Made in Australia — Challenges

We all want to earn more and spend less. Isn’t that the philosophy for getting wealthy? What does this mean? Your earning is somebody else’s expense and vice versa. For eg. Last week I had to call a plumber because of a blockage in my bathroom pipe. He came and using a machine spent about half an hour and I had to pay $330. My expense was the plumber’s earning. Income and expense are relative terms.

I migrated to this country in 1998 and I have been told that we had lots of industries in Australia but with the concept of globalisation and opening up of our market, lots of manufacturing has been outsourced overseas. Why have we chosen to import good from overseas and close our own manufacturing?

Is it because other countries produce cheaper goods than we can produce them in Australia? The Australia produced goods can’t compete in the global market….

Australia has been among the top in terms of “Quality of Life” index. The current minimum hourly wage is A$ 19.49 as per Fairwork Australia. You get a loading of 25% if you are a casual employee. In addition to the basic pay, a business will have to pay for superannuation, payroll tax, annual leave, sick leave, workers compensation, workers facilities etc. It adds another 30–40% on top of the basic pay. On top of that there is a cost of on-boarding. Compare that with a worker in a third world country, for the daily wage of an Australian worker you will employ a worker in a third world country for the whole month. That’s a lot of output when you compare that with Australian production.

Is our high standard of living the reason for the demise of manufacturing?

Probably not, manpower is one of the three components that is required for a healthy manufacturing economy. The other two relates to more of management and administration.

For running a manufacturing unit you require three key things:

1. Skilled and competitive workforce

2. Favourable government policy

3. Market acceptance of the products

Business Management — Have we mismanaged our businesses? It seems like we have taken the easy way out by just importing things from overseas and add mark-up and sell. We have focussed on a strategy to minimise our fixed costs rather than manage them.

Has our business managers chosen the easy path to increase the wealth for the shareholders?

Government policies — has the government policies been favourable for investment in manufacturing industries? Probably not, otherwise we wouldn’t be in a situation that we today.

Can we learn from other developed economies? Can we benchmark us with other countries at par with Australia and understand how we can create a level playing field.

The questions that we have to address — Are we able to do more value addition than the costs involved? Can we engage in more high technology manufacturing that is more knowledge based than labour based? Can we create a niche for our products in the world market?

We have to remember one very important thing — Money matters not only for the business that produces but also for customers that consume.

Value of any product is what a buyer is willing to pay. Understand the customer.