Written by Rory Kennard, Managing Director, Makinex Renewables
The Strait of Hormuz may have reopened, but its brief closure exposed a much bigger question for Australian businesses: what happens when the equipment keeping your operation running can’t be repaired, replaced or supported when you need it?
For years, buying decisions were largely driven by performance, efficiency and upfront cost. Today, they’re increasingly driven by different questions. Who do we call? How quickly can someone get here? What happens if a replacement part is sitting on a ship that can’t transit one of the world’s busiest shipping routes?
These questions have moved from the margins of purchasing decisions to the centre of them. They’re no longer hypothetical. New ABS data, released last month to capture the commercial impact of the Hormuz closure, found 72 per cent of Australian businesses negatively impacted by fuel costs or availability, one in six experiencing active supply chain disruptions, and three in five already changing how they operate in response.
The businesses asking these questions aren’t being overly cautious. They’re responding to a reality where downtime, delays and idle equipment waiting on parts quickly outweigh any saving made upfront. The lowest upfront price can quickly become the most expensive decision when projects grind to a halt.
Nowhere is this more visible than in how businesses evaluate power infrastructure for remote and off-grid applications. There are diesel generators sitting on civil and resources sites across Australia burning fuel they don’t need to burn – usually because operators made the comparison on a two-year horizon. This made sense when fuel was cheaper, freight was reliable and lead times were predictable. That’s no longer the case. Extend that window to four or five years and the economics of hybrid systems, integrating solar, battery storage and backup generation, look fundamentally different.
Hybrid power is simply one example of a much bigger change happening across Australian industry. Businesses are redefining value, placing greater weight on operational resilience, lifetime costs and the ability to keep projects moving when conditions change than on the upfront purchase price alone.
The cheapest quote only looks cheap until the project stops. Once equipment is sitting idle, workers are waiting and replacement parts are weeks away, the purchase price becomes largely irrelevant.
This is particularly acute in regional and remote Australia, where distance compounds every supply chain assumption. Equipment used on remote construction sites, telecommunications networks and mine sites is exposed to extreme heat, dust, corrosion and conditions that stress both hardware and the humans maintaining it. Heat management systems need to be designed around Australian operating extremes, not adapted from products built for different climates. The knowledge that comes from years of deployments across Australian conditions is hard-won and imported alternatives, however well-engineered, don’t have it.
Customers operating in remote environments, from the Pilbara to Far North Queensland, now want to know if they can speak directly with the engineer who designed the system, not wait for their support ticket to come up in an offshore queue. That expectation may have seemed unusual five years ago, but today it’s increasingly a condition of sale. For critical infrastructure, the difference between resolving a fault in two hours versus two days can dwarf any saving made at procurement.
The supply chain dimension follows the same logic. In the renewables sector, the conversation is less about Australian-made as a point of pride and more about a practical question: is the stock here, are the parts available, and is the support local? For some organisations, this is renewing interest in suppliers with local inventory, local manufacturing capability and simpler, more reliable supply chains.
None of this is an argument against global supply chains. Australian businesses will always be connected to international markets, and that’s a strength. But recent events, from COVID to the global energy crisis and now the Strait of Hormuz, have exposed the cost of assuming supply chains will always work as planned.
In conversations with project managers across Australia, we’re hearing the same thing: they’re no longer asking who’s cheapest. They’re asking who will be there when something goes wrong.
The businesses best placed for the next decade will be the ones that can keep operating when conditions shift: when shipments are delayed, components fail, or project timelines tighten and there’s no room for a three-week wait. For many businesses, resilience has become just as important as performance or price.
Access to Australian expertise, Australian support and, where possible, Australian manufacturing is increasingly part of how the smarter operators are building that resilience in. Local capability, properly valued, is a source of competitive advantage. The businesses that thrive over the next decade won’t simply be those that bought equipment at the lowest upfront price. They’ll be the ones that can keep operating when the unexpected happens. That’s why resilience has become the new return on investment.
