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Future of Compressed Air in Manufacturing

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The world of compressed air has moved fast in recent years. The old piston type (reciprocating) compressors commonly used in workshops and other specialised products like pressure vessels have now been replaced with compact, plug-in, integrated units utilising orbital scroll technology to produce cleaner, quieter air output at much lower running costs and much higher operating efficiency. These machines are also low maintenance and have a far longer working life. Higher energy efficiency, lower maintenance, portability, and smaller footprints must be the aim for future advancements in the smaller compressor arena. Let us discuss this subject further in this blog.

Drivers for Enhancements

The utilisation of these new age compressors is growing globally as industry strives to meet today and tomorrow’s economic and environmental demands. There are continued advances in this space like ELGi enhancing energy efficiency of air compressors, and there will be a substantial increase in the demand for high efficiency compressors for all types and sizes of industry. In addition, as more new technologies arise from natural gas exploration and contemporary designs from energy-efficient engine drives, a significant focus on emission reduction will benefit from advances in compressed air system design and usage.

Practical Applications

Indications are that demand for compressed air will gain in the future for a range of highly practical reasons. For example, compressed air can play an essential role in renewable and sustainable energy alternatives by reducing dependence on traditional forms of energy. Advanced air production, storage and distribution systems can drive new exploration, mining and industrial ventures of the future. Another trend that will significantly impact the use of compressed air is the growing interest in improving existing hybrid engine systems which will drive sustainable auto manufacturing using 3D printing. By using oil-free technology and more advanced designs, manufacturers can create new ways to improve engine performance. The benefits of this type of engine are quickly becoming evident as governments and consumers look to reduce their environmental footprint and boost energy efficiency.

The Air Contamination Factor

For specific applications including food and beverage processing, pharmaceutical manufacturing, electronics and packaging, chemical and petrochemical processing, air contamination is a critical factor. With limited access to clean fresh air, the provision of a contamination free air source is essential. Already some heavy steel fabrication companies have developed highly efficient, oil-free, air-cooled compressors which are used in all kinds of industries where air quality is paramount for the end product and production process. In these critical environments, contamination by even the smallest quantities of oil can result in costly production downtime and product spoilage.

Economics Involved

One factor that will significantly impact the use of compressed air is global economic growth. As economies worldwide recover and grow, businesses and consumers will always look for better ways to reduce costs and increase efficiency. By utilising the newest advances and innovations in compressor design, pipe fabrication Australia can improve process flow with an energy source that reduces waste and saves time and money. As developing nations become more industrialised, there will continue to be a growing demand for more efficient and specialised compressors. This also means more jobs in the manufacturing, research and development and servicing fields as engineers work to design new types of high-efficiency technologies and technicians are educated to install, commission and service the new systems. With the ability to reduce greenhouse gas emissions, save money and improve efficiency, compressed air technology is sure to have a significant impact on the world economy.

Conclusion

Businesses and consumers will need to adapt over the coming years as we transition to more sustainable energy sources. Several factors will influence the demand for compressed air in the future. These include global economic growth, the increased need for energy efficiency and the trend toward more environmentally friendly technologies. Compressors will need to continue to develop to meet the growing demands of businesses and their applications in the years to come!

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Australian Manufacturing Gets Big Boost

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The economic outlook for manufacturing might be looking up after two key indicator reports suggested that the Australian economy has turned a corner. It appears that the positive outlook for Australian manufacturing is close to being realized. Westpac’s consumer confidence sentiments insights suggested that Aussies are increasingly looking to spend, with a 5.3% rise in confidence in November, news that was compounded by NAB’s business confidence equivalent, which also saw a rise. Though the commercial outlook was not quite as strong as the consumer version, both were marked improvements on previous months and backed up a wider feeling that Australia’s period in the economic doldrums might be coming to an end. Manufacturing and mining plant and equipment Australia specifically continue to lag the wider economy, with forward orders a particular pain point, but even within that, the prospects were still improved on what they have been in recent months, suggesting a positive momentum.

Creditorwatch analysed the data for Industry Update, with Chief Economist Ivan Colhoun suggesting that, while not completely out of the woods, there were reasons to think that the long-term lag might be about to come to an end. “It’s probably getting close for Australian manufacturing,” he said. “Lower interest rates would help house construction further, though that does not look likely until the first half of next year. “Negative forward orders mean more heavy steel fabrication companies are reporting a drop in orders than are reporting an increase. A smaller negative means that there are still more firms reporting deteriorating orders than improving orders, so it is still not great. But it may be suggesting we are getting close to the low point for the manufacturing cycle. I suspect the beginnings of an improvement in building approvals is helpful as the house construction sector is important for many Australian manufacturing processes.”

Notably, manufacturing was singled out as an area where the performance of the sector in Australia was likely to be most heavily impacted by global conditions rather than more localised issues. The jobs data, according to Colhoun, was even more difficult to parse. “I think the problem is very similar across the globe, due to the common shocks being experienced,” he said. “High interest rates and some pull forward of spending on manufactured goods during COVID. Improved post-pandemic supply chains are likely to also be allowing more import competition. This is well reported to be affecting the steel sector. I do not have a good explanation for the plunge in unemployment expectations – it does look somewhat unusual and runs contrary to the trend in job advertisements which fell again in October after several broadly steady months.”

“At face value, it says consumers are more optimistic about their job prospects. It is not clear why they think that. Are they feeling generally more positive about the economy because of income tax cuts? Probably. This might mean they extrapolate this to a better job market. As before, there is not a confirming signal yet from job advertisements. Regarding manufacturing’s staffing troubles, traditional blue-collar occupations, along with healthcare and social assistance, continue to report staffing issues, while traditional white-collar professions have less problems sourcing staff. However, the outlook is optimistic with news like ARB’s expansion creating manufacturing jobs. As job ads slowly drop, this should loosen up the labour market with some benefit to manufacturing, however, the government’s tightening of immigration and student numbers will tend to work in the other direction, unfortunately.”

Man working and Standing Out in the Steel Fabrication Industry

A Positive Outlook for Australian Manufacturing in 2024

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The Australian manufacturing industry is set for a strong end to the year after three positive data reports landed in late September. The combination of a long-awaited rate cut in the United States, solid job news in Australia and a pick-up in one of the leading sector-specific indices should spell better prospects in the future for heavy steel fabrication companies. The US Federal Reserve’s decision to slash 0.5% of their cash rate, the first such cut in four years, signals a strengthening economy in one of Australia’s key export markets, while on the home front, the unemployment rate grew by 0.1%, indicating a loosening of hiring issues that have plagued the sector. For the manufacturing sector, the quarterly joint report from the Australian Chamber of Commerce and Industry (ACCI) and Westpac charted increases in demand despite ongoing issues in the broader economy generally.

20% of respondents reported an increase in new orders, continuing a positive trend that was also evident in the June quarter, though cost pressures, mining plant and equipment Australia supply chain problems and a difficulty finding staff remain an issue. “The US is the world’s largest economy, so it is very critical to the world’s economic outlook,” said Besa Deda, former Chief Economist at St. George Bank and Westpac’s Business Bank. “That fact that the Federal Reserve has dropped interest rates by half a percent will help US economic activity, which was of the reasons that (Fed chair Jerome) Powell gave for the cuts. He said it was a balancing of risks and he wanted to keep strength in the US economy. Keeping that strength also helps the world economy and the trade sector in Australia, which contributes to overall economic growth and helps companies like ARB expand and create manufacturing jobs. A half percent drop was not fully priced (by the market) and our rates remain steady.

“Though the Reserve Bank of Australia meets next week, I don’t think they’ll move, which means that the differential between the US cash rate and the Australian cash rate has narrowed which is good news for steel fabrication Australia. That is across the curve and it might give more upside to the Australian dollar. For businesses that are importing goods and services that are priced in US dollars, they might be paying a little bit less. It might also reduce risks around imported inflation. The other thing to keep in mind is that shorter term interest rates in Australia – cash rate, one year government bond rate, two-year government bond rate, one- and two-year swap rates – are heavily determined by what the market thinks the Reserve Bank will do with monetary policy. But as you go further out and look at five years, seven years and out to ten years, the yield on those government bonds and rates on the swaps are heavily correlated with US rates. What the US is doing and what the outlook is for inflation in the United States does have a very strong bearing on rates here over the long term, which may have an impact on initiatives such as digitalizing people management in manufacturing.,” said Deda.

Logistics Isometric Flowchart Composition

Future-proofing Supply Chains

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As discussed in a previous blog on post-pandemic fabrication supply chain, the COVID years were harrowing for supply chains with the imminent threat of lockdowns creating volatility in demand and supply patterns. With the return to normalcy, the future of global logistics has become significantly brighter — however there are lessons to be learnt during the pandemic and which should be avoided in case of a similar situation in the future. There is a gradual realization that many forces need to be considered when creating truly resilient, dynamic supply chains. So, what are these forces and how should they be leveraged correctly? This writeup looks to decode this subject in greater detail.

 Supply-Demand Mismatch

In a perfect world, supply and demand sync evenly but in the real world, often one outpaces the other – such as the shortage of certain consumer goods of 2020. Oversupply can also cause issues which can pile up and quickly eat through a business’ bottom line. A common issue is where to store the overstock and how to continue to sell it and profit, and this can cause issues up and down the supply chain of heavy steel fabrication companies. These pockets of exponential demand will continue to exist as will moments of oversupply. Both need to be built into forecasts to help stakeholders better manage inventory and adapt as forces shift the balance.

Commodity Shortages

Commodities like lithium and cobalt are in high demand but not always easy to procure. Producers that need hard-to-replace materials must factor in forces such as potential tariffs, weather patterns, upcoming environmental regulations, and variable pricing of mining plant and equipment to ensure production does not suffer. The emergence of innovative design is a trend which can be used to resolve shortages. Engineers are using smaller geometries, so the required amount of the given commodity is reduced without sacrificing product capability. An example would be the small size of computers today compared with earlier days when they were the size of a room and exponentially less powerful.

Economy and Pricing

The state of the economy is a major factor which is a bell weather for consumption trends, such as using local steel companies in Australia. With rising inflation, consumers are looking to spend less but still get that bang for their buck — and that translates all the way up the chain. At the same time, between labour, the rising cost of materials, tariffs, and more, suppliers are getting squeezed on cost. While there will never be a perfect model for economic forecasting, knowledge of known forces and their impact on consumer behavior can be built into pricing projections.

Labour Shortages

Forces such as labour shortages always impact product availability. For instance, Japan needs more than 200,000 engineers in the next couple of years to maintain current production levels. In 2030 it is expected that Japan will not be able to fill 270,000 artificial intelligence and IoT jobs. One of the drivers of this trend is ageing populations. The engineers who have been designing and building components worldwide are now retiring and there are fewer people available to fill those gaps. Not only is there an inverted population pyramid at play here, but the increased need for these products is driving up the demand and exacerbating this skill gap. Consider how many things require technologies that did not exist even 10 years ago. The demand is going to skyrocket, which means even more engineers and IT professionals will be needed going forward.

Final Thoughts

In the context of future planning for supply chains, none of these forces are new but the need to accurately build them into supply chain forecasts is increasingly important. The pandemic helped highlight the need to take all these forces into account to ensure that disruptions are limited when a black swan event occurs. Hence, supply chains are ever-evolving and it is up to us to keep pace with its evolutionary development!

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