Business barometer: doing business in qld

Business barometer: doing business in qld
Published: 
October 2012

‘Two-speed economy’ has become a bit of a business catch phrase, some might say cliché. We talk to 20 leaders about what it means to their businesses.

Our strategic focus is to respond positively to opportunities with those clients and industries that are performing strongly, as well as developing strong strategic alliances.

WE ASKED THE FOLLOWING QUESTIONS:

  1. Do you see your business as operating in a two-speed economy?
  2. Is it affecting your day-to-day business decisions and long-term planning? How?
  3. Has the current climate produced any unexpected opportunities for your business?

 

MEGAN BIDENCOPE
DIRECTOR, MEASURED INSIGHTS

  1. As a research and consulting organisation, our business reflects our clients’ businesses, with mining and resources, financial services, and IT clients performing strongly, while government and community-based service provider organisations are experiencing cut backs.
  2. Our strategic focus is to respond positively to opportunities with those clients and industries that are performing strongly, as well as developing strong strategic alliances.
  3. The current economy has produced unexpected opportunities in three areas: growth in our employee opinion surveys and safety culture surveys as clients look for an accurate picture of their organisation and the key levers they can pull to improve performance; facilitating strategic planning to build organisational confidence in the face of uncertainty; growth in executive coaching as organisations look to accelerate the performance of emerging talent and build bench strength.

 

MICHAEL BURTON
CHIEF EXECUTIVE OFFICER, CUTTING EDGE

  1. Definitely. Our core business is creative; the content that we produce is based around filmed entertainment, television advertising and digital marketing. The downturn in retail trade and lack of consumer confidence has affected this greatly. With reduced advertising revenue for broadcasters comes greater pressure on production budgets. It is a downward spiral that is hard to correct.
  2. We are more cautious with opportunities. In the past we may have taken on a certain amount of risk in investments and business exposure, knowing that if a particular opportunity didn’t pay dividends, there was always another on the horizon. Now we are more analytical and more prepared to forego opportunities that don’t have a degree of certainty in their ROI.
  3. The way that business communicates to internal and external stakeholders has changed dramatically. We’ve been able to apply our creative skills and IP to this communications challenge, and we’re solving problems that hadn’t previously existed. The enormous growth in the resources sector raised a lot of questions in HR and process management. We’re combining creativity with technology to solve them.

 

TODD COATES
CHIEF EXECUTIVE OFFICER, DREAMWORLD

  1. Our guests are experiencing a range of financial circumstances, however we believe that everyone shares a desire to escape for some fun and happiness. Hence we continue to invest in our product and marketing.
  2. It hasn’t changed the fundamentals. First and foremost we continue to listen and learn from our customers. We continue to research and develop new innovations to meet our customer needs and provide great value entertainment to families and teenagers. We have made significant investments for the years ahead.
  3. We believe consumers are looking at how businesses are giving back to the community. This has given us an opportunity to bring forward the work Dreamworld has been doing for many years to save Australian wildlife and tigers in the wild. Additionally, we are starting to communicate our work on our new Indigeneous development and our efforts to help save a culture.

 

LOUISE DUDLEY
CHIEF EXECUTIVE OFFICER, QUEENSLAND URBAN UTILITIES

  1. Yes, I believe Queensland Urban Utilities is operating in a two-speed economy.
  2. Within the South East Queensland region that we operate, we are experiencing the economic impacts of slower population growth and property development. This impacts how we plan our capital program to meet future infrastructure needs. On a day-to-day basis, there are an increasing number of customers having difficulty in paying their accounts. On the employment front, there is greater competition in employing specific skilled workers as they are also sought after by the mining industry.
  3. The current climate has afforded the opportunity to focus on efficiency to minimise cost impacts on our customers. It has also allowed us time to refine our capital program.

 

RUSSELL DURNELL
GENERAL MANAGER, PALAZZO VERSACE

  1. We are definitely aware of the current two-speed economy and how that is impacting our industry. Like many of our industry colleagues, we have noticed a decrease in the volume of international business tourism bookings, however the same has not been observed for the top echelons of international luxury travellers and domestic leisure reservations.
  2. There is still a demand for corporate MICE (Meetings, Incentives, Conventions and Events) travellers but there is tough competition in the industry with destinations both in Australia and overseas offering amazing products and great value for money. With the international market, particularly China, being our main target, it’s more important than ever to stay ahead of the game and to offer more than just a memorable event. We put a lot of effort into offering the full Versace experience, regularly introducing new packages and options to cater to evolving needs and desires of business travellers.
  3. With the strength of the Australian dollar, we expected to see a significant decline in international MICE bookings and high-end leisure travellers, however there is still strong demand in both, which is a little unexpected in the current climate. There has been a change in the type of events and offerings that meeting planners and business travellers are seeking. Guests are moving away from prescribed packages to be more involved in styling and event format.

 

DAVID FOOTE
CHIEF EXECUTIVE OFFICER, AUSTRALIAN COUNTRY CHOICE

  1. If the second speed economy is the resource economy then yes. Our business is certainly impacted by this resource-driven economy.
  2. Our business, particularly in the rural divisions, has been impacted through significantly increased competition for housing, business services, logistics and semi-skilled labour. The impact has caused an increase in operating costs, with a further expense of a decrease in the quality and availability of business services. Our company is needing to develop core capabilities to counter these impacts, eg, expanded company accommodation infrastructure, which is a concern as to the potential redundancy of this infrastructure in a relatively short time frame.
  3. The current climate has brought forward a raft of new business enquiries and potential new opportunities from north Asia, and China in particular, for a diverse range of goods and business services in our sector.

 

IAN GILLESPIE
CHIEF EXECUTIVE OFFICER, RACQ

  1. With over 1.2 million members we are keenly aware that while some Queenslanders are thriving others are struggling. It is important that the RACQ continues to provide relevant member services and to represent value, particularly with high cost products such as insurance, and in services to regional areas. The mining boom in central Queensland has impacted on RACQ, particularly its contractors, in attracting and retaining good mechanical staff. This is an issue for businesses throughout the state.
  2. We take nothing for granted. Our focus, short- and long-term, is on making sure member benefits outweigh the cost. That means being able to offer something valuable for everyone, irrespective of their economic circumstances. We believe we are in a unique position because our major motive is delivering value to members, not shareholders. We plan to continually invest in improving our service standards and keeping prices low.
  3. We are seeing more people wanting to manage the risk of unplanned, and potentially costly, interruptions to their mobility by taking higher levels of breakdown coverage. We see a number of opportunities for us to use our scale and buying power to deliver more lower cost and higher standard products and services. This is because profit is not our primary motive and all our earnings are reinvested to meet members’ needs.

 

DAVID GOODWIN
QUEENSLAND PRESIDENT, CHAMBER OF COMMERCE AND INDUSTRY

  1. Yes, certainly it’s boom times in mining and resources and tough in other sectors, but I see a third speed emerging in agribusiness where cotton and broadacre farming have experienced good growth.
  2. I think it’s improving our understanding of what we need to do for business in Queensland. Some things we can’t control, but others we can, like government imposition of costs and regulation on business. There’s also more focus in our support for business on practical tools to improve sales, efficiency and profitability. The tough times have also refined what our members need from us.
  3. ‘Never waste a crisis,’ we say. The current state government is under pressure to get costs under control. But it also understands that if the private sector doesn’t fly, nor will the public. It’s an opportunity to engage directly with state government and we’re having an impact.

 

PHIL HENNESSY
QUEENSLAND CHAIRMAN, KPMG

  1. The market is certainly challenging. Six months ago we had a positive view of conditions in the resources sector, but now with a number of projects delayed or cancelled, commodity prices dropping, and major resource companies shedding staff, the outlook does not appear as bright. Combine that with struggling sectors like property, retail and tourism, and it means business has to be more focused than ever. At KPMG, we place a lot of emphasis on helping clients navigate tough economic conditions.
  2. Yes. We are carefully monitoring the economic trends to help us shape our strategy in the short-to medium-term. Identifying early where growth sectors are helps us determine the right areas in which to invest for business growth.
  3. Yes. As a Big 4 firm, we have traditionally focused on the staple areas of audit and tax. But challenging economic conditions have provided opportunities for our advisory practice to broaden our offering to clients. We have also focused on advisory services for the SME market as well as our larger clients. This has resulted in significant growth in recent years and the broadening of KPMG’s service lines.

 

LAURENCE LANCINI
MANAGING DIRECTOR, LANCINI GROUP OF COMPANIES / CHAIRMAN, NORTH QUEENSLAND COWBOYS

  1. The main driver of retail property development is retailer confidence underpinned by consumer confidence. This is somewhat subdued throughout Queensland, aside from those locations in close proximity to mining activity (ie Townsville & Mackay) which benefit from a high disposable income.
  2. The hesitation of retail owners to enter into long-term leasing arrangements has slowed new development. For our business, this has impacted both our development and construction activities. We have streamlined our resources to accommodate this shift and reduced our operating costs leading to improved business operations.
  3. The ability of our improved business operation, on the back of a proven track record to deliver quality developments, has allowed us to consider and seek out value-adding opportunities from existing shopping centres and other retail opportunities. These are a direct result of a tough retail environment and a deflated financial market.

 

PAUL LINDSTROM
PARTNER, PWC

  1. I view the current economic state as more patchwork, or multi-speed, as some sectors of business are struggling while others succeed. There is still strength in the resource sector, but challenges lie ahead with falling commodity prices and high production costs. We have also been cognisant of working with the new government as priorities change. With the reduced use of contractors in this sector we have had to measure the impact and its affect. The overriding message is that some businesses will continue to find ways to operate and grow in this ‘new reality’.
  2. We are always looking at the best way to resource and focus our business based on what the economy is doing. We assess the market for where we see growth opportunities and strategically align ourselves to invest time and effort in these sectors. By making this a priority we have determined where to build for the future.
  3. Legislative reform is creating a number of opportunities across businesses and the need for changing business models. For example, since PwC has a depth of experience in health, the break up of the sector into regional sectors/boards provides opportunities. Some future opportunities may lie in the proposed changes in educational funding models as well as opportunistic investment in Queensland by overseas investors with a longer-term view

 

GERALD MARION
DIRECTOR, STRATEGIC DIRECTION & CUSTOMER, ERNST & YOUNG

  1. Our business is operating in a multi-speed economy. There are undoubtedly challenges as a result of slowing growth and ongoing precariousness globally, but with challenges always come new opportunities.
  2. Every business operates within current market conditions. It’s critical to have a solid understanding of how the current environment affects clients to help them navigate the challenges as well as seize opportunities. It’s about striking the balance between the agreed long-term course of action and being responsive, agile and innovative to avoid risks and maximise gains. The best businesses understand there is always more than one path to a goal. Different pathways open up new opportunities and new ways of doing business.
  3. The current environment has produced both unexpected as well as anticipated situations and opportunities. The key is to take advantage of each by acting swiftly, being nimble and not being afraid to do something differently. From a personal perspective, I always like a good challenge!

 

PAGE MAXSON
CHIEF EXECUTIVE OFFICER, AUSTRALIA PACIFIC LNG

  1. Interestingly, we haven’t experienced as much of a skills shortage that many industry commentators predicted, as we see people transitioning from other sectors and projects around Australia. This increase in the skilled workforce, including upskilling by many, was not entirely unexpected, but pleasing none the less.
  2. While Australia Pacific LNG project business decisions are generally not directly impacted by the two-speed economy, we are cognisant of the wider impact of these decisions and how they may impact those not directly associated with the project. One example is how we address housing availability and affordability, not only for our workforce, but also for long-term residents who are the backbone of the community.
  3. Interestingly, we haven’t experienced as much of a skills shortage that many industry commentators predicted, as we see people transitioning from other sectors and projects around Australia. This increase in the skilled workforce, including upskilling by many, was not entirely unexpected, but pleasing none the less.

 

KYL MURPHY
STATE DIRECTOR CEDA – THE COMMITTEE FOR ECONOMIC DEVELOPMENT OF AUSTRALIA

  1. CEDA works across sectors, industries and professions, and so we see every speed of the economy. Australia has always had a multi-speed economy, and with that you have periods of economic transition and adjustment, but no-one aspires to a single-speed economy.
  2. When growth in some sectors holds a light on stagnation or decline in others we must be questioning past assumptions. It is a time for all business to analyse productivity and innovation. While there is uncertainty, this is not a time to be risk averse or for complacency.
  3. Change always creates opportunities. The executive and industry leadership profile in Queensland is very strong; we are able to access incredible expertise here. We have to be smart enough to see the new issues arising, to question the solutions and settings being proposed, and bold enough to propose new thinking and new approaches. That is what is expected of us.

 

JOHN O’HARA
CHIEF EXECUTIVE OFFICER, SUNNY QUEEN, AUSTRALIA

  1. The performance of the economy certainly affects egg purchasing; as the general economy slows, egg purchasing increases as people look for cheaper sources of protein. Egg sales over the past 3-4 years has grown steadily.
  2. It is long-term decisions that are being affected most. Investment for growth has never been in a worse state due to future market uncertainty. Confidence in future investment in shell eggs is at its lowest with many market influences in play.
  3. As eggs have become commoditised, we have had to seek opportunities elsewhere. For us, this journey started about 6 years ago when we decided to move into value-added egg-based products. The current economic climate has given us the opportunity to promote alternative options to save customers on total food costs.

 

CATHERINE O’SULLIVAN
STATE MANAGER, QUEENSLAND, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

  1. We have a clear focus on the most disadvantaged in the community and as such we are always dealing with a two-speed environment. Regardless of the strength of the economy, for many of our clients the capacity to capitalise on those opportunities just isn’t there – our role is to bridge that gap.
  2. The current climate does significantly affect our business as we see Queensland’s unemployment figures rising. The withdrawal of the Queensland Government’s labour market programs in our state has impacted on our work as demand for Australian Government services has increased.
  3. Perhaps not entirely unexpected, the expanding impact in regional areas of the resources boom provides challenges and opportunities for our team in addressing labour market demand for skills and labour in that sector, its supply chains and the communities in general. These dovetail nicely with our place-based regional strategies.

 

KIEREN PERKINS
STATE MANAGER, NAB PRIVATE WEALTH, QUEENSLAND

  1. I see a multiple-speed economy. Mining and mining-driven services are certainy leading the charge. We have clients across all market sectors and some are doing it better than others.
  2. We’re very aware of what our clients are capable and confident of doing right now. Market conditions affect confidence. It’s important to understand the various risk appetites of each client and to tailor our services to fit their needs.
  3. There are investment areas that have surprised us, especially in superannuation investments where businesses have sustained reasonable growth. The medical sector remains strong and in professional services we are certainly finding plenty of work. However, they are at the coal face and are sensitive to market changes.

 

SALLY PITKIN
DEPUTY CHAIRPERSON, EXPORT FINANCE & INSURANCE CORPORATION (EFIC)

  1. EFIC supports exporters at times of structural change in Australia’s exporter base, driven by cost pressures and exchange rates, coupled with worldwide economic volatility and slowing domestic demand from our trading partners.
  2. Australian exporters are reorientating their businesses to engage in international markets, principally through participation in regional and global supply chains for both goods and services so as to access new markets and remain competitive. This requires EFIC to closely monitor economic conditions and structural changes to ensure financial solutions are responding to these changing conditions. EFIC is also developing longer term strategies to align the organisation’s structure and capacity to these changes. In this way, EFIC will be able to continue to provide innovative solutions and new products to support Australian export trade.
  3. The Global Financial Crisis, continuing financial markets volatility and strong resources sector has created an increased demand for EFIC support across all exporters, ranging from large corporates, mid-market exporters to SMEs.

 

GEOFF RODGERS
CHAIRMAN, ROWLAND

  1. There’s perhaps even more speeds operating within the Australian economy, linked to different sectors and geographies! About 60% of our revenue comes from mining and resources – within Australia and, increasingly offshore – so we’ve seen the incredible phenomenon that has taken place in this space over the past eight years or so. It will continue – albeit perhaps at a lesser intensity – over the next few decades.
  2. To a degree – in terms of allocation of staff, capital, marketing efforts, etc. The key is to keep pace with the increasing fluidity of the sector and to anticipate client needs going forward.
  3. The significant work we have done in the mining and resources sector over the past 25 years, combined with Australia’s leadership position in this space (in particular, Queensland’s leadership position), has allowed us to undertake client assignments throughout the Asia Pacific region and elsewhere. In recent years, we have worked on assignments in Indonesia, the Philippines, Vietnam and Chile, we have won work in Mongolia and are pursuing other opportunities in New Caledonia, Laos and other locations.

 

NEIL TAYLOR
CHIEF EXECUTIVE OFFICER, GREYHOUND AUSTRALIA

  1. I think the phrase ‘two-speed economy’ has been over used and it’s probably a phrase of the past. Greyhound is a national business operating in two main sectors: travel & tourism and resources. We see some great differences within each sector. For example, if you are in CSG or LNG right now you are still in resources but will feel a lot better than if you are, say, in coal. As a national business we have to have different strategies even within the same sector.
  2. We plan and execute our strategies for the two main areas of operations differently, and have separate teams working in each. Our strategy for travel & tourism is focused towards B2C, with a strong emphasis on new product development and improving customer service. In the resources sector we clearly operate in a B2B market and will continue investing in running safe and efficient operations.
  3. Yes it has. Post GFC we saw consolidation in the travel and tourism sector that created opportunities for new partnerships and code sharing with other operators. The current slowdown will make all businesses focus more strongly on efficiencies and innovation. We see opportunities for consolidation in travel and tourism, and in resources we have new offers and innovations that will be well received.

 

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