<strong>OneSteel</strong> pipe and tube supporting light towers at Sydney Olympic venues. Photo – “Fountain Night” by Murray McKean.A major objective for Distribution in the current year is to workmore closely with <strong>OneSteel</strong>’s Whyalla Steelworks and MarketMills divisions to improve overall returns to the company.Robin Freeman, President <strong>OneSteel</strong> DistributionThe sudden downturn in housing activity and continued decline in construction spending necessitated promptaction to protect the returns from Distribution. During the year, spending on housing fell by 27.4% and nonresidential construction spending was 13.5% lower. Steps were taken to rein in operating and capitalexpenditure, personnel numbers reduced by 239 or 10.3% before the addition 458 Email staff, and stock levelsexcluding Email fell $22.5 million or 12.2%. Profit declined by 34.3% at the earnings before interest and taxlevel but tight control of working capital translated to strong cash flow. As the pick-up in activity in the current yearis expected to be slight, the focus will continue to be on costs and working capital management.The purchase of Pipeline Supplies Australia and part of Union Steel from Email, increased the scale andcapabilities of <strong>OneSteel</strong>’s Piping Systems and Steel Distribution businesses. Since the acquisition in May <strong>2001</strong>plans to consolidate facilities, appoint new management teams and address the many other matters relating to themerger have been implemented. The key objective is to retain the sales of the businesses purchased and thereforethe main focus is on customer service, initially ensuring that no customer is disadvantaged by the changes that aretaking place and then moving to further improve service quality.A major objective for Distribution in the current year is to work more closely with <strong>OneSteel</strong>’s Whyalla and MarketMills divisions to improve overall returns to the company. This will involve increased communication and a betterunderstanding of the operations of each business which range from iron ore mining to sale of steel products.BUSINESS ACHIEVEMENTS: Distribution/<strong>OneSteel</strong> Reinforcing – Australian Design Award - 5 May <strong>2001</strong>Photo (left to right) Mark Patrick, University of Western Sydney; Gaynor Ott & Lou Marasco, Market Development Engineers for <strong>OneSteel</strong><strong>OneSteel</strong> Reinforcing and The University of Western Sydney Centre for Construction Technology Research, were awarded the prestigiousAustralian Design Award in Engineering Design for TRUSSDEK ® . TRUSSDEK ® is an ultra-lightweight, permanent, combined steel formworkand reinforcement system, that offers unrivalled spanning capability and efficiencies compared with other steel decking systems. It leadsto faster, more economical construction. TRUSSDEK ® is a unique Australian product, the result of research and development work that hasseen Australian technical know-how lead the world in this field. TRUSSDEK ® is a registered trademark used exclusively by <strong>OneSteel</strong>Reinforcing.16
Australian DistributionTHE BUSINESS THE MARKET PERFORMANCE DEVELOPMENTSSheet, Coil and Aluminium ReinforcingSteel<strong>OneSteel</strong>’s Steel Distributionbusiness has centres locatedthroughout Australia providing awide range of products to resellers,end users, such as manufacturers,fabricators, builders, miningcompanies and the agriculturalindustry. The business focus is tofurther build on its relationshipswith customers and to sell in aconsultative manner demonstratingvalue delivery.Reinforcing steel is used forconcrete reinforcement, miningstrata control, agricultural andindustrial mesh products andreinforcing steel fibres. Reinforcingcontinued to develop its strategicdirection of “ReinventingReinforcing”. In line with thisdirection, 12 new products andservices were launched inconjunction with rebranding underthe <strong>OneSteel</strong> Reinforcing name.A leading processor and distributorof steel sheet and coil and a rangeof aluminium products from10 locations in Australia. Product issourced from major Australian andoffshore manufacturers and used inthe construction and manufacturingindustries. Our customers convertthe metal into finished and semifinishedgoods including metalcabinets, gutters, roofing, fencing,large and small marine craft.Market activity was subduedduring the year as sales to theengineering construction sector fellaway significantly after theOlympics, and the manufacturingsector fell into a slump afterChristmas. Confidence within themarket was low and prices wereunder pressure. Demand forprocessed product was restrictedas the customers opted to do workin house.The market was very depressedduring the year. Major markets ofhousing, non-residential andengineering construction were allsignificantly adverse to the recordlevels of the previous year. Allregions were depressed butSydney in particular droppedsignificantly. Niche markets inindustrial, rural and mining wereall relatively stable from theprevious year.The economic contraction thatoccurred in the December 2000quarter affected the residential andnon-residential markets with themajority of our customers recordinglower volumes. Customers involvedin transport continued to producestrongly. The manufacturingsegment aided by the lowerAustralian dollar favoured ourcustomers focused on exportmarkets.Despite the poor market andsevere price competition, marginsimproved. Tight expense controlwas exercised throughout the yearbut the impact could not negate thevolume shortfall. Inventoryreduction was highly successful,with stock weeks finishing at asustainable all time low.Financial performance was heavilyaffected by volume and pricereductions due to increasedcompetition. This was offset in partby continued restructuring leadingto significant cost reductions aswell as reduced inventory levels.Safety performance was good witha 40% reduction in MedicalTreatment Injuries per millionperson hours.Despite sales volumes being lowerthan expected, lower stocks, andworking capital and cost reductioninitiatives combined to deliverpositive cash outcomes ahead ofprojections.Major developments include thedecision to combine the two Steelbusinesses in each of Brisbane andMelbourne to create a moreeffective business and marketpresence, and the merger of theUnion Steel acquisitions in Sydneyand Perth. These changes will beimplemented progressively over thefirst half of <strong>2001</strong>/02.Productivity improvements wereachieved across all areas ofprocessing with a continuation ofinitiatives into the <strong>2001</strong>/02financial year. New products suchas BAMTEC®, prefabrication andL class mesh were successfullyintroduced, with future focus onincreasing their usage in themarket. Implementation of a newbusiness information technologysystem has commenced and willbe completed in 2002.The $14,000 FederalGovernment’s first home ownersgrant is assisting customers toincrease volumes as residentialapprovals increased in the June<strong>2001</strong> quarter. The division willwork closely with customers togrow in profitable market segmentsand also continue with businesscost reduction and rationalisationinitiatives.MetalandMetaland services customers inregional markets. Local managersadapt the company's full productand service range to maximise thevalue offered to the market andtake advantage of localopportunities. In areas where thereis no direct local presence,strategically-located Metalandfranchisees service local industries.Customers in the resources sectorwere affected by declininginternational demand and pricesalthough improvement occurredlater in the year. Regionalmanufacturing recovered duringthe year and there were alsoimprovements in the rural segment.Market confidence improved withthe announcement of infrastructureprojects such as the Alice Springsto Darwin rail link.Sales volume and profitperformance was down on lastyear while cash generationexceeded expectations throughinventory reductions, combinedwith automatic stock replenishmentsystems introduced and operatedwith Market Mills. A number ofcost initiatives were introducedachieving productivity gains. Safetyimproved significantly throughbetter housekeeping, one-on-onetraining and safety audits.Since May <strong>2001</strong>, many businesseshave been focused on the Emailmerger, and how best to use thecombined strengths to service ourcustomers. Modest capitalexpenditure at most locations hassupported initiatives to improvesafety and customer efficiency.New pricing systems are beingrolled out that are improving thevalue of market offerings.Piping SystemsPiping Systems’ services the naturalgas transmission, petroleum,chemical, construction, mining andbuilding services markets as aleading distributor of pipes, fittingsand valves throughout Australia.The division continues to focus ondeveloping their value proposition toproject-related work, based onproviding customer-specific solutionsusing all of <strong>OneSteel</strong>’s manufacturingand distribution resources.Business activity from the gastransmission sector was significantand the petroleum sector was alsostrong. The construction and miningmarkets were less active than inprevious years. However strongeractivity is forecast for early 2002.Building services remained steadywith increased competition fromnew entrants to the market.A lower level of project workacross most market segments led tosales being below recent years.Softer margins reflected the projectsales to the gas distribution sectorand a high level of competitionoperating within a generallysubdued market. Expense reductioninitiatives were successful but notsufficient to balance the shortfallfrom sales volume and margin.The merger of the Email PipelineSupplies operations with PipingSystems will result in a wellbalancedbusiness, combiningsales and marketing skills,exclusive product brand names,extended distribution footprint andsourcing expertise, providing avery competitive value propositionfor our customers.17
Change language