AUSTIN ENGINEERING LIMITED Austin Engineering Limited reported an increase in the production capacity and capability of its operations in Batam, Indonesia driven by a rapidly expanding order book and strategic focus on the facility. A combination of a new site lease and expansion of the Company's existing facilities will see Austin increase its current Indonesian-based production capacity of 12,000 m2 by almost 100%. The business is also well advanced in employing another 150 production workers and has been strengthening its management team all year.
Austin has over the last 12 months almost completed a refurbishment of its existing Batam operations through reviewing and refining production systems to lift efficiency and product quality, particularly for truck trays and underground ore pass and chute assemblies. The expanded, advanced manufacturing operations will be fully operational in early January 2023. New Facility Expansion Austin has leased approximately 10,000 m2 of purpose-built manufacturing factory space including laydown areas.
The new facility is adjacent to Austin's existing, wholly owned facility, which enables workforce and management flexibility. Lease rates for the new facility represent around 5% of the cost of a similar leased facility in Kewdale, Perth. Existing Facility Expansion: Increase of ~5,000 m2 in usable concrete production /laydown area to expand Austin's hub-and- spoke containerised product logistics processing with 50% of that now complete.
100 per cent increase in material cutting and processing capacity (5,000 to 10,000 tonnes p.a.) with implementation of a second, new 24 metre bed plasma machine. The new site will allow for an increase of >100 m2 of production capacity in Austin's existing facility, in addition to considerable increases in vertical storage capacity by elimination of inefficient process flow obstacles such as internal offices. In the past year, Austin has recorded a large rise in production demand from its lower cost advanced manufacturing facility in Indonesia due to innovations delivered under the Austin 2.0 strategy including: Manufacturing leadership introduction and commissioning of advanced manufacturing jigs, tooling, automation and build facilities under Phase 2 of Austin 2.0 strategy, which set up the business to build sub-assemblies to feed Austin's other businesses and clients around the world (hub and spoke).
As a hub, Indonesia is building sub-assemblies for products finally assembled in Australia, New Zealand, Africa, Europe and potentially North America in the future. For supply into Australia, this action has eased significant labour scarcity, particularly in Western Australia. However, full implementation of this strategy has been constrained by the capacity limitations of Indonesia in H1 FY23, which are now mitigated with the capacity and capability expansion.
Quality leadership improvements in quality assurance and control have cemented leadership in this area against other competitors in the region. The general capability of the facility and the quality improvements were instrumental in winning what is expected to be an ongoing series of purchase orders, over several years, for equipment for a regional mine which may be worth ~$13 million per annum. People leadership a new Asia-based team has driven the innovations under Austin 2.0, improved overall operating efficiency and general competitiveness of the business.
Austin estimates total capital expenditure for the facility upgrade and capacity expansion to be: $3 million for advanced manufacturing (previously announced). $2 million for facility expansion (with up to an additional $2 million linked to further revenue growth in calendar year 2023) $1 million for new equipment (plasma machine, welding machine etc. to augment the existing capacity).
