Manufacturing in Australia has faced many obstacles in the past, but as Katherine Crichton found out, the ability for manufacturers to adapt, innovate and deliver is paving the way for a stronger industry.
THERE is no argument that manufacturers in Australia face many challenges, with smaller production runs, fluctuations in the Australian dollar, and fiercely competitive neighbours such as China, all impacting on companies’ ability to successfully penetrate the global marketplace.
The industry is very important for the Australian economy and this is something Ian Harrison, chief executive of the Australian Made/Australian Grown campaign is well aware of.
“Not only does it secure jobs, it also ensures that consumers have a choice to buy Australian.
“Our research shows that 67% of Australian consumers prefer to buy Australian made products and it is our aim to help these consumers exercise their preference for buying,” Harrison told Manufacturers’ Monthly.
“Australia is known for its quality products and its friendly people. It makes sense to promote our goods as Australian and it gives businesses a competitive advantage,” he said.
Manufacturers’ Monthly spoke to two Australian manufacturers leading a resurgence of local manufacturing through constant innovation, investing in people and offering customised solutions to their clients.
Innovation is the key
ASP Plastics started off as a spring manufacturer but after realising the potential in the plastics market, the company began developing its capabilities in plastics manufacturing, especially medical grade products. The company is now a major exporter, with the harm reduction market representing around 50% of its business.
Paul Brennan, MD of ASP Plastics said for the company to reach this point, a commercial reality had to be realised.
“There’s always going be a competitor — whether they are next door or overseas. It is a matter of doing what they can’t do and improving your processes to be world leaders in your market.
“Even though we have had to abandon some product lines, we now focus on technologically complex products that have shorter production runs,” he told Manufacturers’ Monthly.
The company has also invested in education and training of its staff, and has created a company culture based around people.
“We took a risk and hired people that weren’t from the plastics industry but that had good business skills.
“We also flattened out the company’s hierarchy and created a culture of communication where everyone can challenge established processes and raise ideas,” he said.
The company also takes a proactive approach in addressing challenges such as the skills shortage.
“APS visits around 12 or more schools a year in Western Sydney alone to let the students know that there are opportunities in manufacturing, and it is not just the dim dark factories of yesteryear.
“We also get involved with TAFE and Universities and have a say in the curriculum so we can get employees of the future who can help us get where we want to be tomorrow, rather than where we are today.”
Another innovative way ASP has differentiated itself in the marketplace and increased its competitive edge is by finding ways to enhance their relationship with customers.
By way of example, ASP provides warehousing space and the infrastructure to take over services such as invoicing and money management for their customers.
“We have a taken a holistic approach looking at how we can work with our customers to find ways to save them money and make them more profitable,”
“We also go further up the value chain for our customers and this adds value to our relationships with them. This builds a culture of trust and it is a win-win situation for all parties involved,” Brennan said.
Quick to market
Another company keeping its feet firmly planted on Australian soil is J Robins and Sons. The footwear manufacturer has been designing and producing brands such as Sandler, Easy Steps and Wide Steps in Australia for over 100 years.
Despite many businesses in the industry moving their manufacturing base offshore, Phil Butt, company MD, says J Robins and Sons has taken a different approach.
“We are a footwear manufacturer with a particular focus on fashion, and with the knowledge we cannot compete on price or volume against countries like China or Indonesia, we concentrate on being very quick to market,” Butt told Manufacturers’ Monthly.
With speed to market one of the keys to success in the fashion industry, short lead times and quick supply is essential and the structure of the company was changed in order to address these needs.
“In the mid-80s we identified the importance of ‘just in time’ manufacturing, so we went overseas and examined the processes used by leading companies in Japan and the US and brought these back and modified it for Australian conditions,” he said.
As a result, the company structure is now an excellent example of vertical integration. From a supply point of view, J Robins and Sons control everything from raw materials, design and manufacture to when the shoe is packed in the box.
And Butt says having a local manufacturing base and supply chain is one of the key advantages the company has over its international competitors.
“We don’t need to predict what the ‘in’ colour will be, but overseas manufacturers have to know in up to six months in advance what the right colour and style will be before each season.
“As a domestic quick response manufacturer with faster, smaller production runs, the result is a quick, flexible manufacturing process where from the time we get an order, it can be dispatched in five days.
“Supply from places like China could be two or three months.”
With ‘just in time’ manufacturing a major component of the company’s strategy, this also led to changes to the company’s team structure.
With shoe manufacturing still a very labour intensive process, Butt explains that the company not only increased expenditure in capital equipment, but invested money into training and increasing the team skills of employees.
“Our staff were literally trained to work in manufacturing teams, to multi task etc and we enabled workers to have a far greater level of involvement in the company’s business strategies and process development,” he said.
When asked their views on the future of manufacturing in Australia, both men are optimistic.
“I am positive for Australian manufacturing but even more positive for ASP because of the processes we put in place so we can remain competitive, but also stay in Australia,” Brennan said.
“The world is a really small place now. You have to adapt and realise, even though you are in Australia, you already operate in a global market anyway.
Brennan believes if Australian manufacturers worked more collaboratively with each other, then local manufacturing with only get stronger.
“There’s always been this perception of not speaking to competitors or companies in the same market. If we can learn from each other, join industry associations and network, the industry will grow,” he said.
Butt is equally positive about his company and says even though J Robbins & Sons is one of the few footwear manufacturers in Australia, the future is looking good.
“We have developed a strategy outlining where we want to be in five years time, and by knowing our market, capitalising on strengths, getting rid of waste in our processes and most importantly, working with our employees, we are making sure there is a future for us in Australia,” Butt said.