World Electronics ForumLas Vegas, 8-10 January 2011

Dr. Bill PetreskiPrincipal Adviser – Technology Industry

AGENDA

About Ai Group• History

Australian Economic Outlook• Ai Group Industry Indices• Electrical & Electronics data

• Australian Regulatory Landscape• Framework for Corporate Social Responsibility

Electrical & Electronics Retailing in Australia• Australian retail market• Consumer electronics• Electrical & electronics sector

AUSTRALIAN INDUSTRY GROUP

A leading industry employer organisation - with a 130 year history - representing nearly 15,000 business members across Australia.

Ai GROUP

Policy Advocacy

Standards & Regulatory Development

Membership Services

Business Improvement Services

Delivering programs on behalf of Government

Ai Group ensures, through policy advocacy leadership, that members have a voice at all levels of government, by representing and promoting their interests on current and emerging issues.

Infrastructure Investment

Population Growth

Climate Change

Industrial Relations Reform

Tax Reform

Productivity

ECONOMIC OUTLOOK

• In November 2010, the seasonally adjusted Australian PMI fell 1.8 points to 47.6, below the 50 point ‑level separating expansion from contraction for the past three consecutive months.

• The strong Australian dollar, intense overseas competition, slack domestic demand, higher interest rates and shortage of reliable and skilled workers have been regularly cited in surveys.

Performance of Manufacturing Index

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ECONOMIC OUTLOOK

• The Australian services sector has contracted for eight of the past 10 months and has remained below the 50-point level separating expansion from contraction.

Performance of Services Index

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ECONOMIC OUTLOOK

• The Australian PCI for November 2010 revealed that the construction sector has contracted for a sixth consecutive month.

• Decline coincides with difficult market conditions, intense competition to secure new contracts and a dwindling level of work from school building projects.

• Residential builders also cited the negative impact on activity from recent interest rate rises and weak demand from first home buyers.

Performance of Construction Index

Australian PCI®

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ECONOMIC OUTLOOK

• Electrical & Electronics Industry Survey and report is underway.

• Digital Switchover Task Force is monitoring television volumes.

1.Consumer Electronics• Televisions• Computers • Mobiles

2.Consumer & Industrial Electrical• Switchgear• Bakelite• Lighting• Cable• Conduit & Trunking

AUSTRALIAN REGULATORY LANDSCAPE

Regulations cover: Electrical safety, Minimum Energy Performance Standards (MEPS), Electromagnetic compatibility (EMC) , Trade Practices and ACCC requirements.

CORPORATE SOCIAL RESPONSIBILITY

• The Australian regulatory landscape on CSR focuses mainly on the environment responsibility

• Environmental Responsibility– Climate Change– Natural resource

sustainability

• Social Responsibility– Ethical Sourcing– Community Engagement– Corporate Governance

National Waste Policy

Product Stewardship Framework Legislation and Television and Computer Product

Minimum Energy Performance Standards & Labeling

Equipment Energy Efficiency Program

Initiation of Standards E-Waste Committee

Department of Sustainability, Environment, Water, Population and Communities

CORPORATE SOCIAL RESPONSIBILITY

• National Waste Policy

• Minister endorsed a National Waste Policy Implementation Plan setting priorities for the first 5 years, including

1.Facilitating national waste classification and data systems.

2.Second national waste report to support evidence based decisions will also be a priority

3.Addressing market impediments

4.Developing approaches to hazardous substances in products and articles sold in Australia.

5.Governments, as major purchasers of goods and services to promote sustainable procurement within their own operations.

CORPORATE SOCIAL RESPONSIBILITY

National Waste Policy

Establishes Australia’s waste management and resource recovery agenda across six key directions for the period to 2020:

Taking responsibility - for reducing the environmental, health and safety footprint of products and materials.

Improving the market - for waste and recovered resources, with local technology and innovation being sought after internationally.

Pursuing sustainability - less waste and improved use of waste to achieve broader environmental benefits.

Reducing hazard and risk - with consistent, safe and accountable waste recovery, handling and disposal.

Tailoring solutions - increased capacity in regional, remote and Indigenous communities to manage waste and recover and re-use resources.

Providing the evidence - access to meaningful, accurate and current national waste and resource recovery data and information to measure progress, educate and inform the behaviour and the choices of the community.

CORPORATE SOCIAL RESPONSIBILITY

• Product Stewardship Framework Legislation and Television and Computer Product

Responsibility for addressing environmental impacts will be applied to appropriate points across the supply chain.

The diverse nature of the Australian market targets extended producer responsibility addressing environmental impacts on the producer, supplier or importer.

The framework legislation will allow for voluntary, co-regulatory and mandatory schemes.

No products are currently identified for the imposition of a mandatory product stewardship scheme.

CORPORATE SOCIAL RESPONSIBILITY

• Participation in Standards E-Waste Committee

Standards Australia is about to embark upon a project to develop a new Australian Standard for the collection, storage, transport and treatment of electronic waste in Australia. .

CORPORATE SOCIAL RESPONSIBILITY

National Legislation on Minimum Energy Performance Standards (MEPS) and Labelling

Coverage of products using other energy forms in addition to electricity;

Coverage of non-energy-using products which impact on the energy use or efficiency of regulated products;

labelling of the greenhouse gas impacts of covered products; greenhouse gas-intensity standards for covered products; and minimising the (non-energy) environmental impacts of

regulated products. Suppliers of registered products be required to report

annually on the national import, sales or supplies of each registered model;

Label images or key data must be prominently displayed when products are displayed, promoted, marketed, sold or supplied at any point in the supply chain (including internet)

The new regulatory framework should provide for control of product imports as a means of enforcing compliance.

CORPORATE SOCIAL RESPONSIBILITY

• National Electrical Safety System

• The Electrical Regulatory Authorities Council (ERAC) is reviewing the Electrical Equipment Safety System in Australia.

All suppliers will register on a national database

Supplier Declaration of Conformity for all products

Compliance folder and registration on the national database for level 2 and level 3 products

Marking of all in scope products with the Regulatory Compliance Mark (RCM)

Recording of all complaints relating to product safety or compliance, taking appropriate action and documenting

CORPORATE SOCIAL RESPONSIBILITY

Counterfeit Products

Products are coming into Australian markets that are not to Australian Standards.

This creates a number of issues around safety, energy ratings and other key elements.

Traditional more established suppliers have been up until now, ensuring their products, at considerable cost, have been manufactured to or above the prescribed standards.

An increasing number of importers of non compliant equipment have no knowledge of the regulations and Standards that apply in Australia.

Enforcement of regulations is underfunded and dysfunctional.

ELECTRICAL & ELECTRONICS RETAILING IN AUSTRALIA

The Australian Technology Industry is diverse and fragmented, characterised by a broad (and becoming broader) product spectrum from software and media content to electronics to electronics manufacturers.

ELECTRICAL & ELECTRONIC RETAILING

• Accounts for an 8.7% share of the total retail market.

• This sector was valued at A$20bn in 2010, with a CAGR of 5.4% between 2003 and 2008.

CONSUMER ELECTRONICS

• Since 2007, the Australian consumer electronics market has posted decelerating rates of growth.

• This trend is expected to continue, resulting in market decline in 2011.

• Recovery is forecast for 2012, after which the market will resume a steady rate of growth.

Electrical & Electronic Goods Retailing

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ELECTRICAL & ELECTRONICS SECTOR

• The electrical and electronics sector is expected to reach a value of A$21.7bn in 2013, with a CAGR of 3.1% over the 2008–13 period.

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Conclusion

ContactsDr. Bill Petreski

Principal Adviser – Technology IndustryEmail: bill.petreski@aigroup.asn.au