IT’S a sad day when any manufacturing company closes its doors, but when icons such as Pacific Brands move their production to Asia it is particularly hard to take.
But for commentators to now start talking about the death of Australia’s manufacturing industry just shows how little they know about the TCF (textile, clothing and footwear) industry.
Over the years Pacific Brands has bucked the trend and kept making some of the country’s iconic clothing brands here.
I, like many observers, have been impressed, to date, by how long the company has been able to keep its Australian-made business model going. Ever since the tariff phase-down programs of the 80s and the 90s, the labour-intensive TCF industry has been under siege from low-cost imports.
The recent Green report recommendation of a $200m innovation assistance package for the TCF industry is a welcome boost, but the funding is not earmarked to start until 2010. Clearly some, if not all, of the funding, should be brought forward to prevent further factory closures.
However, it appears that Pacific’s decision to close most of its manufacturing plants and put 1850 workers on the dole was more to do with the unco-operative attitude of the banks, the ‘hard-nosed’ approach of consultants and senior management’s incompetence than any long-term planning.
Sue Morphet and her executive team appear completely out of touch with reality, with their decisions providing a case book study on NOT what to do.
Giving themselves huge pay increases while planning to slash its workforce was never going to be a good look, and the company will pay the price both on the stock exchange and in the shopping malls.
Maybe Morphet and her team should talk to Holden’s executives who are looking to share the company’s pain by reducing their own salaries by up to 10%. Maybe this is the time to introduce legislation where executive salaries are determined by shareholders.
It was interesting to note Pacific Brands’ share price fell dramatically after the announcement, and has continued to drift down, with the company savaged in the financial press.
It’s becoming obvious banks have toughened up on their requirements and covenants from business, just at a time manufacturers need a helping hand.
We have a very healthy banking system in Australia; unfortunately they don’t have a healthy lending practices at the moment. Manufacturers need money to invest and to manage their business. Maybe the government should be looking at offering guarantees for small business lending.
Or maybe they should look to the UK’s Barclays Commercial Bank which has launched a new initiative to assist its manufacturing sector clients in battling a recession.
The programme combines practical guidance, workshops, industry discussions and networking events to offer manufacturing owners and managers specific skills and knowledge that will help them in meeting the unique challenges, and identifying potential opportunities, the current recession presents (www.barclayscommercial.com/turningthecorner).
Buy Australian
Sue Morphet and her executive team have also failed to recognise the value of “Made in Australia”.
Talking to Ian Harrison Chief Executive of the Australian Made, Australian Grown Campaign, it’s clear the marketing department of the different divisions of Pacific Brands certainly understood the buying power of the label, promoting the fact that their products are Australian made aggressively.
“It’s disappointing to see the closure driven by text book theory. They will now be just one of the pack.”
“It’s disappointing for Australians, as well as the workers, Australian consumers have supported the company and made those brands iconic. They will <[lb]>forfeit brand loyalty.”
Harrison believes the brands will stay strong for a period of time, “they are strong brands, but brand loyalty will almost certainly fall over time, and they will always be subject to the disappointment that too many Australians feel over these closures.”
In times like this, Harrison believes consumers should be encouraged to buy Australian-made products, and is calling on the Federal Government to get involved.
And he might get his wish sooner than he thinks. Talking to Industry Minister Senator Kim Carr in March, it was clear he was clearly disappointed with the closure and plans to do all he can to assist manufacturing through this bad patch.
One area Carr should be looking at is reducing the cost of using the Australian Made, Australian Grown logo, maybe it shouldn’t be free, but the present costs are too high.
Harrison, like me, would like to see the Federal Government play a more supportive role in branding Australia.
This move should not be seen as protectionism, but rather nationalism, which will grow stronger in 2009 as this economic meltdown intensifies.