FROM THE CMPA SECRETARIAT (Issue 49)

Factoring Interruption into Your Budget

Honorary CEO, RON KERR, reflects on the impact to budgets that the breaking of the drought and financial stability brings.

HAVING an affinity with both quarrying and farming, one can presently reflect that 2010 is presenting many similarities with 1974 – particularly the breaking of a long and protracted drought.

The breaking of the drought brought with it challenges including a reduction in the activity which could be undertaken on the land and in civil projects due to ground saturation and wet materials.

As a result of the past 10 years of drought this is a phenomenon which many of our new civil contractors have had little or no experience in managing. Of knowing when to withdraw their services, how to manage the resultant reduced cash flow and increased capital outgoings.

With excessive rain, our construction material processing sites also oft en become sodden. This results in haul roads and stockpile areas becoming flexible platforms, eroded gullies appearing and overburden becoming more difficult to manage.

The continuity of production of fine aggregates and high-grade crushed rock becomes near on impossible as both our crusher chambers and screen mediums become clogged.

General maintenance on mobile and fixed plant becomes physically more demanding on employees and contractors as mud, rain and wind present challenges and pose safety and access issues.

All of the above results in a reduced capacity of output for the processing system and has an impact upon the budget.

Presently industry is also witnessing civil construction businesses faltering or failing and many taking with them millions of dollars worth of unpaid quarry materials and services.

On reviewing outstanding liabilities of many firms, it seems apparent that the terms of credit offered by the industry may not be reflective of good business practice.

We should not be seen as a bank to our clients or a sector of the banking industry and offer terms of payment other than that which is consistent with the industry average.

On top of this there is also an element of great anxiety being shown by the general public and industry at every official interest rate rise in recent times.

One can recall interest rates of 19% back in the early 1990s and the fact that the industry was able to see its way through this period was reflective of prudent resource management.

It will be of great interest to see how the industry manages rising interest rates as well as the tighter access and restrictions on borrowing.

Taking the above thoughts into account, we need to ensure we have factored into our budgets more than just the historical costs and revenue from previous years.

Budgets must now take into consideration interruptions and adjustments that can adversely impact business cash flow. As is oft en stated in small and medium business, cash flow is king.

INNOVATION AWARD

The CMPA Innovation Awards are a new idea to recognise and reward an innovative development in Victoria’s construction material processing industry.

The award is open to any CMPA Member or their employee and includes any genuine innovative development in:

• Plant maintenance or design,
• Material processing,
• Safety or employee health,
• Staff development & training,
• Environmental management,
• Resource management,
• Reducing off site impacts,
• Community relations, or
• New product development.

An independent judging panel will decide the winner who will be presented with a $500 cheque, framed certificate and a perpetual trophy at the Annual Dinner in August. Submissions will be limited to 600 words with lots of pictures.

This is an opportunity for your brand new idea to be recognised. More details will follow in the next edition of Sand & Stone.

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