Financial Crisis is not all bad news for sheetmetal fabricators

THE CUSTOM Group believes the global financial crisis may have an indirect positive for itself and other Australian sheetmetal fabricators.

THE CUSTOM Group believes the global financial crisis may have an indirect positive for itself and other Australian sheetmetal fabricators.

The company says the downturn will force the sheetmetal market to look at domestic sensibilities rather than run the usual outsourcing risks from cheaper labour countries.

Greg Wallis, the fabricator’s Managing Director, says the economic circumstances are ripe for reinforcing fiscal positives to potential local clients as well as encouraging those who outsourced to overseas in the past to return home. He says low-cost labour countries have many unexpected cost factors which almost always outweigh the cheaper prices.

As an example, some companies who outsourced to China have been affected by delivery and quality issues as well as eight to ten weeks in down payments, he says.

According to the director, a client would continue to pay for around four to six after receiving the goods when outsourcing to a local fabricator.

He says 60% identified supply chain issues are the biggest problem when using low-cost labour countries, when surveyed by the Australian Financial Review.

China is also heading towards an industrial relations platform for workers, meaning the threat of strikes and demands for higher wages are ominous.

Wallis says a higher level of quality control can also be guaranteed when a product is manufactured locally.

If a product is shipped from overseas, it will have to be handled responsibly between many different transport mediums.

Paying for high-quality and careful logistics is not nearly as much of a burden when a product is being transported across Australia, rather than from another continent, he claims.

Continuity, language barriers and general communications mishaps are also considerable issues. Quality insufficiency can range from damage in transit to inaccurate manufacturing. Wallis says this can lead to costly disputes.

The cost of transport from China makes small batches of sheetmetal prohibitive, so the country can only really process massive orders.

The impact of currency devaluation means that Chinese manufacturing costs have gone up 30% at a rapid rate, he adds.