O29mobile'ppt

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Ridley Pavillion Wayville Showgrounds South
Australia Wednesday July 29, 2009

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A New Economic Future The Challenge Of
Uniqueness On The Path To Recovery
Phil Ruthven, Chairman
WHERE KNOWLEDGE IS POWER
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Topics

• Economic Business Outlook
• 2. Market Perspective
• 3. Creating New Industries
• 4. Where The Jobs are
• 5. Keys To Business Success
• 6. Innovation Uniqueness

3
1.Economic Business Outlook
4
Global Scene
5
The GFC What Went Wrong?

• Too many loans (sub-prime mortgages,
  infrastructure bonds and property loans) were
  made without consideration of prudential
  guidelines.
• Around 3 of the worlds financial assets (of
  US 310 trillion) and half the worlds
  stockmarket capitalisation (US 60 trillion in
  June 2008) were lost
• The damaged securities were classed as toxic
  assets, similar to the junk bonds of the
  1980s.
• However, the write-downs are excessive, and
  bargains are beginning to appear,
• The stockmarket is the one to watch for an
  economic recovery as it is usually 6-9 months
  ahead of the economy. It seems to have
  bottomed-out in March 2009

6
World GDP GrowthReal growth (PPP), 1950-2009(F)
Purchasing Power Parity (PPP) terms
2008 3.2 (F) 2009 -1.9 (F) 2010 2.2 (F)
Past 25 years 3.5 p.a
1950-1969 growth in US market terms
IMF/Economist//IBISWorld
22/06/09
7
Worlds 30 Largest Economies 2009 (F)
Poland 1.0 S. Arabia 0.9 Argentina 0.8 Thailand
0.8 S. Africa 0.7 Egypt 0.7 Pakistan 0.6
Belgium 0.6 Malaysia 0.6 Sweden 0.5
Purchasing Power Parity (PPP) terms
Rest of World (198 nations) 15.3
21st 30th Nations 7.2
20.1 USA
11th 20th Nations 14.7
12.6 China
Italy
Japan
Russia
Brazil
France
Britain
Germany
India
2.6
2.9
3.0
3.1
6.2
4.9
3.4
4.1
Spain 2.0 Mexico 2.0 Canada 1.9 Korea
S 1.9 Indonesia 1.3 Turkey 1.3 Australia
1.2 17th Iran 1.1 Taiwan 1.1 Netherlands 1.0
Worlds 228 nations US 73.8 trillion
CIA/IBISWorld 10/11/08
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Economic Growth 2009 (F)20 Largest Economies
(ppp ranking)
5.6
5.0
2.4
-0.4
World Growth 2009(f), -2.0
-1.5
-2.3
-2.8
-2.8
-3.5
-3.7
-3.7
-3.9
-4.4
-4.4
-4.5
- 5.0
- 5.5
-6.0
-6.5
-6.7
The Economist/IBISWorld 14/07/09
9
Economic Growth 2010(F)20 Largest Economies
(ppp ranking)
7.1
6.4
3.3
3.1
2.8
2.7
2.0
World Growth 2010(F), 2.3
2.0
1.9
1.3
1.2
1.0
1.0
0.7
0.7
0.6
0.6
0.5
0.4
-0.6
The Economist/IBISWorld 14/07/09
10
Asia Economyppp terms 2009 (F)
Other Indian S-C 3.4
Greater China 40.9
Other 2.4
India 14.8
Singapore 1.6 Malaysia 1.7 Thailand
2.4
35.9 China
Indon. 4.1
Australia 3.5
18.5 Japan
South Korea 5.7
3.2 Taiwan
NZ 0.5
H/K 1.8
US 23.2 trillion (33.4 of world GDP)
Source CIA/ IBISWorld 10/11/08
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Australia
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When it comes to the Australian economy,
we dont know were alive!

• In the Industrial age from 1865-1964 there were
  27 negative growth years in GDP - every 3-4 years
  apart on average - with average falls of 4.7.
• In the New Age from 1965, there have been just
  two negative years, 22 years apart on average and
  with average falls of just 1.5!

13
Australias Economic GrowthReal growth in GDP
1860 to 2013
Industrial Age
New Infotronics Age
Year ended June
ABS IBISWorld 27/07/09
14
Australian Index of Consumer Sentiment2 months
progressive to July 2009
Recession Level
Source Westpac-Melbourne Institute (IAESR), IBIS
estimates 14/07/09
15
Economic GrowthAnnual real GDP growth ()
progressed in quarters to March 2009 (and
forecast to June 2013)
Average long business cycle is 34 quarters (81/2
years)
Forecast
36 qtrs. 34 qtrs 34 qtrs
33 qtrs 38 qtrs 34
qtrs? 36 qtrs ?
Years, ended June
Source IBISWorld 23/07/09
16
Unemployment in AustraliaAnnual, 1890-2008 (with
forecasts to 2012)
Full employment prevails for 60 of each century
Forecast
Full Employment defined as lt 5
Elongated epression
Depression
Depression
Year, ended December
Source ABS 12/03/09
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Indicator Lending RateMaximum Overdraft
Overdraft (Variable) Small Business
Interest Rate ()
Years, ended December
Source Reserve Bank
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South Australia
19
Australias Economy Population F2009 (F)
Population
GDP
ACT 2.1
NT 1.4
ACT 1.6
NT 1.0
Tas 1.9
Tas 2.3
SA 7.4
SA 6.5
NSW 31.8
NSW 32.5
WA 10.2
WA 13.8
Queensland 20.2
Queensland 18.9
Victoria 23.7
M. East 4.1
Victoria 24.7
21.8 million
1200 billion
IBISWorld 21/07/09
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Economic Growth SA Real growth F1991-2008
Australia (3.3 pa)
Real GSP growth (, pa)
SA (2.3 pa)
Years, ended June
Source ABS
21
Adelaide House Prices change over a year to
March 2009
15 year cycle
Average 6.3 p.a
SourceABS6416-01/9H
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Southern AdelaideMarion, Onkaparinga, Holdfast
Bay and Mitcham LGAs
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(No Transcript)
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At A GlanceF2009
Population 344,000 (21.4 of SA) Growth F09
1.0 (c.f 1.8 Australia) Contribution to
Economy 16.7 billion (1.4 of
nation) Revenue of enterprises 47.3 billion
Businesses (E) 25,360 Employment
181,800 Wages 7.6
billion Household Income 14.2 billion Major
Employing Industries Health Community
15.0 Retail 11.6
Prop Bus Serv 9.8 Construction
9.5 Manufacturing
9.2 Education 8.4

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Southern Adelaide By LGA ( of total basis)
F2009
Population Employment
HHold Income
45.3 24.7 19.5 10.5
43.9 22.7 22.8 10.6
46.0 23.4 20.4 10.2
Onkaparinga Marion Mitcham Holdfast Bay
Source IBISWorld
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2.Market Demand
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Australias Market Demand Year To March 2009
Consumption Expenditure 57.9
Exports 19.6
Capital Expenditure 22.5
Government Consumption1
2.6
Exports
14.2
19.6
Govt. 3.7
Household Consumption
Business 14.1
43.7
Housing 4.7
2 Incl. Ownership Transfer Costs
(1.0) and inventory change (-0,4)
1 Mainly on behalf of households 8.6 State
Local 5.6 Federal
Gross National Turnover (GNT) 1489 billion
Source ABS/IBISWorld 21/07/09
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Household Consumption
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Australian Household Expenditure Year to March
2009
Depreciation 6.8 Prop.
Interest 7.7 Consumer Debt
Int. 1.5 Unincorp. Interest 1.2 Transfers
0.4
HHold durables 3.3 Motor vehicles
2.1Other 1.0
Savings 2.0
Taxes ( social contributions)

Capital Related
14.4
6.4 Durables
17.6
Fin. Ins. Serv. 6.6
17.8 Non-durables
11.8
Rent1 ( other dwelling costs)

3.6 Health
Mobility
2.2
4.8
7.4
3.3
Entertainment Gaming
2.1
Hospitality
Other Services
Food 7.2 Alc.
Tobacco 2.4Clothing 2.2 Utilities 1.5 Veh.
Operation 3.5 Other 1.0
Education
Communicns. 1.7Fares 1.6
1017 billion (118,300 per household)
Note 1 includes imputed rent (home
ownership)
Source ABS5206/IBISWorld
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Changing Household Expenditure of total basis
1900 1950 1960 1970
1980 1990 2000 2009
Taxes Durables Non-durables Health/Education Ho
spitality Entert. Recrn. Communicns.
Fares Other Services Rent Fin. Ins. Capital
Related Savings
14.5 17.8 6.5 5.5 5.0 8.0 3.3 12.0 6.
1 15.8 3.2
54.0 7.8 8.0 9.3 6.9
billions
2
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Capital Expenditure
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Components Of InvestmentYear To March 2009
IP Other Intangibles
Other 0.5
5.2
State Local Govt
2.6
Machinery Equipment
Nat Govt. 2.2
14.1
27.1
OShip Transfer 4.5
Engineering Constn .
Dwellings 20.7
13.0 Buildings
12.7
Investment (GFCF) 341.8 billion (28.6 of GNE)
Source ABS/IBISWorld 23/06/09
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ExportsOf Goods Services
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Australias Exports Market C2008
Freight 2.3
Other Services 5.2
Agriculture 10.8
Tourism 12.0
43.3 Minerals
Manufactures 31.2
279 billion
IBISWorld 03/02/09
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3.Creating NewIndustries
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Australias Economic Progress

• Dominant Industries
  Period
• I Hunting Age Hunting, fishing gathering
  -1820
• II Agrarian Age Agriculture, Government 1821-1864
• Resources Commerce
• III Industrial Age Manufacturing, Commerce,
• Govt. Adm. Resources
• IV Infotronics Age Service industries,
  Electronics 1965-2040s
• Knowledge
• V Enlightenment Knowledge, Services and Space
  2040s -

1865-1964
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Australias Economic GrowthGDP _at_ Constant F2008
Prices 1788-2009 (F)
Agrarian Age
Infotronics Age
Industrial Age
Hunting Age
Industrial Age
An Industrial Age is when Manufacturing,
Construction and Utilities (electricity, gas
water) dominate the economy, that is over a
third of GDP
GDP billion
Year, ended June
IBISWorld 26/05/09
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Changing Importance of Australian Industry
Share of GDP by Industry Division
28/07/08
Note At market prices to 1940, at factor cost
thereafter Source N.G Butlin, ABS
IBISWorld
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Australias Industry Mix Shares of GDP in
constant F2007 price terms Year to March 2009
Pers. Other Serv.
Hospitality (1.8)
Agriculture 2.5
Cult Rec. Serv.
Mining 7.8
Utilities 2.1
1.8
1.5
Health 5.9
Education 4.0
9.5 Manufacturing
Ind. Taxes 7.8
7.2 Construction
Govt. Adm. 3.8
4.5 WSaling
OShip Dwells. 7.8
12.1
Prop. Business Services
5.4 Retailing
7.5
4.7 Transport
Finance Ins.
2.4
Sectors Primary Secondary Tertiary
Quaternary Quinary
Communications
GDP 1200 billion (current prices)
ABS 5206-26 /IBISWorld
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Outsourcing Creates Most Industries

• We outsourced the growing of things to create the
  agriculture industry, aided by new technologies
• We outsourced the making and building of things
  to create the industrial age industries of
  manufacturing and construction, aided by new
  technologies and utilities.
• We are outsourcing services (household services
  and business functions) to create the current
  infotronics age from 1965-2040s, aided by new
  systems technologies and a new utility sector.

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Household Outsourcing in The New Age

• Entertainment
• Hospitality Clubs
• Taverns, Pubs and bars
• Casinos, other gambling
• Tourism
• Hotels, motels, guesthouses etc
• Entertainment centres, theme parks,
• Air travel, boat travel, car rental
• Meals
• Fast Food outlets
• Theme Restaurants.
• Home delivery (of fast food).
• Finance, Investment Legal
• Investment Advice Management
• Tax Planning Returns
• Legal services
• Health
• Wellness
• Home nursing, aged care at home.

• Childminding
• Nanny services, child minding centres.
• Maintenance
• Room/house painting
• Home Repairs
• Electrical
• Plumbing etc
• Gardening/Exterior
• Landscaping, clean-ups.
• Lawn mowing
• Pool Maintenance.
• Hair Beauty
• Hairdressers/beauty salons
• Hair restoration
• Sexual Services
• Sexual services
• Cleaning
• Laundry, dry cleaning services.

IBISWorld
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Household Outsourcing In The New Age1 F2009 (F)
Entertainment Recreation Gambling Clubs
Other 1.1
Maint./Cleaning 1.3
Hair/beauty 1.8
Child Care 3.1
Legal 3.2
Financial 10.5
Entertainment Recreation
34.6
Tourism 12.1
16.3
14.9
Health
Meals
Transport Accommodation Miscellaneous
215 billion24,900 per Household (478
per week)
Note 1 Spending on services, new since 1965
SourceIBISWorld 14/12/08
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Business Outsourcing in the New Age

• Trucking
• Road transport industry.
• Cleaning
• Office, factory, hotel etc.
• Laundry, work clothes.
• Canteens, Dining Rooms
• Caterers.
• Maintenance
• Painting .
• Engineering.
• Carpentry.
• Security
• Security systems.
• Surveillance services.
• Personnel
• Recruitment.
• Out placement.
• Training.
• Reception

• Accounting
• Payroll, Invoicing, Share Registers
• Full contract accounting.
• Superannuation administration.
• Computing
• Software development writing.
• Computer services (IT outsourcing)
• Property
• Property trusts,
• Property management
• Marketing
• Advertising, media buying
• Call Centres
• Distribution
• Warehousing Delivery
• Information Planning
• Database services Strategic and Other Consulting
• Franchising
• Operations.

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Business Services In Australia of total
revenue basis F2008
Mkt. Research Mgt. Consulting Public Relations
Security Investigation 1.8
Other 2.2
Cleaning 2.3
Real Estate Agents
Equipment Hire/lease
Employment Placement 1.2
Professional Technical Services
5.4
4.1
Temp Staff 9.2
7.2
5.1
14.0 Eng. Consulting
3.5
A/C Services 8.7
13.2 Legal Services
18.8 IT Outsourcing
Computer Consulting
Online data/ processing 1.4 Adv. Serv
Graphic design 3.5
Computer Maintenance 1.3
Revenue 152 billion (4.8 of nation)
Source ABS, IBISWorld
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Overseas Outsourcing to Australia

• Tourism
• Incoming visitors.
• Travel/booking services
• IP Business Services
• Designs, patents (eg. Orbital Engine Co).
• Systems intellectual property eg. franchises,
  licences.
• Technical know-how.
• Education
• Tertiary lower education (incoming students and
  outgoing teachers).
• Electronic education (satellite, diskettes, CDs,
  videos etc).
• Health
• Surgery and recuperation /sanatorium services.
• ICT
• Software, selected hardware, on-line information
• Meteorological information etc.
• Communication services

• Sport
• Competitive (regional world events).
• Manufacturing
• Value-added resources.
• Downstream manufactures (from resource
  strengths).
• Unique manufactures.
• Services (advisory).
• Mining
• Energy minerals (oil, gas, uranium, coal).
• Metals (iron ore, alumina, nickel, gold).
• Non-metallic (rare earths).
• Services.
• Agriculture
• Crops (cotton, new fruit vegetable, sorghum,
  oilseeds, rice).
• Livestock (beef).
• Fishing (fish farming).

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Fastest Growing Industry ThemesNew Age
1965-2040s

• Business Services outsourcing non-core
  functions.
• Financial Services - outsourcing of
  transactions/investment.
• Property Services - outsourcing property
  ownership.
• Knowledge Industries - databases multi-media
  services.
• Health - outsourcing home doctoring.
• Education - outsourcing pre-school, plus
  universities.
• Personal Household Services - outsourcing
  chores.
• Cafes, Restaurants Catering - outsourcing the
  kitchen.
• Tourism - outsourcing travel and accommodation.
• Recreation Cultural Services - outsourcing
  leisure.
• Mining energy minerals (oil, gas, coal,
  uranium)
• ICT - the New Age all-pervasive utility.
• Biotechnology Nanotechnology New Age
  technologies.

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4.Where The Jobs Are
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Employment By Industry Sectors Australia
June 2009, Share of Total Employment
Primary Sector
Quinary Sector
Secondary Sector
Cult. Recn. Services
Personal Services
Mining 1.4
Agric. 3.3
Utilities 1.4
4.1
1.9
Manufacturing
Health 10.9
9.2 Construction
9.2
Hospitality 6.7
3.7 WSaling
Education 7.4
Govt. 6.4
11.3 Retailing
Prop./Bus. Services
Transport
Fin. Ins.
12.0.
5.6
3.6
Tertiary Sector
Quaternary Sector
Communications 2.1
10.76 million employed
Source ABS 6203-D
IBISWorld 22/07/09
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Employment Growth By Industry 5 year growth to
June 2009, 000 persons
Total growth 1,143,800
000 persons
Source IBISWorld 27/07/09
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Industry Employment Comparisons ( of total
basis) F2009
Australia South
Southern
Australia Adelaide
3.3 9.2 9.2 3.7 11.3 5.6 3.6 12.0 6.4 7
.4 6.7 10.9 4.1
5.1 10.0 8.1 3.7 11.2 4.5 3.2 11.6 6.5
7.9 6.1 12.8 3.6
9.2 8.1 3.6 11.6 4.3 4.5 9.8 5.9 8.4 6.
2 15.0 4.7
Source IBISWorld
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Where The Money Is By Industry Full-Time Total
Adult Earnings, Year to March 2009 (000)
1.5 of workforce June 2008 1.4 3.7
9.1 12.1 2.4 6.2 7.4 5.5 2.0
9.4 10.7 3.7 11.3 6.5 4.9 3.5
All Industries
Wages (000)
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5.Keys To Business Success
53
Profitability of Top 1800 Businesses Weighted
ROSF (after tax), 5 years to F2006
2nd 100 4th 100 6th 100 Average
9th 100 11th 100 13th 100 15th 100 17th
100
21.4 gt Best Practice (ROSF 21.4) 45.0 gt
Average (ROSF 13.4) 43.8 gt Cost
of capital (12.0) 65.9 gt Bond Rate
(5.4) 16.0 Losses
-32.7
Percent
Source IBISWorld 05/09/07
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What the Best Enterprises Are Doing

• 1. They stick to one business at a time and do
  not diversify
• 2. They aim to dominate some segment (s) of
  their market
• 3. They are forever innovative, valuing the
  business IP.
• 4. They outsource non-core activities to enable
  growth.
• 5. They dont own hard assets.
• 6. They have good and professional financial
  management.
• 7. They plan from the outside-in not the
  inside-out
• 8. They anticipate any new industry lifecycle
  changes.
• 9. They follow world best practice for their
  own type of business.
  
  
  
  
• 10. They develop strategic alliances.
• 11. They develop unique organisational cultures.
• 12. They value leadership first and management
  second.

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6.Innovation Uniqueness
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In the emerging borderless world of the 21st
Century, an enterprise needs at least to know and
emulate World Best Practice for their own class
of industry (one of 500 in the economy).But
even that may not enable a business to compete if
other countries are implementing WBP at a lower
cost (lower wages and/or economies of scale).A
business therefore needs to be creative,
innovative and develop unique intellectual
property
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• What it is
• Unique intellectual property could best be
  described as a cocktail of
• skills, special competencies, unique systems
• patents, trademarks brands
• organisational culture, customer relation
  protocols
• vision, plans and documented achievable
  strategies.
• 
  
• It is the "holy grail" of a enterprise, its core
  and its most valuable balance sheet asset,
  whether recorded as such in dollar terms or not.

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• What it isnt
• Important as the following are, they are not part
  of a firms intellectual property
• good people/human resources (they are not owned
  by the enterprise!)
• world best practice (this is a condition of
  survival in this day and age)
• balance sheet strength (this is prudential
  finance management anyway)
• ICT/Internet (this is the new age utility for
  all enterprises, households and persons. However,
  IP can be expressed via ICT and always needs to
  be captured and distributed in this form).

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