ARE WE PREPARED FOR A MARKET DOWNTURN?

Have we sufficient margin over our cost base and the correct business models in place to withstand a significant market downturn? RON KERR, Honorary CEO of the CMPA reports

OVER the last ten years, we have witnessed unprecedented and continual demand for our processed materials which has resulted in over a 75% increase in annual tonnage since 1997 as drawn from data available from the Department of Primary Industries.

This issue was raised in the last Sand & Stone magazine under “Looking into the crystal ball”.

In talking to Members, one is advised that much of their activity has been underpinned by a booming private sector; not local government or state and federal institutions.

Concern is being raised in the event that the private sector were to lose confidence in the economy and contract their activities – what would be the impact if there was as much as a 30% reduction in annual tonnage?

Others are questioning whether the state and federal institutions will be able to initiate works programs in a timely manner to ensure the impact of such as downturn can be minimised, or even if they are initiated that any funds will end up at the quarry gate in the form of demand for processed materials.

As the industry’s unit rates have not even maintained CPI adjustments, could our business withstand a 30% downturn in sales activity?

Have we been meticulously allocating costs into our unit rates in a manner which would accommodate such an outcome over the last eight years?

The costs referred to here are associated with the retention of our labour force; additional compliance obligations associated with safety, environment, culture and quality; and the business’ investment into securing future resources to service the community.

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