Company inductees are optimistic

CELEBRATING manufacturing excellence, ten companies were inducted into Victoria’s Manufacturing Hall of Fame at a gala dinner in Melbourne last month (May 21)

CELEBRATING manufacturing excellence, ten companies were inducted into Victoria’s Manufacturing Hall of Fame at a gala dinner in Melbourne last month (May 21).

With a theme of ‘design, create, innovate’, the black tie event attracted close to 600 manufacturers to the Atrium at Flemington racecourse.

The ten companies inducted into the Hall of Fame this year were:

• Albins Off Road Gear;

• Charlwood Design;

• Compumedics;

• Dair Industries;

• HM Gem Engines;

• Note Printing;

• Thales;

• Torian Wireless;

• Trimas; and

• Visy Recycling.

There were also three recipients of the Hall of Fame Honour Roll awards: David Burton, executive chairman and founder of Compumedics; Lee Kidman, former owner of Kidman furniture; and Andrew Stobart, former MD of Olex Cables. Dr Peter Campbell, improvement manager with Volgren Australia, took out the Young Manufacturer of the Year award.

Victoria’s industry minister, Theo Theophanous, presented the awards and praised the inductees for their outstanding contributions to the sector.

David Fraser MD of inducted company Dair Industries, who produces automotive components for Holden, Ford and Toyota, said it was a terrific accolade for the whole company.

“Just because I own the business, I certainly haven’t done it on my own. The award is something we’re all going to be very proud of,” Fraser told Manufacturers Monthly.

In one of world’s most competitive industries, Fraser puts his company’s success down to thinking strategically rather than simply operationally.

“We’ve have a very clear product strategy, focusing on what we deem to be import unfriendly product. We’ve cut out Chinese and Thai competition by virtue of the nature of the product we make rather than cost.

“We deem product to be import unfriendly by virtue of volume weight and/or fragility. The bulkier the part, the heavier it is, the more susceptible it is to either cosmetic or mechanical damage, the less likely it is to come from overseas,” he said.

Fraser cites the instrument panel cross member for the VE Commodore that Dair presently manufactures as an example.

“I’m sure they can make it a lot cheaper in China, but it will never come from there. But you can’t ignore them.

“We know we can buy things from those areas at absolute nonsense prices. For example, I can buy a stamped metal part from China and get it here for less than I pay for the metal,” he said.

The reason, according to Fraser, is due to Chinese suppliers getting a 17c kickback from the government for every dollar they export to Australia.

To succeed against this non-level playing field, Fraser says you need a multi-pronged attack. “You need to have the intestinal fortitude to invest in new facilities and equipment, to set up for the future, coupled with a good product strategy, plus a good bunch of people.

“But while technology is part of the game, it’s certainly not the whole game. The reality is a press in Australia doesn’t go any faster than a press in China.

“The competitive edge lies somewhere else. It’s not in the direct product cost but the total cost of doing business. When you factor in all the logistics, the risk and exposure to overseas supply chains etcetera, that’s where you need to differentiate yourself in the market place and I think we’ve been reasonably good at that.”

Fraser is optimistic about the future of manufacturing in Australia believing the Chinese bubble will eventually burst. “For those of us that can hang out long enough and maintain a manufacturing footprint in Australia, there’s going to be an awful lot of relatively large crumbs to be picked up,” Fraser said.

Fellow inductee, Robert Saunders MD of the Trimas Corp (manufacturer of Hayman Reese products and Rola roof racks) is also optimistic regarding the future of manufacturing in Australia, and points to the Toyota Camry of what Australian manufacturing can achieve.

“The previous locally made Camry was the lowest cost and best quality car, based on Toyota’s global manufacturing.

“However, the current Camry is not in that position, that’s because the old Camry was made on fully depreciated tooling. This Camry is built on a brand new platform, so the economies of scale become a problem,” Saunders told Manufacturers Monthly.

“I think we’ll always face that problem but if we work at it we can be competitive in niche areas … not necessarily in the high volume areas because our economies of scale are so low relatively speaking.”

Regarding China, Saunders says local manufacturers have to understand that their biggest strength is not necessarily their manufacturing process. “It’s also their customer relationships and all the other value added services inside a business.

“If you are required to go off shore or if you require low cost components for your product range then make them yourself off shore. But recognise that there’s a huge benefit in customer relationships and services that can be provided over and above cost. A lot of people just don’t recognise that.

“Also don’t be frightened to form alliances and use the benefit of working with others to get that economy of scale,” Saunders said.

Like Fraser, Saunders has invested quite heavily in technology, but says it’s not the total answer.

“As a business, we have always believed in having high barriers to entry.”

To this end, the company value adds where it can, not only the products it makes but also the service it provides; all to make it difficult for somebody else to enter its market.

“We’ve done that and built a tremendous brand with both the customer and consumer belief in the product. A lifetime warranty on all our products has been a good deal for us. It’s a whole package of things,” he said.

Saunders says he gets frustrated by manufacturers who say that the competition from off shore is beating them. “They’ve got to recognise what they’re good at and what other people are good at. If it is a low cost environment that you need to survive then move your factory off shore. Don’t wait for somebody else to do that for you.

“We’ve chosen to off shore some manufacturing to our own factory in Thailand. We use it to manufacture some components and then we finish it here to the quality standards that we want.

“We are able to deliver to our customers and give them the level of service that they want,” Saunders said. However, he admits, there’s no one simple answer.

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