IN THIS ISSUECommunity Edge - FLSmidth ABON 4Cutting Edge Profile - ActronAir 8Giving You The Edge - Single Point of Failure 14

GIVING CUSTOMERS AND INDUSTRY THE EDGE WITH NEWS AND INNOVATIONISSUE 6 NOV 2012

A LOCAL SUCCESS STORYActronAir and BlueScope Steel Sheet Metal Supplies.

GLOBAL ECONOMIC UPDATE

WELCOME Welcome to the sixth edition of The Edge. In this edition, our case studies demonstrate how versatile our relationships with our customers can be. As well as supplying quality products and services, we work closely with our customers in many other ways including community initiatives and helping to differentiate them in an import flooded market.

We have included another great Community Edge article, a book review regarding supply chain management and an economic update to keep you informed about the factors affecting our industry. We have also included a sustainability article regarding the Australian Green Infrastructure Councils new rating tool.

I hope you enjoy this edition of The Edge, if you would like to see more of a particular topic, or have any feedback on the publication, please feel free to contact us.

Please forward any comments or suggestions to: contributions@bluescopesteel.com

DISTRIBUTION UPDATEThe steel industry continues to face many challenges, however at BlueScope Distribution we continue to focus on our customers, their needs and providing them with the right mix of quality products, excellent customer service and support.

In a highly competitive market where imported steel product is squeezing manufacturing margins, BlueScope Distribution is revolutionising the sales process through what we call the Steel Efficiency Review ™ (SER).

At BlueScope, we believe our people are our strength, and the SER was developed based on the insight that within our business there are people with many years of knowledge, experience and an understanding of manufacturing and steel processing. This 'knowledge capital' can be used as the platform to develop a selling experience based in a genuine value-adding dimension, instead of product for price.

This knowledge capital delivered through the SER can provide best practice recommendations to customers based on the 7 key operational waste areas:

• Over production • Time in waiting • Transportation

• Processing • Inventory • Motion

• Rework

It enables us to transform the selling approach to one of customer closeness and genuine understanding of our customers’ business challenges, which develops trust and relationships right from the beginning. If you would like to know more, please visit www.steelefficiencyreview.com.au.

Safety is a core value at BlueScope Distribution and we are constantly working with our people, customers and suppliers to improve safety practices for the benefit of everyone. A great example is BlueScope Distributions Transport carrier in Victoria winning the 'Australian Transport & Logistics Best Practice Safety Award' – the Australian Freight Industry Awards for the Fall Prevention Safety System trailer (FPSS). The FPSS trailer has been a joint initiative between BlueScope Distribution and Metropolitan Express.

The primary feature of the trailer is the built in side hand rails down each side of the trailer which are raised and lowered as required. When the hand rails are combined with the headboard and tailboard of the trailer, this provides a rated protective barrier. This barrier prevents the driver from falling from the height of the trailer if they were to slip whilst on top of a load, removing or applying load restraint or other activities.

Another key feature is the automated tarping system. This removes the manual handling risks associated with handling tarps on the back of trucks as well and improving the timing involved for weather sensitive products. This is a great result achieved by working closely with our supplier for the safety of all.

At BlueScope Distribution our focus will remain on our customers and delivering upon their expectations and needs. Even though we face a continually changing market, we believe in the products we sell and the service we provide, and will continue to work with you to meet the challenges ahead.

Andrew Bray General Manager BlueScope Distribution

Andrew Bray

GLOBAL ECONOMIC UPDATE Australia Overview

Australian economic growth continues to outpace that of most other developed economies. Real GDP grew at a healthy 3.7% in FY12, in the main driver being a strong mining sector. However, concerns over slowing emerging world growth has seen mining activity and future investment plans being scaled back, but is expected to be somewhat offset by an upturn in residential and non-residential construction activity after an extended period in the doldrums.

While state and Federal governments are concerned about balancing their budgets, the RBA has seen a need to cut rates (cash rate down to 3.25% in October 2012) as the best bit of the mining boom – high commodity prices – has already passed its peak, and the key driver of Australian growth at the moment – resource-related construction – is less than two years from a similar peak.

The Australian dollar is also thought to be valued above its fundamentals and there is an expectation it will depreciate over the next two years.

Residential market upturn imminent

Residential & non-residential construction markets have continued to reflect weak demand conditions on the back of ongoing global economic concerns, low consumer confidence and tight credit conditions. It is also apparent that since the expiry of the government stimulus measures, the private sector has been slow to pick up the slack, opting to delay projects.

The Ai Group-HIA Performance of Construction Index (PCI) stood at a very low 30.9 points in September, reflecting the suppressed conditions, and has now been in negative territory for more than two straight years.

In FY11 the index averaged 41 points, while in FY12 it averaged 36 points. Both residential and non-residential investment activity declined by over 5% in FY12. The HIA, however, is predicting a return to modest positive growth in the next few years as the impetus of interest rate cuts feed through the economy and confidence returns.

Engineering construction continues its stellar run

The June quarter construction data demonstrated the significant size of resources and energy related investment in Australia, with the engineering component of construction spending remaining solid as the LNG plants and other resource based projects are built in Queensland and Western Australia.

The value of engineering construction work done, increased by 1.3% QoQ in Q2 2012 to $30.5bn, 31.9% above the level in the same quarter of the previous year. Reflecting the strong recent inflow of resource-based construction projects, the value of engineering construction work done in FY12 currently stands at a record level of $114.6bn.

Forward indicators of activity continue to point to a solid medium term outlook for engineering construction. The value of private sector work yet to be done in Q2 2012 was valued at $128.7bn. Based on the previous year’s rate of operation, this equates to a sizable 13 months’ of work in the pipeline.

Manufacturing continues to face strong headwinds

Ai Group’s Performance of Manufacturing Index (PMI) fell a further 1.2 points to 44.1 in September, its seventh consecutive monthly fall. In FY12 the index averaged a reading of 47 points, down 2 points on the FY11 average. This provided further confirmation of the range of present headwinds that continue to confront this sector of the economy, including the strong Australian dollar, intense import competition and weak business confidence.

The outlook remains weak, with the contraction in new orders also extending into a seventh consecutive month, pointing to softer manufacturing conditions in the months ahead. However, despite the negativity in this sector, it’s important to note that some strong pockets of strength remain in the Australian manufacturing sector, especially those elements which have tapped into the resources investment boom, such as machinery and equipment and non-metallic minerals production.

Mining activity comes off the boil

The mining sector continued its strong growth performance in FY12 on the back of high levels of investment in new minerals and LNG projects. Asian demand for Australian resources and record level commodity prices has driven an investment boom, propelling mining activity and its importance within the Australian economy to very high levels. The contribution to GDP of mining and mining-related output has soared and profits in the mining industry account for an increasing proportion of total business profits.

Total new capital expenditure increased by 18% in FY11 and by a hefty 72% in FY12, accounting for 56% of total CAPEX for the year. Looking ahead, however, the recent slowdown in the Chinese economy has translated into softening commodities demand and lower prices. As a result, Australian miners are re-assessing their long-term project plans. However, the RBA remains confident that the demand for Australian commodities remains fundamentally strong, which will see investment continue to grow in this sector.

Global Overview

The global economy continues to be characterised by negative sentiment. While concerns over Europe have receded a little for the time being, worries about a stagnant US and new misgivings about a slowing emerging world, especially in China, continue to impede global growth. The International Monetary Fund tips the US to grow by a modest 2.2% in 2012. The US is also set to face some fiscal consolidation early next year; however there are some encouraging indications of a housing recovery, albeit from a ravaged base, and improving labour market conditions, with the unemployment rate falling below 8% for the first time since January 2009.

The Fed has also announced another round of quantitative easing (QE3), whereby it will essentially print $US40 billion a month in order to stimulate the economy. In Europe, the ECB has moved to support struggling banks and governments by acting as a cheap funding source. However, the longer term structural issues still plague the region. The emerging world is currently plagued by weak demand from the developed world as well as a general aversion for risk at the moment. China growth has slowed to below 8% and as a result, the Asian Tigers (Korea, Singapore, Taiwan, etc) are contracting.

Poor reform in India has hindered development and investment in its industry and it will barely grow by 5% this year. In Latin America, Brazil will grow by just 1.5% this year but is expected to accelerate somewhat next year as the government stimulates extensively through both fiscal and monetary means.

Source: BlueScope Steel EconomicsDisclaimer: This document is made available to you on a strictly confidential and non-reliance basis. While every care has been taken to ensure the accuracy of the information, BlueScope Distribution Pty Ltd does not warrant the accuracy, completeness, currency or fitness for purpose of the information. You should verify and check the accuracy, completeness, reliability and suitability of the information contained in this document for any use to which you intend to put it. Except to the extent to which liability may not lawfully be excluded or limited, BlueScope Distribution Pty Ltd and its related bodies corporate will not be liable to you or any third party for any direct, indirect or special loss or damage however caused (including, without limitation, breach of contract, negligence and breach of statute), which may be suffered or incurred in connection with the information.

Raising funds for the fight against cancer brings together companies, community organisations and individuals around the country like few other causes.

Since it first put the kettle on in 1994 Australia’s Biggest Morning Tea has raised $100 million dollars for the cause, including contributions from BlueScope Distribution and many of its customers.

Australia’s Biggest Morning Tea is Cancer Council Australia’s most popular fundraising event and the largest, most successful event of its kind in Australia.

During the annual campaign more than a million people sip their way through morning teas at work, school, home and in the community.

Most of these efforts have involved solo events organised by enthusiastic employees at single sites. In the case of BlueScope Distribution’s Westall branch in Melbourne and mining industry supplier FLSmidth ABON however, Australia’s Biggest Morning Tea has become a common cause.

FLSmidth ABON Pty Ltd is a leading global supplier of equipment and services to the minerals extraction industry, providing everything from a single crusher to complete minerals processing facilities, supported by a highly regarded onsite maintenance service.

Its Australian manufacturing facility at Airport West in Victoria has been a long term user of BlueScope Steel’s XLERPLATE® steel 250 grade plate range and also use “Q&T green feed” manufactured at the BlueScope Steel Port Kembla Steelworks to create the teeth for crushers which are then heat treated into wear parts for applications such as this.

Like BlueScope Steel, FLSmidth ABON has a corporate culture and tradition of supporting the communities in which it operates – as well as its customers.

BlueScope Distribution’s support of FLSmidth ABON with plate allocations during steel shortages has been reciprocated by the equipment supplier’s commitment to purchasing Australian steel plate.

The two companies have drawn closer together, with strong business and personal relationships and co-operation on special projects, with regular multi-level contacts between the two companies, co-operation to stage an Australia’s Biggest Morning Tea event first bore fruit four years ago.

“As one of the main suppliers to FLSmidth ABON we’ve built up a relationship over nearly 15 years,” said Armando Azzolini, BlueScope Distribution’s Market Development Manager at its Westall branch.

“To help make sure the fundraiser is a success we supply two trailer barbecues and organise the meat and soft drinks as well as providing raffle prizes for the day. This year 130 people attended, including customers and opposition suppliers. For a good cause we feed everybody,” Armando concluded.

The latest BBQ morning tea raised $9528.20 for the Cancer Council.

L – R Tohme Hayek, Melbourne Manager – BlueScope Distribution; Nick Marchesani, Account Manager – BlueScope Distribution; Jon Cowie, Purchasing Manager

EDGE

Adding value for a good cause

MUCH MORE THAN DISTRIBUTION

The name may be BlueScope Distribution, but as a steadily increasing number of customers are discovering, steel distribution is just the final step in a wide range of value-adding services the company offers.

BlueScope Distribution can not only supply quality steel (and aluminium) products but also provide expert processing to exacting customer requirements.

Our product range includes steel plate, sheet and coil, reinforcing fabric, bar and building products, merchant bar, structural steel, tubular and aluminium products.

The product range and processing expertise are backed by the technical expertise and reputation of BlueScope Steel to ensure the highest levels of service and support.

The range of steel processing services available includes CNC oxy & plasma profiling, bevel cutting & drilling and laser cutting of plate.

We also offer shearing, slitting & blanking of coil products. Structural sections can be supplied cut to length & drilled and we offer a service to cut and roll groove pipe.

All of these services are carried out to customers specifications in conjunction with BlueScope Distributions’ reliable scheduling and estimating services.

With a national processing and distribution network, these services are convenient to access and are constantly being enhanced.

Recent investment in an additional coil plate processing line in WA adds to supply capacity for major fabricators and profilers there.

It gives customers the opportunity to save on material costs, as well as improving efficiencies in their businesses, by being able to purchase coil plate product in a variety of sizes and widths to suit their operations.

The new coil plate line is the widest and longest machine in Western Australia, and can process coil plate from 3 – 16mm, up to 2500mm wide and cut sheets from 1.8m – 13m. It is located in Naval Base Kwinana, home to a significant number of fabricators and profilers.

Pipeline Supplies

The BlueScope Pipeline Supplies business is a one-stop processing centre for roll grooving, cut grooving, cut to length, bending and fabricated fittings. It is equipped with the latest Victaulic® machines backed by leading edge quality assurance processes.

Patented Victaulic grooved piping systems are rapidly increasing in popularity as a high pressure solution because they are safer and cleaner to install, with less labour needed on site and reduced fire hazards due to the absence of hot-works.

With the capability to roll groove pipe from 100mm to 900mm / 4” to 36” BlueScope Pipeline Supplies can supply roll grooved pipe to match the full range of Victaulic fittings.

Fully motorised, semi-automatic tools produce highly accurate roll grooved pipes to meet all needs.

BlueScope Pipeline Supplies can also cut groove pipe from 50 to 200mm (2” to 8”) and supply pipe ready to use. Accuracy is ensured by a spring loaded tool bit which cuts the pipe to a pre-determined depth, ensuring uniformity of groove.

For more information call 1300 66 11 56 or go to www.bluescopepipelinesupplies.com.au

ALUMINIUM TOO

Our new state-of the-art flatbed aluminium router is controlled by fully integrated, world leading, nesting based

manufacturing software to handle the most complex shapes. Its software is compatible with AutoCAD through DXF transfer.

It cuts with precision, ease and accuracy to produce components to exact specifications, resulting in less post cut finishing and significant savings in time and money.

The router has a 2500mm x 12500mm bed size and can cut aluminium sheet up to 25mm thick.

With our large range of plate, sheet, coil and extrusions, BlueScope Distribution offers the complete aluminium package for the boat and ship building industry.

L – R Tohme Hayek, Melbourne Manager – BlueScope Distribution; Nick Marchesani, Account Manager – BlueScope Distribution; Jon Cowie, Purchasing Manager

CASE STUDYA C A D E M Y R O O F I N G

Markets Relocation a Marathon not a Sprint

The relocation of Melbourne's wholesale fruit and vegetable market on a new site at Epping in the city’s north began in 2009, but the size of the undertaking means it will not be fully operational until 2014.

Melbourne’s Wholesale Fruit and Vegetable Market and National Flower Centre currently located on Footscray Road in West Melbourne will form the core of the new precinct, surrounded by businesses that improve and develop the transportation, handling and marketing of fresh produce.

Relocating the market will free up the existing Footscray Road site for port and rail development over the next 20 years and is also expected to provide substantial economic benefits to the state through a more efficient market precinct.

As it is fully developed over the next 10-20 years, the new market precinct incorporating the market's core trading facility, warehousing, distribution centres and value-added business is expected to drive over $1 billion of investment on the site.

Long before the first fruit and vegetables arrive however, it has been building products made by BlueScope Steel, which dominate the site.

Over 110,000 square metres of roof cladding made from COLORBOND® steel, more than 4,000 tonnes of structural, RHS and pipe steel and nearly 1,000 tonnes of purlins are contributing to construction of the produce hub.

Bovis Lend Lease is the design and construction contractor for the project which is expected to cost more than $600 million.

Alfasi Steel Construction fabricated 2,121 tonnes of structural steel supplied by BlueScope Distribution, together with 1,955 tonnes of RHS and pipe steel.

Structural processing including drilling and cutting was carried out at BlueScope Distribution’s Westall branch which also assisted Alfasi with nesting solutions.

Nearly 140,000 lineal metres of purlins were roll formed by Melbourne’s Metalform Structures, using almost one thousand tonnes of steel provided by BlueScope Steel, making it one of the industry’s largest single purlin orders in nearly five years.

Metalform Structures, a business unit of Lysaght Building Solutions, is a specialist purlin supplier with skilled estimating staff and fast production turn-around times geared to supply even the largest commercial construction projects.

Academy Roofing is also one of the largest contractors in its field, with a history of successfully completed projects which includes DFO Cairns, Gibson Island Water Treatment Plant in Brisbane, Christmas Island Immigration Centre, Narellan Town Centre in NSW and the Altona Sports Centre in Victoria.

The company began work to install over 110,000 square metres of LYSAGHT® KLIP-LOK 700 HI-STRENGTH® wide cover, concealed fix cladding in March 2011 and only recently closed its site office – although it is still returning for additional work.

“During most of that time we’ve had a crew of at least 18 onsite, rising to 25 when needed,” Academy Roofing director Wayne Lee said.

“As the building program has progressed we’ve moved into newly completed areas, contacted BlueScope Lysaght and ordered a truckload of roofing sheets, sometimes at very short notice.

“It has involved a lot of co-ordination, but BlueScope Lysaght have been fantastic. They bent over backwards to accommodate us on a project where so far we’ve had 40 or more deliveries.”

Academy Roofing installed the LYSAGHT KLIP-LOK 700 HI-STRENGTH® cladding in standard COLORBOND® steel colours Surfmist® and Evening Haze®, as well as the custom colour Market Red.

The Market Red colour was developed especially for the project, to highlight the 16 large entrances to the complex’s trading floor area.

The trading floor will provide access to all areas including undercover loading and unloading bays immediately adjacent.

operated, and decided to design and build one for the family home in Sydney.

Today ActronAir has one of the most extensive ducted air conditioning product ranges in the local market, designed and manufactured in Australia. The company has also added a range of wall split system air conditioners engineered to meet Australian conditions.

The ActronAir head office, located at Bella Vista in Sydney’s north west, covers more than two hectares. Its 10,500 square metre world class manufacturing facility includes a sheet metal fabrication line, powder coating facilities and commercial and residential assembly lines.

“This is a strong, proud, privately owned Australian business which is on the ‘Lean’ journey and having great success,” said Michael Gerada, Manager, BlueScope Steel Sheet Metal Supplies, NSW.

“Our relationship has been strengthened by our ability to supply a high standard of BlueScope Steel ZINCANNEAL® steel and GALVABOND® steel products with reliable delivery, product continuity and pricing continuity over many years.”

Strategic partnerships are helping local manufacturers play a key role in an air conditioning market where foreign brand names predominate.ActronAir is a fine example and a great success story - a family owned and run air conditioning specialist dedicated to engineering, designing and manufacturing reverse cycle split ducted air conditioners and packaged air conditioning systems for residential and commercial applications.

The Sydney based company has been a customer of BlueScope Steel Sheet Metal Supplies for more than 20 years, sharing a relationship which has benefitted both organisations.

It is a relationship which highlights the customer focus of BlueScope Steel Sheet Metal Supplies business and underlines the ActronAir commitment to a process of continuous improvement.

The ActronAir story began in 1984, when Garry Mundy and his two sons Robert and Kevin became interested in how air conditioning systems

L-R Jon Maddox – Operations Manager ActronAir; Michael Gerada – State Manager BlueScope Steel, Sheet Metal Supplies; Ron Sutton – Account Manager BlueScope Steel Sheet Metal Supplies

LOCALHERO

CUTTINGC U S T O M E R P R O F I L E

“Engineers from ActronAir and BlueScope Steel Sheet Metal Supplies will get together at the front end of the design process to further optimise the amount of sheet we use and if necessary discuss custom sheet sizes which will allow us to optimise yield.

“The process is a two-way street. BlueScope Steel Sheet Metal Supplies came here and saw some of our workplace organisation including our sign-boarding and visual management strategy. They were able to take that away and apply it within their own businesses.”

Cliché or not, this really has been a win-win outcome, as both parties quickly acknowledge.

“ActronAir are encouraging us to think outside the norm and challenging BlueScope Steel Sheet Metal Supplies to understand the value we can create so that we get better with each delivery we make,” Michael Gerada said.

Jon Maddox is similarly upbeat. “They are as excited about our business and coming in and being a part of it as we are,” he said. “We very much feel that BlueScope Steel Sheet Metal Supplies are part of our whole team here.”

The relationship is a dynamic one, enhanced by the recent implementation of the STEEL EFFICIENCY REVIEW™.

“They have challenged us as a long term supplier and through the STEEL EFFICIENCY REVIEW™ we have been able to highlight our point of difference and share what ActronAir and BlueScope Steel Sheet Metal Supplies are each learning, to the benefit of both businesses,” Michael Gerada said.

Jon Maddox, Operations Manager at ActronAir, is enthusiastic about the STEEL EFFICIENCY REVIEW™ process which takes a broad approach to identify savings and boost profitability.

“In the last two years we’ve changed the way we interact with all our suppliers and many of them have been very responsive,” he said. “BlueScope Steel Sheet Metal Supplies has welcomed that and embraced the opportunity to partner with us in different ways, including the STEEL EFFICIENCY REVIEW™.

“Previously relationships may have been centred purely on commercial discussions, but now we talk much more about end to end relationships. We try to look at a total value offering rather than just talk about price.

“We cover items such as sales forecasting, order acknowledgment, accurate pricing lead time information, delivery performance, health and safety performance.

“Key stakeholders within BlueScope Steel Sheet Metal Supplies knew our business already and knew what we were all about. What they wanted to do was to broaden that knowledge to understand the way that better tools and techniques could help both parties.”

Practical benefits soon emerged, with Jon Maddox numbering a list of worthwhile outcomes.

“They gave us solutions around PPE for steel handling and efficient management of deliveries and despatches in the transport yard,” he said. “The review also identified effective minimisation of waste through the proper nesting of sheets in the design phase.

LOCAL

The Australian Green Infrastructure Council’s new I.S. rating tool provides Australia’s only comprehensive rating system for evaluating sustainability across design, construction and operation of infrastructure.

BlueScope Steel has been involved as an organisational member with AGIC since its inception in 2008 as part of the company’s commitment to sustainability. It is a co-sponsor of the materials category of the IS rating tool.

The new tool provides a vehicle for consistent application and evaluation of sustainability in tendering processes, to establish an organisation’s credentials and reputation in its approach to sustainability in infrastructure.

It encourages the development of green infrastructure by assessing and rating a project’s environmental performance and can be used by all industry stakeholders including developers, designers, planners, legislators, constructors, operators and owners.

The AGIC tool differs from other ratings systems such as the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) and the Green Building Council of Australia’s Green Star system.

While LEED and Green Star have specific definitions for compliance in each category, the I.S. tool is less prescriptive and allows more options for evidence to prove compliance.

The rating tool addresses broad areas – management and governance, using resources, emissions, pollution and waste, ecology, people and place and innovation.

Within these areas are categories such as procurement and purchasing, energy and carbon, water, materials, discharges to air, land and water and innovation.

These and additional categories comprise a total of 51 credits, providing a detailed framework for evaluating a project’s sustainability. Each credit is allocated a certain number of points and all credits are presented in the same format.

A project’s sustainability can be rated at the design, as built, or operational stages and all ratings must be renewed every five years.

Certification obtained at the design stage is interim and must be converted to an as built certification on completion of the project.

When a project has been operating for a minimum of two years, it becomes eligible for an operational rating. Existing infrastructure can also be rated under the operations certification.

The evaluation process for the I.S. tool involves self-assessment, followed by independent verification from an AGIC appointed assessor, then formal certification, if applicable.

The tool can be used to assess most types of infrastructure including roads and bridges, bus and cycleways, footpaths, ports and harbours, airports, railways, communication transmission and distribution, water storage and supply, sewerage and drainage, electricity transmission and distribution.

Within the IS rating tool, a number of opportunities exist to gain credits using BlueScope Steel products. For example the rating process aims to reward the reduction of life cycle environmental impact of materials.

This credit process uses a materials calculator where the applicant enters product volume and transport distance and the calculator compares the impact of a project’s materials with a pre-programmed reference project for a range of raw materials.

As an organisational member of AGIC, BlueScope Steel ensures that its life cycle inventory (LCI) data is accurate and conforms to the requirements of the AGIC materials calculator.

Comprehensive life cycle inventories (LCI) of BlueScope Steel products can be accessed through the Building Products Innovation Council LCI database.

BlueScope Steel is an industry leader in sustainability, with a dedicated sustainability team.

There are numerous ways BlueScope Steel products can help gain credits, for more information about the Australian Green Infrastructure Council and the new I.S. rating tool go to www.agic.net.au or visit sustainability.bluescopesteel.com.au

INDUSTRY

UPDATE

SUSTAINABLE INFRASTRUCTURE

The completed tanks shipped to customers from Dandenong are not just supplied with a promise of quality, they are delivered with comprehensive documentation.

“Some of our competitors only supply a PS2 statement, which is a single piece of paper stating that a tank complies with the relevant Australian Standards,” Anthony Turner said.

“By contrast we put together a complete manufacturing data report of about 70 pages for each tank. In that we list our welding qualifications, detail our welding procedures and include all the BlueScope Steel material test certificates for the plates used.

“All our paint reports and all the NDT reports including those on the lifting lugs as well as MAG particle testing on our welds are disclosed so that customers can be certain of the integrity of each tank’s design and fabrication.”

It’s early days yet, but the new business is already winning contracts to supply tanks to first tier mining and drilling companies and the contractors which work for them.

“We are chipping away and getting our name out there,” Anthony Turner said. “We’re currently supplying projects in Queensland and WA, including one order of four skid-mounted 100,000 litre diesel tanks which are designed to be regularly moved around mining.

“An international energy company with operations in New Guinea contacted us recently because they said their due diligence investigations had revealed very good reports out in the industry about our quality and our service,” Anthony concluded.

Building a reputation for quality has proved to be a winning strategy for a new established Melbourne fuel tank manufacturer.

When the opportunity arose to establish a bulk fuel tank manufacturing business in Dandenong early this year, Anthony Turner was confident he could make a success of it.

After all, he knew the clever designs and commitment to quality developed by his business partners who had already made a success of Advanced Fuel Tanks in Christchurch, New Zealand.

Anthony was then the General Manager of a Melbourne company which fabricated tanks under contract for Advanced Fuel Tanks’ Australian customers.

Fast forward and he is now in partnership with the New Zealand company’s founders, has established an Australian arm of the company and is winning a steady stream of orders, especially from resource industry participants.

Advanced Fuel Tanks is Australasia’s leading designer and manufacturer of self-bunded above ground fuel tanks, used worldwide for the storage of diesel, petrol, aviation fuel, oil, solvents, chemicals and other hazardous substances.

“We make tanks from 1,000 litres capacity up to 18.5 metre long, 150,000 litre storages,” Anthony Turner said.

“Our tanks are 100% Australian made from BlueScope Steel and we compete successfully against local manufacturers and about half a dozen suppliers who are selling imported tanks made in Thailand, China and Malaysia.”

Advanced Fuel Tanks has its focus fixed very strongly on the use of the best available steel from a supplier able to add value and supply chain efficiency, to compete against imported tanks which are usually built to a price rather than a standard.

It uses Grade 250 XLERPLATE® steel supplied by BlueScope Distribution in 6mm and 8mm thicknesses.

“That’s important to us because it is a quality local product,” Anthony said. “We strongly promote our local fabrication using Australian steel from BlueScope Steel because it supports the local economy. We’re going against the trend in manufacturing and we are succeeding.”

To simplify Advanced Fuel Tanks’ fabrication tasks, BlueScope Distribution carries out final cutting of the 3.2 metre by 12 metre plates and has them rolled to the required shape before they are delivered to the company’s workshops.

QUALITY Wins

CASE STUDYA D V A N C E D F U E L T A N K S

CASE STUDYJ O N D A S H E E T M E T A L A U S T R A L I A

For nearly 30 years Jonda Sheetmetal Australia has built a reputation as a general fabricator and quality manufacturer and supplier of rainwater goods.

Now the Melbourne company’s willingness to innovate to meet customer needs is attracting interest and sales of its latest product Australia wide.

At Jonda’s West Heidelberg premises John Nikolopoulos, who built the business with his wife Dani, has worked for several years to design and manufacture an effective leaf guard product.

“There are plenty of products on the market, but they all had drawbacks, especially the cheap ones,” said daughter Laura Nikolopoulos, who now plays an active role in the business along with her brother Jake.

Every Home Needs a Leafless Roof

At last there’s a gutter guard that works.

L-R: Peter Schepis Market Development Manager SMS, Laura Nikolopoulos, John Nikolopoulos

“Customers wanted a leaf guard that was going to last – one built for all roof types. John developed several different types of perforated meshes but then decided to develop one from scratch, not just adapt something already produced for another purpose.

“The big problem with many mesh-type leaf guard products is that holes in the mesh are so small that they tend to clog up with dust, roof lichen and broken down plant material.

“When these holes fill up, the mesh almost becomes a flat surface and water will flow over the top and over the edge of the gutter.”

Jonda’s Leafless solution uses a six millimetre hole which is too large to clog, yet too small to let debris though into the gutter. Aluminium construction ensures Leafless will not break down in sunlight as many plastic products will.

Optimum leaf shedding and drainage performance is achieved by corrugating the 2.5 metre rolls of the perforated material which are then powder coated to match the COLORBOND® steel range.

Aluminium was selected because of its suitability for hand shaping during installation to follow the profile of tile or metal roofs.

BlueScope Steel – Sheet Metal Supplies Sunshine branch has been a long-term supplier to Jonda and was able to source the aluminium feed for the machine that John Nikolopoulos designed and built to produce his Leafless gutter guard.

“They’ve been a supplier of all the sheet and coil products for our business and were extremely helpful in sourcing what we needed,” Laura said.

“We’re getting strong inquiry and sales through the leafless.com.au website and we have also begun a radio advertising campaign which is working well for us. Originally sales were mainly in Victoria but Leafless is now also starting to go interstate.

“It’s easy to install because it doesn’t require any lifting of tiles and as a non-combustible product it has a fire rating of ZERO in compliance with Australian Standard AS 3959.

“That makes it ideal for building in bush fire prone areas, where plastic meshes simply aren’t.

“Many sales are to DIY users, but Jim’s Roofing franchisees are also using our product and our traditional roofing contractor customers are seeing it as a good product and an extra business opportunity.

“We can arrange installation by highly reputable tradesmen who receive ongoing company training, are fully qualified and insured,” Laura concluded.

For more information go to www.leafless.com.au

AfterBefore

RecommendationSupply chain risk management expert Gary S Lynch details the 10 best ways to manage and mitigate supply chain risk. The Edge recommends his insights – despite a peppering of jargon – to executives handling all aspects of corporate life, including risk, manufacturing, compliance, operations, logistics, outsourcing, procurement and security.

AbstractAll companies, no matter their industries, products or locations, are members of complex, convoluted and interconnected supply chains. Any unexpected event – a labour strike, a cyclone, a product recall, a commodities price hike, a power failure, a biochemical disaster, a political revolution – that harms any link of a supply chain can have a devastating effect on all the other links, including those that most people would never imagine are connected.

The Laws of the Laws1. “Everyone, without exception, is part of a supply chain” – Every

firm is connected to every other firm. What affects one affects all.

2. “No risk strategy is a substitute for bad decisions and a lack of risk consciousness” – Poor decisions cause negative effects up and down supply chains. Companies that lack risk consciousness suffer the most.

3. “It’s all in the details” – Broad overviews are no help when your supply chain is breaking down. You must focus on the minutiae to understand your problem.

4. “People always operate from self-interest” – No link in the supply chain will cover another link’s risk – that is, absorb a cost – if it can avoid that situation.

• Supply chains are a series of interconnected links. If one link breaks, the chain fails

• If something can go wrong in the supply chain, it will

• Supply chain risk management requires measuring and assessing your supply lines’ exposure to uncertainty

• Having an effective supply chain requires collaboration by all parties involved

• Supply chain risks mutate with every process change

The Ten Essential Laws of Supply Chain Risk Management

• Organisations do not set risk priorities; external stakeholders do

• To mitigate likely risks, research and understand your suppliers processes and their business models

• Senior executives must get involved with and support company wide risk mitigation

• Assume that you lack proper supply chain insurance and that what you have will not cover all losses

• Accept that, when push comes to shove, people will always pursue their self interests

Some of the points raised by Gary S Lynch in Single Point of Failure may seem self-evident, but experience shows they are the ones most easily ignored. If your approach acknowledges each of the points below then you’re in control of your supply chain risks.

Single Point of Failure

These laws of risk apply universally to all supply chains:

1. If You Don’t Manage and Lead Change, You Have to Surrender to It

Any link in any supply chain can break at any time. When a rupture occurs, ask if it is a single failed link or a systemic problem. Did someone purposely fracture the link, or was it an accident? Who is responsible? What is the impact at every other link on that chain?

Prepare before your supply chain breaks by accepting that, sooner or later, something bad will happen somewhere, usually at the worst possible time. Visualise triggers or likely choke points that might cause problems. Any complication that develops will be a moving target.

2. The Paradigm Should Destroy the ParasiteRisk is a parasite that infects your supply chain. Prioritise which risks your organisation will focus on mitigating. However, your external stakeholders – customers, the media, government regulatory agencies, lenders and so on – are ultimately responsible for determining your “risk paradigm” or supply chain risk priorities.

These external stakeholders can unexpectedly undo all your risk management. For example, a change in regulations may force you to alter every aspect of your supply chain and reporting. To minimise existing risks, organisational leaders need to learn their supply chain’s exposure paradigms – that is, to imagine everything that might go wrong and how each failure could trigger another.

3. Manage Your Business DNA in a Petri Dish of Evolving Risk

To manage supply chain risk, detect and evaluate risks that might bring down your organisation. You must understand your company’s essential nature, or DNA, which requires knowing where your supply chain begins and ends.

Use the DNA acronym – “define, narrow, act” – to understand your supply chain and identify your “business value footprint”, that is, “the complete footprint of your operation” or your “organisational genome.” First, ask yourself, “Where does my supply chain start and stop, and what do I influence?” Second, rank your risk priorities, including where interdependence with suppliers, employees, manufacturers or customers makes you most vulnerable. And third, act to “minimise or mitigate the risks.”

4. In Supply Chain Risk Management, Demand Trumps Supply

If demand suddenly expands significantly, the supply chain’s configuration must change. This can generate numerous negative downstream effects. Develop the clearest possible picture of your “customer and demand, market trends (local and global) and competition, distribution and sales channels,” and “the external environment.” Research your company’s supply side and focus on the needs of your customers.

5. Never Set Up Your Suppliers for FailureIf your company places responsibility for supply chain risk management on its suppliers and refuses to assume a portion of accountability, you are setting your suppliers up to fail. For example, if your organisation wants to cut costs, you might insist that your upstream suppliers reduce their billings by a set percentage regardless of their already tight margins. You know in advance that

they will make up for this new pricing pressure by cutting costs. Their costs may generate quality or service problems down the road. Learn everything you can about your primary suppliers and the firms that supply them.

6. Managing Production Risk is a Dirty JobConsider all that can go wrong with production. Even a partial list of internal failures is daunting - strikes, workplace violence, cyber attacks, machinery failure, obsolete technology and sabotage. External failures can be just as destructive. For example, Dow Chemical’s plant in Bhopal, India, accidentally spewed 24 tons of toxic gas, killing an estimated 20,000 people.

7. Managing the Parts Does Not Equal Managing the Whole

The volatility of the logistical movement of goods is a primary reason supply chain risk management is so difficult. When goods are in transit, anything can go wrong at any time. Risks include shipping delays, cargo theft, spoilage, custom problems, and the like. Managing the movement of goods within your supply chain involves coordinating an array of activities, including material handling, transport and warehousing.

8. If Supply Chain Risk Management Isn’t Part of the Solution, It Will Become the Problem

To plan, develop and institute a comprehensive, effective strategy to mitigate supply chain risk, your corporate culture must develop a companywide “risk philosophy.” Senior executives should approve your risk mitigation efforts and actively support them. A single high-ranking executive should assume overall responsibility for building and leading a systematic, resilient risk management program that incorporates monitoring and measurement. Align your risk mitigation activities with other programming, such as your marketing activities.

9. The Best Policy Is Knowing What’s in Your PolicyRisk insurance is important for any supply chain operator, but it is not a panacea. Often the insurance available offers insufficient protection, and the coverage does not adequately compensate for losses you might incur. Nevertheless, your organisation must carry as comprehensive an insurance package as it can afford. Otherwise, a catastrophic loss can wipe out your business. Spread “diversification of risk exposure” among your supply chain partners.

10. Manage the Risk as You Manage Your OwnYou – and your family or loved ones – operate every day within your own personal supply chain; use these supply chain risk principles to reduce your personal emergency risks. Visualise the risks that can upend your life and develop advance plans to deal with them.

Try to make good decisions, because bad choices actualise risk. Accept that, when push comes to shove, people will always do what is in their own self-interest, so don’t expect others to cover your personal risks or losses. Plan to cover them yourself.

BOOK REVIEWS I N G L E P O I N T O F F A I L U R E

Be PreparedMany senior executives prefer not to think about the baffling subject of supply chain risk management. You cannot assume that you are safe because you luckily slogged through a risk event in the past. Another risk event lies just around the corner. If you aren’t ready, a supply chain break could put you out of business tomorrow. Take the necessary steps to prepare.

10 Laws of Supply Chain Risk

Single Point of Failure

Mark ScottGeneral Manager, Western Region, BlueScope DistributionTime in Position: Since December 2010

Time with BlueScope? Since February 2003, in which time I have worked in many different parts of the business from sales and marketing to strategy and general management.Responsibilities? I am responsible for leading our team in WA/NT, working to make sure we deliver value to our customers, provide efficient and safe operations and have an engaged team where everyone is safe and where employees have the opportunity to develop and build a career.What satisfies you most about your work? Leading a successful team that delivers positive results and enjoys celebrating success. I enjoy challenging myself and continually learning from others to develop my skills and the skills of my team. What are the key emerging trends or challenges you see in the steel industry and our business? The proliferation of imported fabricated steel has created a significant threat to the Australian steel industry. The contestable market for the Australian steel value chain, that is, BlueScope and our customers has declined as a result of the emergence of greater import competition from countries that do not have the same costs of doing business that we have in Australia. The Australian steel fabrication and manufacturing industry has exceptional capability and a proven track record of delivering value to their clients. Greater opportunities to participate in major investment projects in Australia is necessary for the value chain to continue to invest and prosper.How do you relax? Relaxing involves the outdoors and the family, including four kids. The Perth lifestyle and weather is great for families to enjoy the outdoors, and we love the river, the beach and the parks. There is nothing better than family time, in a world where I am constantly time poor.

What book are you reading right now? The Persuader, Lee Child. An easy, action packed 'tuning out read' on the plane.

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