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The truth about manufacturing

Cheaper off-shore labour and production costs, interest rate rises, inflation and a rising Aussie dollar have collectively cruelled the Australian manufacturing industry.
Cheaper off-shore labour and production costs, interest rate rises, inflation and a rising Aussie dollar have collectively cruelled the Australian manufacturing industry. Contributed

ARE we witnessing the slow death of Australian manufacturing?

Cheaper off-shore labour and production costs, interest rate rises, inflation and a rising Aussie dollar have sparked a disturbing, downward trend.

Add to that global competition, cheaper imports and the planned introduction of a carbon tax, and it's no wonder the industry has only grown by 0.7% since 1999.

Federal budgetary assistance has declined since its peak in 1994-95 as various tax concessions were phased out. And in recent weeks, BlueScope Steel sacked 1000 workers in yet another bad news story for the industry.

Total Australian manufacturing exports were worth $29.6 billion in 2009-10, a decline of 5% over 10 years.

Since December 2008, bank lending to the manufacturing sector declined by 21% and the industry lost 21,400 people from its ranks in the year to May 2010.

To rub salt into the wounds, allegations surfaced last week that local companies were being denied access to lucrative resources projects.

"We don't think it's acceptable that 90% of the gear that goes into a local resource project is imported from overseas," AMWU National Secretary Dave Oliver said.

"We're talking about steel, conveyors, pumps, valves, refrigeration units."

A Sunshine Coast manufacturer, who did not want to be named, said things had been rough for him and his peers for more than a year.

"It's been up and down and I can't see it getting any better.

"We supply a lot of the building industry and at the moment that is non-existent. There isn't a positive feeling at the moment with the state of the dollar and commodities pricing.

"And when off-shore labour is 90% cheaper than what we can do in Australia, it's not going to happen here."

But he said he would change his business to tap into the opportunities in the mines.

"That seems to be the only area which has got the work. We will move an office out there and keep our Sunshine Coast one open.

"I don't think anything will happen in this country until the next election. A change of government will signal a turnaround. Look back in history, we had eight years under the previous government and everything seemed to be going fine."

Advanced Metal Turning owner Trevor Brown said he was the exception to a depressing rule.

The fact that his business was 16 years old and that a strategic decision was made nine years ago to diversify its client base have proven to be strokes of genius.

"We've got enough work to keep us going for 12 months or more...we are one of the lucky few," he said.

"Nine years ago, it was our intention to make it a diversified business so we weren't relying on one industry. And most of our products are exported to the US (AMT makes DNA testing equipment for the FBI).

"That is getting bigger and bigger and has grown three-fold in the last two years."

Mr Brown said the key was returning manufacturing skills back on-shore and legislating that mining companies buy a certain percentage of their purchases from inside Australia.

"I can't see the sense in mining iron ore here and then sending it overseas to be turned into products we buy back again.

"And everyone is talking about the mining boom and how good it is for the country. Well, it might be good for people who own shares in mining companies, but it's not good for people trying to get work.

"The government is trying to give us advice, but it's a very closed shop and very difficult to get a leg in there just to get a basic order in."

Topics:  business currency manufacturing


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