Australian Market for Facilities Management in Australian Market for Facilities Management in Remote SitesRemote Sites

Nelly Appelhanz, ConsultantEnvironmental & Building

Technologies10 May 2012

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Today’s Presenter

Apart from market opportunity analysis, Nelly has undertaken trade, customer insight / consumer behaviour and corporate social responsibility analyses across various sectors in order to implement Marketing & Communications measurements.

Over 8 years of experience

Nelly Appelhanz, Consultant

Frost & Sullivan

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Focus Points

• Australian Mining Industry • Remote Sites in Australia• Opportunities for Facilities Management in Remote Sites

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Australian Mining Industry

• The mining industry in Australia is a significant contributor to the national economy and currently accounts for 42.0 percent of total national trade. Between 2010 and 2011, over 20 new mining operations commenced across Australia.

• In 2011, 142,000 people were employed by the Australian mining industry, with the majority working in remote areas using fly in fly out (FIFO) services to reach their work locations, where they are generally accommodated in remote camps near the mine sites. Nearly 70,000 new jobs will be created directly in the mining industry.

• 40 percent of the operating mines are located in remote areas in Western Australia and 25 percent in Queensland.

Opportunity for FM providers to operate and maintain camps by providing catering, cleaning and laundry solutions, as well technical services to camp residents.

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Facility Management: Industry Structure Australia, 2011

Facilities Management Services for Remote Sites

Remote Sites

Outsourced to FM Service ProvidersIn-house

Facility Management: Industry Structure Australia, 2011

Integrated FM Services Other FM Services

• Total Facilities Management Market in Remote Sites (2009-2018)• In-house versus Outsourced Services (2009-2018)• Share by Service Type (Hard vs Soft Services) (2011)• Share by Facilities Management Service Type (2011)• Total Facilities Management Service by Region (2011)

Source: Frost & Sullivan analysis

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Current Key Trends

1. Higher expectations and a shift from camp to the ‘village’ concept

Over the last few years, mining companies have steadily raised their expectations in relation to FM services used at mining camps. FM service providers are now forced to think “out of the box” to not only provide services to maintain the camp site as efficiently as possible, but to also focus on the well-being of residents.

4. Bundle packages and IFM Contracts

To grow revenue, catering companies have started to offer other FM services, such as cleaning or village management. To deliver these additional services, providers are seeking strategic partnerships if they do not have required resources in-house.

7. Mergers & Acquisitions

In future, it is expected that fewer FM service providers will cover more services for remote sites by acquiring smaller providers that have been focused on one service in a certain remote region or by working with contractors.

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Major Challenges for Facilities Management in Remote Sites

elivering efficient logistics

xpertise

ost -effective solution

.....ttracting and retaining

qualified FM professionals in remote sites

ompliance with health and safety requirements

Major Challenges for Facilities Management in Remote Sites

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Major Drivers (Current and Future)

Source: Frost & Sullivan analysis

Mar

ket

Dri

vers

1-2 years 3-5 years 6-7 years

Mining industry growth drives demand for increased workforce at remote sites

Increased use of FIFO arrangements results in an increased number of mining camps

Mining industry’s need to focus on core operations will provide opportunities to experienced FM providers

Facilities Management in Remote Sites: Key Market Drivers and Restraints Global, 2011-2018

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Major Drivers (Current and Future)

• Mining industry growth: According to ABARES, new capital expenditure in the mining industry was estimated to be $55.5 billion in 2010–11, 53.0 percent higher than in 2009–10. Over the same period, exploration expenditure was nearly double the annual average of the past 30 years.

• Increased use of FIFO arrangements: FIFO workforce arrangements support 24x7 operations in remote areas and allow mining companies to rapidly build up workforce to address peak production requirements. This is especially useful for short project life scenarios in remote locations, where the case for building remote communities and towns over a longer period of time is weakened. FIFO is also an arrangement that suits mining professionals who do not want to relocate their families to remote areas where services are limited.

• Mining industry’s need to focus on core operations: In the face of considerable pressure from shareholders to increase production reliability and output, mining companies are looking to focus on their core operations and outsource non-core functions. In remote locations, where mining firms already contend with the challenge of work force shortage, the use of external service providers thus becomes a productivity enhancement tool.

Source: Frost & Sullivan analysis

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Competitive Landscape

Number of Companies in the Market

• 6 large global players

• 12-15 small and medium Australian companies

Tier of Competitors

• Tier 1 - Multinational companies (both Australian-owned and foreign-owned);

• Tier 2 - Medium and small companies specialized in a few services for remote sites (e.g. catering or housekeeping)

• Tier 3 - Camp and accommodation construction firms that also offer camp operations and maintenance services

Market Participants

• The market participants most active in delivering FM services in remote sites are Compass

Group, Spotless, ISS, Sodexo, ESS (Compass Group) and Cater Care Services.

• Other companies, such as Precision Camp or Decmil are competitors that offer services

beyond FM as well (e.g. construction of accommodation, services to operate and maintain

the facilities etc). Source: Frost & Sullivan analysis

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Competitive Landscape

• Participants such as Transfield Services, UGL Services, LendLease and Morris Group are

hoping to increase penetration of remote mining camps in the future.

• Competition in the FM market for remote sites is high, profit margins are low and service

providers are faced with the challenge of attracting and retaining staff.

Source: Frost & Sullivan analysis

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Conclusion : Key Take-Aways

2 Revenue for Facilities Management services in remote sites is expected to double within the next 7 years

3 Fewer facilities management service providers will cover almost all required services at remote sites

4 Acquisitions and strategic partnerships will enable service providers to offer integrated solutions

5 Priority of work-life balance requires a complete concept of village management instead of simple service provision

1 The mining industry’s growth is the single biggest driver of Facilities Management services in remote sites

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For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+61 (0) 8247 8927 djeremiah@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 5910carrie.low@frost.com

Nelly AppelhanzConsultantEnvironment & Building Technologiesapacfrost@frost.com