WITH products flooding into the country, often at below cost prices, coupled with a resources-fuelled currency defying gravity, manufacturing in Australia today is facing a critical period. But when the country’s policymakers close their eyes to the thousands of manufacturing jobs going off-shore while continuing with their strict hands-off policy, it’s just a recipe for disaster.
The impact of cheap overseas competition is now spreading right across the manufacturing industry. Already this year we have seen 150 workers lose their jobs with Kraft Foods transferring its Broadmeadows’ biscuit-making operations to China next month. Who’s next?
Maybe it was something of a talkfest at times, but at least last year’s two-day ‘Manufacturing Summit’ hosted by Victoria’s industry minister André Haermeyer, with the support of all other states and territories, attempted to do something. Whether anything meaningful will come out of the December summit is difficult to gauge at this stage, but by attracting 200 plus of this country’s manufacturing elite, it is clear the industry is very concerned about the present state of play.
The Melbourne summit, which brought together manufacturers, unions, industry groups and state industry ministers, organised a number of high profile local and international speakers to elucidate what actions are needed to revive the manufacturing industry. The only problem was the person with the power was busy elsewhere. OK, industry minister Ian Macfarlane did send a representative, but only to declare, somewhat bizarrely, that all is well in manufacturing land. In reality Macfarlane needed to be there, even if it would have been politically uncomfortable.
In the end, the summit agreed that if manufacturing is to survive and grow, the industry needs to focus on high-margin, high-technology products and encourage exports, innovation and research. All admirable sentiments, but when Australian companies need direction and encouragement to achieve these lofty goals, Canberra is often found wanting.
When it comes to innovation and research, rather than encouraging companies to invest in R&D, the government in recent years has made it more difficult to get any dollars out of its coffers, cutting funding at every turn.
It’s a similar story with Austrade. While the government talks of the need to increase exports, especially ETMs from SMEs, Canberra’s bean counters respond by increasing the costs to exporters who use the organisation. Fee for service sounds good on paper, but for battling manufacturers, often on limited budgets, Austrade’s high consultants fees can be a stumbling block.
Attendees at the summit suggested more should be spent on overseas trade missions, with John Button put forward as a prime example of what an industry minister can do to promote Australian made goods overseas, when motivated.
It was interesting to hear Pat Boland, director and founder of ANCA, candidly admit the company wouldn’t have survived in the early days without government support. Today, ANCA exports over 90% of its precision grinding machines around the world, employing hundreds of Australians and generating millions of dollars in exports.
The summit also agreed that skills and knowledge deficits are major obstacles for industry, amid concerns that not enough young Australians are studying key subjects such as engineering, maths and science, especially compared with our Asian neighbours. ACTU’s national secretary, Greg Combet, advised that Australia ranked a lowly 22nd out of 30 developed nations in terms of growth in science and engineering degrees. The union leader called for additional places at Australian universities as well as a much larger scholarship programs in these disciplines.
Heather Ridout, Ai Group’s CEO, warned of the long term effects of the ‘hollowing out’ of Australia’s manufacturing industry on our current account deficit, and called for the federal government to do more on major projects through ICN (Industry Capability Network). This is another body subject to irrational government cutbacks. With the federal government awash with money and looking to buy voters with future tax cuts, some of this whopping $11bn could be invested in Australia’s long term prosperity.
At the end of day two, the summit pledged to develop a ‘strategic industry plan’ by this coming September and to establish a National Manufacturing Forum to drive the plan’s proposals forward, but without Canberra’s support all this effort could come to nothing.