An article regarding manufacturing, or the lack thereof, in Australia.
Back in the 1960’s, most products were actually made in Australia and the early Japanese imports were often derided.
Motor vehicles, TV’s, radios, record players, electronic components, electrical appliances, furniture, power tools and a multitude of other items were all Aussie made but today you would be hard pressed to find any such products being locally made.
Whilst the talk of value adding our raw materials makes sense, it just never seems to actually happen.
Hopefull some positive changes will occur after Australia was caught with its pants down by the pandemic.
So why is that? If there is a buck to be made in local manufacturing why has it been in decline these 40 years? If there is no money to be made why do you expect anybody to do it?
Yeah but manufacturing went down in the 70’s / 80’s when tariffs were reduced / abolished. Basically firms just could not compete with cheaper imports. I can recall when I was growing up in Bendigo, there was John Brown (pullover manufacturer) and Stafford Ellison (suit manufacturer). All gone now. A friend of mine owned a boot manufacturing business in the day and ended up being forced out of the market. He’s still bitter about this to this very day.
If it’s cheaper to make it elsewhere, Companies will do it. It’s not about momentum, it’s about the Government deciding which industries are “essential “ and providing them with the necessary protection.
The type of products Australia manufacturers has changed over the past few decades. It has shifted from high volume low margin products (like clothing and cars) to more niche products with higher margins (medical, specialised technology etc).
Food manufacturing has remained as Australia is renown around the world as having high food standards and high food quality. This is why there is often foreign interest in investment in food production, from the farm to a finished manufactured product.
Many common household or fashion products which have been made in Australia in the past are now made overseas where products can be produced cheaper to meet customer expectations. Such products, it is difficult to find reasonably priced Auatralian made alternatives.
Where Australia excels in manufacturing, products can be easiIy found. If one is chasing the cheapest price or a special buy (like shopping at Aldi), one is unlikely to see Australian products which will skew one’s view on Australian manufacturing. Often consumers will say that they buy foreign because Australian is not available. Unless it is one of the high volume low margin products, this could be more about where they shop or what price they are willing to pay rather than looking for retailers that have Auatralian products.
While I don’t often subscribe to the the views of The Conversation, this article presents an overview of how Australian manufactung is changing and adapting to a prosperous future:
Well I know Australia does quality cookware well. Found an Aussie made and owned maker of pans a couple of years back and their product is great and can’t get a better warranty than they offer. Own 6 of their offerings already and just pledged to their next Kickstarter yesterday. Not trying to hide their name as I’d recommend them to anyone, but can’t remember Choice’s policy on product/company recommendations lol - been so long since I’ve had one I’d recommend hahaha.
The problem with protection is that you and I will pay for it in higher prices for those kinds of goods or we will go without.
We have seen several articles about COVID19 revealing the fragility of the supply chain in Oz. Often mentioned as the culprit is the ‘just in time’ method of running a supply chain which saves money by not holding stockpiles and getting requisite goods or components where they are needed just in time. This saves on capital by reducing inventory held and saves on storage costs.
The downside is that if the supply chain is interrupted there is no contingency in store to keep you going while the chain is repaired. Critics say the answer is for government to declare some things ‘essential’ (toilet paper???) so that they will always be available in a crisis.
There are two big problems with that. One is guessing in advance what is essential, if the public is going to be quite irrational how do you know what they will panic buy next time? The second is deciding who pays for it. If there is a government subsidy then you and I pay through taxes, if no subsidy then we pay through higher prices.
That is the capitalistic approach to life for sure. On that basis there should be no reason to ever pay more than the absolute minimum for any product, or any service that delivers on the requirement. Oh yes, manufacturing has generally moved to the lowest cost countries, and we have higher value, higher technology manufacturing to replace it - but the workforce does not always join in as the skill sets to do that are continually raised. But that digresses.
Without being argumentative it comes down to a value system as to whether cost/price is everything, or quality of service matters and is worthy of some premium.
It should not be difficult deciding what is essential (food, toilet paper, fuel, maintenance supplies, etc) but in a simple case, requiring vendors to keep, say 6 months of stock on shore, adds costs but also adds security.
What would have been the economic or human value if there had not been a TP shortage? Or potentially a petrol shortage since the reserves are held in the US for now? Put the crude on a ship and it is days, assuming the ship is not sunk by hostile action, to make that point.
Are you suggesting that the rise in price to the consumer caused by protectionism can be made to somehow disappear by not using the capitalist approach?
Once again who pays?
In both cases you are using the populist formula of; the outcome is worthy so it must be done. You are not saying how it will be done or how it will be paid for.
I did not mean to even inferr that, but I guess I did if you read that into my post. My point was intended to be that the price increase of protectionism or mandating on shore stores may be justified if it enhances quality of service/supply and thus security.
Society pays because society benefits, when it hits the fan.
My example of mandating X months supply on shore is not saying anything? Populist? or Pragmatic to address a fragile supply chain? Added cost? Yes for storage and the value of money. Security? Priceless.
Solidteknics. I’ve been really impressed by the quality of their pans, and offering a multi lifetime warranty was a surprise. When I asked the owner what the warranty was about, he said the pans are built as heirloom products to be handed down from parents to kids to grandkids. When I said that seems like a limited time business model as you don’t need to buy replacements he said he’d be happy if their pans replaced all the Teflon and he went out of business lol. After talking with him a few times, and talking with others that know him I don’t doubt his sincerity.
I’ve been impressed enough that I pledged to their new Kickstarter as I know how good the products were and the pricing was fantastic - getting a large set of pans for what I paid was a great deal. The website is https://www.solidteknics.com/ for info about them and their latest Kickstarter is https://www.kickstarter.com/projects/solidteknics/solidteknics-lightning-iron-skillet-100-australian-made?. They have an Early Bird price for pledges going still for another 30+ hours, but the campaign goes until May 30th and is already over 7 times it target funding, which always happens with their launches. Great pans, Aussie made & Aussie owned with products not destined for landfill - I’m very happy with them.
I think Kickstarter is a great way for Australian manufacturing to launch products. You get to see what the interest in your product is, and it gives you the chance to actually have sales of the product before you finish production. As always though consumers need to do their research on a company that they are looking to pledge to on Kickstarter, as there will always be sharks swimming in the water when chum (money) is around lol.
It’s a challenging position for Australia which is predominantly a trading nation.
Is the question about more than what is strategic for survival and needed from local manufacture?
Does Australia need to keep open trade links as a source of foreign income? It’s really a source of barter. Will it continue to be necessary to bring in commodities,
we cannot replace,
that will take time for domestic manufacturing capacity to be acquired,
products that require alternatives and technologies to be developed/exploited,
technology that is not within our capacity to develop or already protected by others?
At what point in this discussion do we move from consumers making choices about the availability, needs and cost of a product, and it’s place of manufacture to …(Off topic?) *Geo-political influences on supply chains, and whether Australia should be part of or apart from?
There are some things that as consumers our daily purchases cannot or do not influence directly. All else reverts to the electoral cycle.
It comes down to what price we’re willing to pay for getting stuff cheap. If we value reliability, then we’ll pay the (cash) price. If not, then we’ll pay different prices.
Hi @mark_m, I agree wholeheartedly with you your views. Our manufacturing and technology, in my view, is first class. The reason we don’t manufacture ventilators, maskis, chemicals and many other products is that it’s cheaper to make them offshore. If I read you correctly, then I agree it comes down to politicians to develop the infrastructure to ensure ongoing supply of essential items during a crisis.
Then comes the hard part, what will be the next crisis and what will be the essential items because they’ll most certainly be different to the ones that this crisis has thrown up. Hopefully the politicians will get it right.
It may be keeping an open mind on the how is as important.
Finding alternatives or substitution and doing things differently can also be within the hands of the average consumer. EG Do we really need vast supplies of toilet paper, or a consumer change to prefer bidet seats?
Curiously and as an example of precedent for government intervention. Some states dipped their toes in the consumer market when they offered incentives to convert to dual flush WELS rated cisterns. There are many more examples including the solar rebates for PV and HWS.
In respect of manufacturing locally, and cutting across other topics that have considered supply chains and fuel security. Many of the products consumers rely on to be more self sufficient, independent of external supply issues, are fully imported. Typically from one source nation. EG solar PV and lithium battery products.
Infrastructure includes people who are skilled to operate the machinery, production lines, or whatever the product demands. How do we maintain such a group ready for action, perhaps for decades?
If these manufacturing systems are going to operate locally all the time then they will have to be subsidised. Providing buildings and gear will not magically make our wages competitive with the places that we import from now.
If the systems are not going to operate constantly then there is an overhead in keeping the gear ready to work, in the cost of ownership and maintaining operator skills. As well there will be a delay in starting up production and getting supply lines filled.
If we are going to be ready to quickly deal with all manner of crisis then there will need to be warehouses full of stuff ready to use just in case. At least some of this will go to waste which is another overhead cost.
I don’t mind if the majority of Australians are actually prepared to pay such costs over the time we wait for the next crisis for the sake of improved security. Where I have the problem is with those who think it is just a matter of altering policy and that there is no significant ongoing cost.
I have heard the lament about the lost opportunity as local manufacturing declines from many people for decades. People who I generally respect have told me how it is such a shame that we mine the ores to make stuff, send it overseas and then buy it back as finished products, we ought to stop all this export then import rubbish and do the manufacturing here. All that it will take is for those in Canberra to do the right thing. This is a fairly popular sentiment still today.
I direct you to the case study of the vehicle manufacturing industry, it had decades of subsidies and favourable treatment of various kinds. It had the Button Plan and a great deal of good will not to mention money given to it, we did a huge amount to keep that capability and those jobs here. Didn’t work.
