires a high amount of capital to construct a plant that is competitive within the market. There are also staffing issues as management may be required to monitor growth.
Some of the recommendations outlined for 3monkeez are as follows: –
- Marketing budget- increase the allowance dedicated towards marketing in an effort to capture a larger market share.
- Strengthen client relationships – leverage existing relationships to not only find new business contacts but also to keep a constant flow of work.
- Employment training- increase the skill levels of employees
Moving forward it is imperative to keep an eye on revenue streams and look to diversify where possible. Having smart, measurable, and achievable business goals mapped out for every section of the business will help to keep the business moving forward and leapfrog their competitors. Be sure to read our other company profiles like this post about Nokia. Who knows you may just find your next career!