Export Council of Australia Global Podcast

2. COVID-19 Series - Reassessing your export position and repositioning your business plan

April 30, 2020 Shane Styles
Export Council of Australia Global Podcast
2. COVID-19 Series - Reassessing your export position and repositioning your business plan
Chapters
Export Council of Australia Global Podcast
2. COVID-19 Series - Reassessing your export position and repositioning your business plan
Apr 30, 2020
Shane Styles

Join Sarah and Shane from the ECA with guest speaker Paul Cooper, Owner of Rinstrum and Chairman of the Advanced Manufacturing Growth Centre as they give some insight into reassessing your export position and repositioning your business plan. They focus on drilling down into strategy; how your business is placed right now, reviewing the impact of COVD19 on the business and stakeholders, identifying new opportunities and coming out the other side.

 

Show Notes Transcript

Join Sarah and Shane from the ECA with guest speaker Paul Cooper, Owner of Rinstrum and Chairman of the Advanced Manufacturing Growth Centre as they give some insight into reassessing your export position and repositioning your business plan. They focus on drilling down into strategy; how your business is placed right now, reviewing the impact of COVD19 on the business and stakeholders, identifying new opportunities and coming out the other side.

 

Shane Styles:   0:01
way. Welcome to the Export Council of Australia. Global Podcast. The is the peak industry body and membership organisation and has been helping companies grow internationally for over 60 years. Thie supports this expansion through skills development, policy advocacy and breaking down barriers to trade I,

Sarah Demenis:   0:26
everyone and welcome back Teo the global podcast with our special Siris on coded 19. I'm Sarah Dominus, and I'd like to share that. We've had some excellent feedback from our first episode in particularly around the need for businesses to really stay informed and look for their opportunities. We're finding that there's a real need around supply chain information. And I'm going to now introduce Shane style. How are you?

Shane Styles:   0:58
Thank you, Sarah. It's great to be back.

Sarah Demenis:   1:00
It's fantastic to be back. And I think we've already got so much more information to share just within a couple of days that were since our last episode. So can I get you to tell me what you've been up to for the past couple of days?

Shane Styles:   1:16
Certainly. Yes. I spoke for that is B Export hub in Toowoomba on supply chain management. At this time way also had on the call Julianne from Cuba Trade commissioner in China, speaking and giving an update on China. And the whole team has been working on a range of initiatives like this podcast to really try and help our members stay informed and move forward from your perspective as a mother now home schooling. How's that going?

Sarah Demenis:   1:49
Yeah, it's certainly a challenge, especially with work been busy and really wanting. Teo move forward and support everyone that yet the home life is my husband's working from home a cz well, so it's certainly a challenge, as a lot of other people are facing a CZ well and that really adjustment. But I think it all makes us stronger already ready for the next phase. So with that in mind, we just want to remind everyone that there's a wealth of information on our website available to UAL, where you confined information from what the government's offering, what thie is doing and any other information from our partners and other people that were working on. So no further ado. Shane, can you tell us what will be discussing in today's episode?

Shane Styles:   2:43
Yes, Today we're going to be looking at reassessing your export position in reposition your plane you know, we want to try and drill down on strategy as you do that reassessment of your business and start to look at what exporters really need to do to move forward a CZ. They redefined their business plan.

Sarah Demenis:   3:01
Yeah, absolutely. It's a really important, pivotal moment for a lot of businesses in Australia right now. I'd like to welcome Paul Cooper, who is the director and owner of Industrial Electronics Company, Rinsed rum Smart weighing solutions. In addition, Call wears a number of hats, including chairman of the Advanced Manufacturing Growth Centre, which is one of six growth centres established by the Australian government to drive innovation, productivity and competitiveness across Australia's manufacturing industry. Paul is also a board member of the Children's Health Queensland and is also chair of the Order and Risk Committee for the Queensland Department of Health. Whole welcome. And thank you for joining us today.

Paul Cooper:   3:51
Problem. Thank you, sir. And welcome.

Sarah Demenis:   3:53
It sounds like you very busy at the best of times. It alone during covert 19 period, just before he gets topic today. Can you just give us just what you're seeing And guess that the business sentiment around at the moment

Paul Cooper:   4:12
it's your Sarah and with those number of hats I'm seeing from with a number of perspectives to. So it's finding it quite interesting seeing how small business works like mine through two very large corporations. Government departments, on how they will respond so often as a director. If you've got 45 board rolls, there's a chance that one of those there'll be a mini crisis happening at some time that you're going to dig in and on focus on that particular board. Att The moment if you got four or five boards, you've probably got four or five crises going on, all centred on one, which is

Sarah Demenis:   4:49
yeah, absolutely, absolutely. I can only begin to imagine how busy that would bay s o Let's would start on delving Intertoto What? How businesses are a TTE the moment what they could be doing now and moving forward. So, pope, they should be already assessing how they are at the moment. So what can they do to formulate a covert 19 response pulled? What are the key things that business should be reviewing for this?

Paul Cooper:   5:24
So so most businesses would be well into covert by now it has bean six weeks. I know in in rinse from our focus, most my answers are instrumentalists. I need to divert into one of the others. So instrument is, ah, manufacturer. So we operate without a head office in Australia and the design R and D team sales teams obviously are in Australia. But we've also got our global production have based industry Laker, and we have sales helps in Germany and two other sales hubs in the United States. So I got the map fairly well covered. What? What we've looked at in original response was a response to staff. Bring everybody on board very early. So my first all star female on Covert went out on the sixth of March and just let everybody know that we're aware of the challenges we're about to face. Gave them some single points of truth to look for the health tips on DH. What was happening. And at that stage, it really wass a China's century problem and for our business that became a supply chain issue and ah, lot of businesses at the same time. We're then also facing the same issue of trying Teo open their business post Chinese New Year and get their business up and running, making sure supply chain was working now in the last few weeks. Obviously, that's pivoted around to demand side and try to make sure that the customers are being satisfied. That supplies going through so thier early part, definitely focusing on my case, China's century supply chain issues and now looking at demand and working through the team to try and ensure that we're able to keep product flowing out on get our project satisfied?

Sarah Demenis:   7:21
Yeah, and have you been finding that you've got problems on the freight side of things as well? Is that having an impact for you?

Paul Cooper:   7:28
So it hasn't really manifested yet. So in the very early part, we So if you think about our business in electronics, a lot of the source components are China based, and in the lead up to Chinese New Year, we always do two months worth of orders. Eso our air system works out what's needed, and we pulse in two months worth of supplies in January early February and that allowed us to ensure that we had all of those major subsurface assemblies and components ready to go s o. Most of our product is afraid It globally. So into our manufacturing out and also out of the heart to our sales up is generally afraid it, except for heavy components, steel based or very dense products. They get separated. So we really haven't had that major issue off freight issues. What we had. Wass. Once we got through that Chinese New Year and factory was operating, our staff were pushing product out the really then port in those last few items from China and Malaysia and Singapore to do the end stage customisation before it goes out of Sri Lanka. And at that point, that's when we started supply chain issues. Because the factories in China weren't free opened at that point and globally, the code that issue was studying to roll out globally. So that became an issue. Not so much afraid issue, but really a supply chain issue that went through right through till mid March.

Sarah Demenis:   9:02
Great. Yeah. Thank you. Thanks. And Shane, you've talked about covert 19 bean a marathon, not a sprint. Can you talk to us a bit more about that?

Shane Styles:   9:14
Yes. I want businesses to understand out front that dealing with co benign and isn't this spring. It's going to be a marathon, but most of us are running around in our businesses like it's a sprint and we're going to struggle to chart the right course in the craziness at the moment of responding, trying to stay afloat, meeting new demand. We're just trying to get the business toe work. We all need to just take a breath, think clearly and find time to plan better than we've ever planned before. A good market point for this is to start reflecting on where you'll be in spring. It's the decisions we make now that will best determine where we a place come September. The other point I'd like to make is we are all looking for answers. The situation changes almost daily and therefore you must take personal responsibility to stay informed by what I like to say. Think local and global. No one government, industry, body supplier or customer can give you a ll the answers. You have to seek them from multiple sources. There are some really good websites, including the trying to keep you informed, but everyone's business and therefore how that plays out in the market is unique and you need to make informed decisions that are best for your business, not somebody else's.

Sarah Demenis:   10:32
Fantastic. Some really relevant points there about searching for information. Way touch a little bit on supply chain. The next question. Just a CZ. Businesses moving past this initial response. So, like the e mail that you had sent on the sixth of March, they start reviewing the impact on the business segments. So supply chain, which we touch on a bit, their customers sales and marketing. What are you seeing and advising across your network?

Paul Cooper:   11:08
So it's very different in each one of our markets. S O. We have already spoken a little bit about supply chain, so we won't gulf too much into that. But on the customer side, the customers in the US our businesses and us have been heavily hit by local shutdowns. So as a CZ thie wave of Corona virus has gone from the East Coast started to move into the Midwest across the United States. Our businesses in Detroit and Illinois have both been affected in various stages only because their customers have had to go into to shut down. So there's been limited amount of trouble that's been able Teo occur eso Even though we have an essential service, we supply into the medical warning and also food and transport. So food, transport, medical, our rules essential. But we can only get out of our factory and go on, do that, servicing into those markets on the specific request from a customer. So it's minute. It's been very, very difficult to try and ensure that everything just kept flowing along as needed.

Shane Styles:   12:23
Getting things the flow is there needed has been a great challenge right across the supply chains and around the world. I think for a lot of businesses a moment, a unique time to grow their knowledge of their own supply chains and sales channels and determine the best mix of technology and data monitoring to really help them report on their needs. As we said, supply change of one for when they flow freely and we've been spoiled, we're just in time supply models. They're allows to run our entry low on Cooper cost base down. For many companies, Koba, 19 is highlighted the vulnerability of also having so many sources located in one spot in a long distance away. No, I think in the future planning will diversify well, and that will be key. And I read that the crisis is revealing the weakness in the global supply change forged with outsourcing and thin margins. You know, if you look at the US and you just spoke about, there's almost no industry that doesn't rely on materials from Asia and manufacturing At some juncture. In recent years, most companies have shifted to that just in time delivery, restricting inventory to 15 to 30 days. And I like how you playing and around China's New Year to bring in two months a climb. I think we're all going need to rethink our critical component supply our inventory management and just in time production and supply schedules. Another point I like to make about that moment businesses is not to overreact at this time. In looking at your contingency plans, you must ensure three things. Firstly, that they targeted. You must understand your current real needs. Secondly, that they are modest. They must be affordable and sustainable for your business, you know, and thirdly, there must be scalable when needed. On the sales front, you know, I like to see that businesses are trying to stabilise their position that pricing and their inventory requirements. And have they taken a full review of how the sales channels have been affected? And are there other opportunities outside their existing sales channels, whether with other partners or, as we discussed last week, pivoting to Aby to si model?

Paul Cooper:   14:38
What it has seen is, I think the entire into end supply chain has been amplified, so it's no longer just a single look down Teo our suppliers. We now need to go to second and third tier. Look down to ensure that we've got that the next line of suppliers are also able to produced into our first or second tier. So that has occurred. And on the demand side, we've had to amplify it out from just our customers to our customers, customers to try and get a sense off where the market is going to hit for us so that we can. We can start to predict not just where our customers are going to start reordering, but what is thie demand side from their customers. So it's meant that each one of the senior staff in the various hubs have very early they reached out to our customers and started these these discussions about getting them to talk to their customers and give us feedback. And it was actually a really good exercise because it started to give us a greater level of transparency than we've had before. Eso it turned it into a big opportunity. And even in Europe, our sales manager in Europe was coming back with reports that every time he spoke to a customer and started these discussions about what is what their customers were doing, he would end up with an 80,000 your order at the end of the phone call and s So we're getting We're getting a lot more intel, and we're also it was actually generating sales rather than just coming back with Intel. It was generating sales orders or Ford orders. So they say, Well, we're seeing this with our customer base. Maybe they will want to bring some orders forward so that they're not disrupted in their own business, and it actually turned into a reasonable sort of opportunity for us.

Shane Styles:   16:28
I couldn't agree on with Atmore, especially on the point of transparency. Many companies have been caught not having transparency and not only the supply chain but in the sales channels as well as you mentioned on taking that extra time now to really discover that transparency eyes so important and also start to really, you know, measure out your weakest links. Now is not the time for blind loyalty in yourself channels or supply chains. ITT's Time for Measure Loyalties You know, some in the channels where the suppliers or customers for the long term or short term relationships are not going to make it out of covert 19 Manal. In January, I was discussing with the company about a joint venture in Europe, and I talked them out of signing the agreement on DH that had a personal relationship without company for 10 years. It now appears that distributor is not going to make it on My client dodged a pretty big bullet way. Need to review a lot. I mean all relationships in our supply channels and our sales channels, both locally and globally, and make sure that we're standing on a strong foundation.

Sarah Demenis:   17:42
Yeah, absolutely. I think it's a great opportunity for a good reset in business. It

Paul Cooper:   17:48
is, and I'm certainly seeing that also in the health sector thie vulnerability to China based supplies in the health sector has bean enormously amplified now. So trying to get product whether PPP or medical equipment into the country at the moment has been difficult because the US is pretty much sucking the demand from every factory in China and around the world to try and get ventilators and pee pee pee pee pee into their markets on dure. Same same thing. So that has caused little Australia down here with 2% of the world turnover, is really struggling to meet supply in the medical market. So I've seen some really incredible efforts in the last couple of weeks from supplies in Australia have doubled down and said Yes, we would normally get this from overseas. But we're bringing teams together and solving problems in Australia with high end engineering teams turning into the production phase and assisting with getting production locally sourced. You're in Australia. I've seen it in the medical area in terms of masks, face shields, gowns, ventilators. Yl of this work has been done really pulling in all of this information on DH with the engineering skills that Australia has to solve a supply chain and production issue.

Sarah Demenis:   19:14
Yeah, It's been absolutely amazing. Toe watch companies and communities and people pull together to really bring the resource is that we all need ah lead into a final question for today. What do you see as a necessary steps for businesses to come out? Post Co vered 19. And how do you think they up skill and identify opportunities? We would talk about a couple already, but just if you could expand

Paul Cooper:   19:47
Shane mentioned loyalties. And what we're seeing is that that issue of loyalties in the suppliers you know, Lindstrom's a 30 year old company. So we've been through these cycles we've been through, Remember what? Okay, We've been through y two k and A ll the it orations of the disasters globally, including GFC and stars and and Swine Flu. All of that. And those those supplies that stuck with us through those times what you believe the same ones who are sticking sticking with us in these times, and that has been fantastic. The customer side as well are the ones who are understanding the issues and understand that they're part of a global supply chain. And we respect that rather than my own. So I think those loyalties have been forged in the heat in this environment, so I think that's great. Similarly, we're seeing exactly the same with our teams. They're bringing the teams together. We're seeing the leaders come from the come from the past. The ones who are a Warriors won two of the Warriors who who step up in battle and run it with with Grace with Tom Nous but also with strength rather than the ones who are not battled hardened on DH. We're seeing that in all sorts of areas, both in in our wider industry, but in teams as well and trying to nurture that and allow those those really strong leaders to then create more leaders within your team. That zine interesting part? Well, I think that has been a great learning experience for us. Coming out of this is to see the one Teo who have really been up to step up,

Shane Styles:   21:34
you know, getting firsthand experience about true leadership on the go Might said this before that the word for crisis in Chinese translates to dangerous opportunity on for many. It's hard among so much suffering to think about opportunity, and I understand that Wait, we're no good to anyone. You were out of business in 3 to 6 months time and it's how we position now, which will determine where were placed in spring. Many studies have been done post the GFC, and it was the businesses that sort and seize the opportunities that survived and then went on to thrive past the global financial crisis. What weaknesses have you discovered in your business? And therefore, what's new skills do people need in their businesses? And what are they planning for now? One of the things that will do it, the Sooners launch of dedicated covert 19 online training programme that they can do it their own pace to help them get through this process. I

Sarah Demenis:   22:33
think we need

Shane Styles:   22:33
to be thinking about where the demand points coming from now. And where will they be in three months time? Are you educated off market by market response to the virus? So you know which countries will come back quicker on where those opportunities air going? Tow line that space. You know, I'm looking at hotel groups that I've been speaking to in Asia and they are doing scenario planning at the moment around technology to get close to the source of supply and food Service is not the only industry looking to do that at this stage. I think that will be a really good opportunity for many businesses going forward. If broken tape players out in the supply chain and get closer to their customer,

Paul Cooper:   23:15
I agree. And it's, you know, we are at a time in history here that we've never seen in our lifetime. In fact, my 14 year old twins said exactly the same thing last night. They said We will. We will remember this the rest of our life because we will probably be studying this later on. I said, You absolutely will. It's interesting for you to see this and just to step back occasionally and watch what's happening around you, to see how people are coping and surviving through this process. And 2020 has bean a year like no other. We started off the year with drought in Queensland. We had only just recovered from floods, would you believe? And then we had the drought continuing through most of Australia. WeII then had the Chinese US trade was going on on that continued right through in the whole of 2019 to the extent that it forced our hand in the US to actually acquire a steel fabrication business in Illinois. Teo to deal with the factor. Rising steel prices and import import restrictions. We've had Brexit in this year. And, you know, in August September last year, banks were asking, What's your Brexit plans? Can you update your Brexit plans and give them to us? Well, where are they now? Way then. Had the bush fires on DH. How tragic has it been for those businesses? Coastal communities in Turin, tourism businesses in Australia who were devastated in the bush fires and hoping for Easter trade to see them through once the bushfires that had finished and now they get through the Easter that the Christmas period? No tray, they get to Easter. No trade. I they're the ones that I feel for those hospitality businesses, tourism based businesses that are facing this on DH. I don't know how you come through on something like that. Yes, in our businesses, as manufacturers, we will have to do things to survive. We will have to make sure that we access the right level of government support in each country where it is needed. But remembering that some of that is debt and some of that is business support debt has to be repaid. So the issue of just going and borrowing at this time in the hope that things are going to work out down the track is often very, very risky strategy. So I think keeping your plans up to date, taking the granularity of your cash flow planning from your yearly or quarterly drill it down and get the granularity on monthly, weekly and even daily to ensure that, as thes changes air coming through as government grants are stepping in as the job keeper is flowed out as the various states, packages are available for rent, assistance and everything, feed them in to those granular plans and understand how that's going to flow through on your business. And it's just that these each step of the way because we've got to get out of this is the end of it, and we've got to ensure that we're getting out of it. And even when you get back to business as usual, is your debt level on a A you basis, still able to be supported while you're taking on this debt now.

Sarah Demenis:   26:37
Yeah, thanks. Do you think I think you raise excellent points on advice for businesses at this stage? Shane, have you got anything else to add at this stage?

Shane Styles:   26:49
Look, I think what you just said then, Paul, we just cut that out of the whole podcast and posted that plastic. I think that that measure of understanding, you know, the debt needs to be paid back and seeking out your government support levels and then really drilling down India balance sheets and your profit and loss and making sure that whatever debt that you take on is realistic and can be paid back in the shortest amount of time. You know, we don't take dead on at the moment just as a precautionary measure for what may come in the future. We take debt to strengthen the business and help it to grow and come out of this in a stronger position on DH. I would hate to see businesses undermine their position Post covert, 19 because of the debt that they took on Now on not make it, you know. So thank you for that bullet was excellent.

Sarah Demenis:   27:52
Yeah, I don't like Tio. Thank you. Pull for joining us today. I think we've come out with some fantastic tips for businesses now and going forward. I think especially acknowledging that 2020 as a whole is a really challenging year. But I think we will all come out more resilient for it. The other side. So thank you. Once again,

Paul Cooper:   28:16
the expensive learning exercise they were paraded through, isn't

Sarah Demenis:   28:19
it Is it certainly is. We've covered a lot in our episode today and we hope you, Khun, take this information into your business now. And as we progress through Covert 19 next week will be talking at supply chain and taking a closer look on the impact in your business. In the meantime, if you'd like to contact the please email us info export or ge dot you on. We look forward to seeing you next week.

Shane Styles:   28:56
Thank you for listening to the Export Council of Australia Global podcast. For more information, please visit us at www dot export dot or ge. Don't you