As we begin the new financial year, IBISWorld business information analysts have revealed the industries set to succeed and those that are going to struggle during this financial year.
Oil and gas extraction
With growing demand from Asian markets, especially Japan, Australian liquefied natural gas (LNG) producers are increasing capacity to meet the demand. Japanese energy suppliers converted to gas-fired plants after the Fukushima Daiichi nuclear disaster in 2011. Investment in export facilities will make the Japanese market more accessible for Australian producers and an additional boost will come from selling LNG at global prices instead of cheaper domestic prices.
Beef cattle farming in Australia
Strong overseas demand for Australian beef combined with strong beef cattle saleyard prices look set to push an 11 percent revenue growth for the beef cattle farming industry. This is despite the predicted decline to live cattle exports as Indonesia imposes stricter import quotas. Additionally, as incomes across the Asia-Pacific area rise, demand for high-quality Australian beef will increase.
Australia-based data centres
Cloud computing and increases in data use will give Australian data centres a boom year. Cloud computing is becoming more cost-effective at the same time as in-house server expansion issues become increasingly difficult. The high cost of in-house servers combined with capacity issues will drive more businesses to outsource to external data centre providers. Data security concerns make Australian-based data centres more appealing than offshore arrangements.
Australian ceramic product manufacturing
This industry is struggling to compete with low-cost imports from Asian countries that have larger economies of scale and pay lower wages. Australia’s largest industry player, GWA Group Limited, have moved their operations offshore, but no other Australian manufacturers look likely to pick up the slack. Sales of specialist ceramic products are likely to take a further hit this year with demand from iron smelters and steel manufacturers continuing to dwindle.
Site preparation services in Australia
There will be less investment in new mining infrastructure as the resources boom goes from investment stage to production stage. Most large-scale mining projects are now finished so there will not be much more capital investment in 2015-16 for mining projects. This will be unfavourable for the site preparation services industry. Operators will have to rely on other types of infrastructure projects such as roads, bridges, and building construction for growth. These projects are unlikely to have the high level of returns as with mining projects. New site development is being postponed due to lower commodity prices.
Scaffolding and machinery rental in Australia
The drop in mining investment will adversely affect this industry. Heavy construction in infrastructure projects and mining is waning as mining companies go into production phase. Mining companies will still rent machinery during the production stage, but it will not offset the reduced mining investment. The scaffolding and machinery rental industry will rely on traditional construction, such as residential and non-residential, which continues to grow, but will not offset the mining investment.