Finding a path during sobering times

Results of the first survey by South-East Melbourne Manufacturers Alliance to assess the impact of COVID-19 are in, and they are “sobering”, according to CEO Vonda Fenwick.

A recent survey by South-East Melbourne Manufacturers Alliance (SEMMA) has revealed the impact of the coronavirus on the Victorian manufacturing sector.

The survey, conducted in March, titled SEMMA COVID-19 Survey: Impacts of COVID-19 on your business, contained six questions related to the impact of the pandemic and government response towards helping small to medium-sized businesses.

Information focused on the impact on supply chains, revenue loss, increased costs, staff reductions, loss of sales and preferred forms of government assistance, and showed that 81 per cent of businesses were impacted by the pandemic.

SEMMA CEO Vonda Fenwick said the survey results were “quite sobering”, given a number of their member organisations, anecdotally, believed they were “doing fine”.

“One of the bigger impacts in terms of revenue, was that we had 70 per cent say their revenues had dropped, and there are another 11 per cent who said that they expected their revenues to be impacted within the next couple of weeks to a month,” she said.

The survey also revealed 49 per cent of manufacturers had stood down staff or reduced working weeks to three or four days.

Another 18 per cent of businesses indicated that job cuts would be necessary if no relief was in sight.

About 47 per cent of the respondents said they were having issues with imported material and were concerned that the situation would “get worse”.

SEMMA is calling on the federal government to introduce a pro-active import replacement program, one which is ambitious and broad-based, not just restricted to medical equipment.

Fenwick said the pandemic has highlighted the importance of on-shore manufacturing, particularly at the political level, but also in the community more broadly.

“I think it is vital for government to recognise just how important it is to have robust supply chains, not just for medical equipment, pharmaceuticals and personal protective equipment.

“Without that, we really are vulnerable. I think that the scope needs to be widened significantly. It’s a lot broader than just medical equipment and oil,” she said.

“A narrow focus fails to recognise the social benefits and economic importance of maintaining and growing our broad-based manufacturing sector,” Fenwick said.

“Decision making regarding purchasing of Australian Made or imported goods needs to acknowledge not just price comparisons but total cost.

“If we have jobs onshore, we have people employed. If we’ve got people employed, we’ve got all the social benefits that flow from that.”

There are huge economic benefits to making sure that we have people employed, and there are also the benefits of retaining the capability, skills, and knowledge in Australia, said Fenwick.

SEMMA will run a second survey to find out whether businesses have benefitted from various government stimulus packages and subsidies, and what the subsequent impacts have been.

“We’re hoping that businesses have been able to retain employees and that the number and the percentage that have actually had to put people off, or go to shorter weeks, may look a bit more optimistic because of the initiatives by the state and federal governments,” Fenwick said.

SEMMA wants to see more locally produced content from manufacturers, and that SMEs can get greater access to government contracts.

Fenwick said although there are policies highlighting the desirability of sourcing Australian products, it was not always reflected in government purchasing decisions.

It is realistic to expect that there is pressure put upon purchasing and procurement groups to ensure they get value for money, but that should not mean just considering price “

“I think the value for money equation has to be extended to look at all the benefits that we get from buying Australian, from making sure that we get local manufacturers involved.”

Fenwick believes the survey was useful to quantify how quickly coronavirus had impacted local manufacturers, which enabled SEMMA to have a conversation with government.

SEMMA’s survey results were recently presented to Jobs, Innovation and Trade Minister, Martin Pakula, and Gabrielle Williams, Minister for Women, Prevention of Family Violence, Aboriginal Affairs and long-time supporter of SEMMA, and a number of other MPs representing the south-east metropolitan region.

“The first five survey questions were to do with impact, the last question that we had in our survey was what the government could do to support manufacturers,” said Fenwick.

Options in the survey for government support included looking at a wage subsidy for every at-risk employee.

“By the time we had our closing date for the survey, the federal government had actually announced their $130 billion Job Keeper package, so we were really delighted to see that,” Fenwick said.

While Fenwick said assistance that has been offered to date, at both the state and the federal government level is welcomed, the beneficial impacts on manufacturers are yet to be quantified.

“We will be able to do that once the results of our second survey are in. The assistance to businesses ranges from small cash injections through refund of Payroll Tax through to support like the Job Keeper payments. We are keen to see how beneficial this support has been to manufacturers.”