Dynamic Business

Being isolated from the heavily populated eastern states has made WA export ready from the start. With the mining boom taking hold of the state, Western Australia has become hot property for overseas markets.

The area of Western Australia is roughly a third of Australia, so it’s fitting that the state also accounts for roughly a third of all Australian exports by revenue. But while Western Australia is known mainly for its commodities—in particular its minerals—it would be foolish to think of the state as one big quarry.

“There’s digging the natural minerals out of the ground, the primary industry part, but then there are all the offshoot industries from that, such as the service-based industries. We’ve seen a lot of growth in advanced technology, software and advanced services related to the resource industry,” says Adam Denniss, Austrade’s WA state manager.

The Australian mining industry is one of the most competitive in the world, and that has led to innovation and world’s best practice, he believes. “Australia would easily lead the world in a number of those advanced technologies, such as computer software systems that monitor mine sites and productivity levels. A lot of overseas companies are looking for that technology now,” says Denniss. “Countries like Brazil have all the minerals in the world, but not the technology to get it out of the ground.”

Ian Whitaker, senior trade adviser at the Chamber of Commerce and Industry, Western Australia and WA state manager at the Australian Institute of Export, says because the state doesn’t have a big manufacturing capacity, its secondary industries tend to be in engineering and shipbuilding. “Much of the manufacturing here is customised engineering geared towards the resources sector. A lot of those companies that grew up in Western Australia servicing the Australian mining oil and gas sectors are now following those companies with projects around the world, to Africa and Central Asia and Latin America,” he says. “And we do have a very vibrant shipbuilding industry: the aluminium fast ferries that Austal Ships build, most of those are exported worldwide.”

East is export ready
Being isolated from the heavily populated eastern states has made Western Australia virtually ‘export ready’ from the start. A lot of the businesses in the state are wholly export-oriented, says Whitaker. “Very little gets consumed in the local market. After all, there are only 2 million people in Western Australia; 1.5 million of those live in or near Perth, so it’s a very small domestic market. There’s a little bit of interstate commodity trade, but most are based at the outset that they will be 100 percent export projects.”

Denniss agrees: “Over the years our isolation has forced businesses to become less reliant on people outside the state because there’s so much cost involved in dealing with people in other states. I think that’s created a natural way of thinking internationally. There’s a natural fit for businesses to look to exporting because putting something in Singapore, or going to Dubai, is equally easy for businesses in Perth as going to Sydney.”

Agricultural exports—traditionally wool and wheat—are also typical commodities that come from the west, but more increasingly the world is consuming WA wine and gourmet food. “Especially the black truffle industry in the southwest. The conditions are right and we have the opposing season to the European industry,” notes Denniss.

Although export revenue is strong, some businesses find it hard to export while servicing the mining boom, while others have difficulty securing skilled labour. “Businesses have gotten sucked up into supplying that resources boom on every level. When we approach businesses, they’re saying ‘we’d love to export but we’re struggling to supply demand here’,” reports Denniss. “Farmers have been complaining for a long time that they can’t get drivers: there are wonderful big crops of wheat, but we haven’t got the drivers to drive headers because they’re all driving trucks on the mine sites being paid $120,000 a year.”

Whitaker believes lack of infrastructure is another constraint on development. “A lot of the projects are located inland, so access via railway or road is a major issue, along with electricity and housing. At the moment the whole Western Australia mining, oil and gas industry is based on fly-in fly-out from Perth, and even out of Brisbane,” he says.

Ironically, the recent economic uncertainty has revived exports outside the resources arena. “With this crash we’ve had, projects have been put on hold so we’re starting to see people say, ‘let’s not rely totally on that field, let’s explore other areas’,” explains Denniss. “Outside of a boom, exports tend to go up.”

As for the future, he sees further development in the technology field. “We’re seeing a lot of technologies start to be commercialised: they’re energy sciences, energy-producing products and alternative energy products, wind power, solar power, geothermal, and solar thermal. Industrial processes are very energy hungry and managing that is very important,” says Denniss. “That’s been very active in the state; people aren’t necessarily exporting yet, but we’re getting close. It’s the next tech boom.”

Whitaker expects the state to become part of a global supply chain rather than dealing with just import and export. “It’s becoming a much more complex logistics environment. Western Australian companies will become much more globally engaged,” he predicts. “Western Australia and export are synonymous, it really is the most internationalised of all the state economies.”

WA Profile
Capital city: Perth
Population: 2.1 million
Export revenue: $68.1 billion (commodities only)
Top three exports: Iron ore, non-monetary gold, confidential trade (includes LNG, alumina, nickel and wheat)

—Source: Department of Industry and Resources