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CEO Update: A Message from George Yammouni

26 September

Headland Admin

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Colleagues,

I hope Q1 in Australia and Q2 in NZ has been good to all of you. Let’s start as we usually do by looking at industry leading indicators.

Australian Manufacturing PMI: Signs of manufacturing slowing in August

The Australian PMI Index fell to 49.3 in August of 2022, from 52.5 in the previous month which is a drop of 3.2 points indicating a slight contraction. Since January 2022, following the Omicron outbreak during the summer break, the Australian PMI gained momentum. This is the first decrease in the country’s manufacturing sector after six consecutive months of expansion.  The index for the machinery & equipment sector is the lowest it has been since April 2020 at the start of the COVID-19 pandemic. Manufacturers reported very weak sales and significant supply chain difficulties.

New Zealand Business PMI at 1-Year High

The BusinessNZ Performance of Manufacturing Index in New Zealand increased to 54.9 in August of 2022 from an upwardly revised 53.5 in the previous month, marking the fastest pace of expansion since July 2021 and remaining above the 53.1 long-term average. New orders (59.2 vs 50.5 in July) and employment (53.6 vs 52.6) continued to grow, while production (54.6 vs 49), deliveries (53.7 vs 49.4), and finished stocks (50.8 vs 49.4) crossed the expansion threshold following contractions in the prior month.

At Headland Technology …

Our new branding program (reflecting our increased focus on smart manufacturing and software) continues to gain momentum as we continue to onboard new staff. Our Q1/Q2 has been similar to same time last year and above pre-Covid times. So we’re happy that momentum continues despite changes in Govt in Australia and changing economic conditions driven by the RBA/RBNZ and inflationary pressures locally and globally.

We’re taking a lot of confidence from Banking sector predictions that housing market “peak to trough” will settle by H2 2023. Interest rate increases forecast for the next 1-2 quarters will commence a downward pattern by H2, 2023 and the measures the RBA are taking to curb discretionary spend are definitely working. This all points to the fact that automation in the manufacturing sector is NOT discretionary spend and the demand for building our on-shore manufacturing capability is likely to continue well into the future. All whilst the skills shortage will drive more interest in sophisticated levels of automation.

Global Logistics challenges however has persisted, especially with all shipping lines, and yet we are getting a fair share of incoming machines (eventually).  Our installation teams have been extremely busy and happy to be implementing/installing some very exciting new technology.

Euroblech and international visitors

We’ve also recently hosted numerous impressive international visitors, who are specialised in software, storage, automation and consulting services and we are delighted that travel is back to pre-pandemic levels of freedom.

At the end of October, we are very much looking forward to hosting a strong delegation to EuroBlech and then in early November we will do the same to Jimtof, 2022.

A renewed approached to stock holding

I’m really delighted with the progress that Andrew Waelen and the Parts team are making with the data-driven stock holding policy and implementing continuous improvement. If we’ve sold a part more than once in the last 12 months we will stock it, provided we can source it for stock. We just have to be mindful that whilst global supply of subcomponents (effecting all industries) is still limited, some of our suppliers may not actually have ready stock.

Closing thoughts

This month, I will close with a huge thank you to so many of you who have worked closely and patiently with us as we’ve navigated the above referenced supply issues. And as you’ve witnessed, we will never give up on trying to creatively find ways to overcome whatever comes at us .. especially if your business is impacted.

Keep well. Stay safe. Continue to innovate!

George Yammouni