Phil Ruthven

So one thing our entrepreneurs are always interested in is which industries they should look to leverage if they can. Are there any industries that will do particularly well this year? I guess resources stands out.

Well I think there are six, resources being one of them. The other one I think that would do well is communications. The roll out of the 3G network and the increasing amount of online content that’s coming on stream and being used means communications will be our fastest growing industry for the next year… and the next five years for that matter. It will grow even faster than mining. So communications number one, probably mining number two.

Finance will be a very close second or third on the list. I think retail will be doing well and that’s partly because of cars. I think even hospitality will do better because local tourism had a dreadful 2009, but I think the hospitality being accommodation and restaurants, etc will do well. Business services I think will do very well also, that’s your accountants and your lawyers who also had a pretty quiet year last year. So that would be the six growth areas that I would see.

But the slow ones I think are going to be the usual suspects. It will be manufacturing, not helped by the high dollar for a start. Utilities – electricity, gas and water – are going to be slow again and that’s a mess of an industry at the moment because there’s still government owned, or perhaps you should say union-controlled, which is probably nearer the truth as we can see in New South Wales and Queensland.

I think construction will be slow compared to where it’s been over recent years. And I think education is going to remain fairly slow as well, with universities finding it all a bit tougher for your incoming students. Again partly because of the dollar and partly because of the racism with India or the supposed racism, real or imagined, they’re the four slowest I would see, manufacturing, utilities, construction and education.

What about from a geographic point of view? Last year you told us to go north to the Northern Territory and Queensland. Is it a similar story or is Perth sort of back in the hotspot area with so much going on the coast there?

Well Perth’s back in again, because a quarter of its economy is based on mining because the prices have doubled since the middle of last year for some of the key minerals. Queensland did suffer a bit last year, again tourism hit it pretty hard and to some extent resources too because then again they are our third most dependent state on resources after Western Australia and Northern Territory. Yes, I think all three of those states will continue to do very well.

The rest of them, the one which was such a surprise was probably South Australia, but I think South Australia’s built on a bit of anticipation because they’re sort of assuming that there’s going to be Eldorado of mining over there as there’s been a lot of mining exploration in South Australia. That’s lead to a lot of speculation among some of those regional towns and cities like Port Augusta and other smallish towns in that area, but I think they’re psyching themselves up to do a sort of mini Western Australia and I’m not convinced that it’s going to happen all that quickly.

But you’ve got to say that South Australia’s done very well considering that it’s a state that’s usually running at about 1.5% slower than the rest of Australia in growth each year. Instead of growing at 3.5%, they normally grow at about 2%. Tasmania also did much better than most people thought in the last year.

It’s very easy to pick the bung state, of course – that’s New South Wales.

Any chance that will turn around anytime soon?

I can’t see why it will, to be honest, because they’re still not facing up to what they’ve got to do. They’re still not going to privatise the utilities, which has to be done. They just haven’t got the money to fix up the infrastructure in New South Wales unless they sell infrastructure that’s badly run anyway and that’s their electricity, gas and water. At least Victoria and South Australia have privatised a bit of theirs. But until New South Wales knows that it’s got to be in the 21st century and not the 19th.

Until this government understands that and is tough on the unions that are calling the tunes, it’s just going to dither around and go nowhere. It’s certainly the worst managed state in Australia and has been for many, many years. And as we saw recently it’s been the slowest growing state for the last 10 years. And I saw that made headlines but I think anybody that studied the states knew that anyway, but it’s just been a terribly, terribly run state for so long.

Is 2010 a year for expansion for IBISWorld?

It is. We’re opening up Europe for ourselves so we’re expanding yet again. We spent a lot of money on development last year rather than opening new geographic areas, although we did pour a lot of extra money into the United States which is becoming our biggest single market. But 2010 is about opening up Europe so that’s another big expansion for us. We’re already in the United Sates, we’re in China, we’re in Indonesia and now we’re going into Europe.

What’s the key to getting that overseas expansion right, are you constantly on the road visiting those places?

I’m not, although I did have a few things to say at the board meetings of course, but I think our own managing director is reading the signs pretty well. We’re not inclined to be sucked in to areas which look good, which won’t turn out to be good, which is India. It is growing very, very fast but it’s not a good market for us yet. We don’t think India, even though it’s got a population of 1 billion people and it’s growing at 6% or 7% a year, is near the level GDP per capita to be a big user of online data information like we sell. In other words you’ve got to be more than big. I mean, we’re only into China because the rest of the world wants to know about China and so we went to China to make their information available to the rest of our clients around the world. But the poor countries like China and India don’t have big domestic markets for our sort of services and so we’re better to go to market that might be growing very, very slowly but at least it’s sophisticated enough to take our product.

And since we’ve been rated as the world’s best online database company, we’re not worried about any competition there. We’re in the United States because we’re just better than any of them and I don’t mean that in show off way, I’m not trying to say that.

What we’ve learned is where not to go and you don’t go anywhere where you shouldn’t go, unless you know you’re going to be the best when you get there. Otherwise they’re going to gang up and hit you hard. You’ve just got to be the best in the world if you want to succeed offshore from here.

You mentioned the strong dollar. Does that give an Australian company a bit of a platform to go into an overseas market, find a bit of their competition that is a bit weakened and have a real go?

That’s true, we’ve already seen that NAB might buy another big English company for two reasons. One is that they’re cheap at the moment and secondly our dollar is so strong that you probably won’t get another chance to buy stuff and move in again for maybe another 10 years.

It’s probably the best year to move in and that’s not just for your big corporations like NAB. I think that’s very true of SMEs as well. In other words, if you’re in good control of your operations here in Australia and you’re a good entrepreneur, the conditions are never going to be much better if you wanted to do an acquisition abroad or even if you even wanted to start up a business from scratch, because the strong dollar helping and you’re not going to get a lot of inflation this year.

Inflation will start to show up in the western world as I say from 2011 onwards but it’s a very, very good year for entrepreneurs, no question.