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Businesses must re-economise to maximise returns under new government

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article image A top class blast room was just one addition during tough times for other manufacturers

Sevaan Group CEO Mr Tony Panrucker believes the change in Australia’s Federal Government has brought renewed optimism for manufacturing, highlighted by positive growth figures for industry since the Coalition swept to power in September 2013.

However, according to Mr Panrucker, some of the biggest challenges will be faced by fairly established companies who have built up cash reserves but have been eating into these reserves through the national downturn because they were unaware how to change, requiring them to re-economise what they are doing to suit the circumstances.

During the toughest business conditions in the last three years, Sevaan Group actually expanded with part of its growth coming via partnerships with troubled fabrication and manufacturing companies through a joint venture arrangement to piggyback on the other’s strengths. Mr Panrucker explains many industrial companies not used to tough times, didn’t have contingency systems to control their business in the event of a heavy national downturn.

During negotiations for joint venture arrangements with potential partners, Sevaan Group, coming from an external base is arguably in a better position to analyse ways to improve their performance and profits simply by partnering them, rather than marching in as a consultant. Joining under a venture agreement allows partner companies to utilise Sevaan’s strengths within their own business, which in turn leads to better economics and gives Australian manufacturing companies more strength and market potential.

Industry surveys suggest the timing could be ideal. For instance, The Australian Industry Group's performance of manufacturing index rose 5.3 points to 51.7 in September 2013 from the previous month, breaking above the 50-point level that signals expansion. 

There were encouraging indications from businesses that the easing of the dollar, low interest rates and clear outcome of the federal election were lifting business sentiment, according to AIG chief executive Innes Willox.

A recent survey conducted by the Industrial Group of B2B publishing specialist Cirrus Media confirmed that Australia's manufacturing industry believes the Abbott government will be good for business.

Out of 1,338 respondents, more than 60% of respondents are confident the Abbott government will be good for the sector. Only able to vote for one of four survey questions, 38.42% said the Abbott government will be good for business, while just over 23% of voters said getting rid of the carbon tax will help the industry.

Mr Panrucker points out that Government change alone won’t change a company because a change in government doesn’t mean a change in the economy straightaway; industry will still have to work for it.

He adds that there are many variables, but history does repeat itself in some ways and setting up with intelligence to properly make the most out of economic conditions will be most advantageous for Australia’s manufacturers.

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