Engineering & Manufacturing Influence News – Issue 14 August 2013



Thank Goodness it is over with; no more of those tedious and destructive adverts for political parties in a campaign that must be looked back upon in time as the lowest point in Australian politics.  But what does this victory mean for manufacturing in Australia?  Of course, one of the biggest signals will be the planned discussions between Holden and the incoming government.  If the Coalition carries out its threat to remove $500m for the automotive support package, then one can only assume that this makes Holden’s future even more precarious and if they do then announce closure, both the economic and political consequences will be significant.

Last month we took the opportunity to sample the members’ opinions on the automotive industry with our impromptu survey.  Not surprisingly most members endorsed the view that the industry was crucial particularly because of the loss of jobs associated with the overall industry.  This month we continue the involvement with a Thursday survey, this time on Industrial Relations; another highly political subject.  It is a wide ranging subject from the power of the unions to the adversarial style of management; from the value of 457 workers to the flexibility of work itself¸ from apprentice pay to parental leave.  We look forward to your views.

On the 15th of august, the State Minister for Manufacturing, David Hodgett announced the recipients of the latest network grants totally $857,000 including VVS’s grant of $17,250.  The full list of the 8 companies participating is listed below.  This formal announcement now means that we can publicise our work, albeit using the government’s official branding.   The committee recently reviewed the whole of the Capability Audit and we are now ready to start by trialling with some of our member companies.  Of course the value of the grant is not just to our existing member network but to a wider audience who could not only benefit from the audit but hopefully from joining the Vernier Society.  Looking at the list of awards, there is at least one consortium, it could be argued, is in competition with VVS for participants.  And it has already been pointed out by some members that there is also competition from the government funded ‘Enterprise Connect’ as well as a number of private providers in this market space.  It is therefore vital to us to get the support of all the active member companies as well as casting our net to external companies.  So far we have had a poor response from members in identifying additional targets.  All of you must know of at least three companies who are in manufacturing and can benefit from the study – so please, please forward their names!



Network Name Details Amount of Grant
Australian Industry & Defence Network –Victoria (AIDN-Vic) based in Ashburton Undertake a submarine collaboration study, which will involve researching capabilities and identifying gaps for defence small and medium enterprises (SMEs) and SMEs in adjacent markets to supply to the submarine sector. $50,000
Australian Sports Technologies Network (ASTN) – Geelong Undertake the ‘Sports Technologies Advisory and Mentoring Support Program’. This program aims to provide Victorian firms with access to experts and advisors in sports technologies commercialisation and marketing with the aim to develop business growth plans, investment attraction and export readiness. $50,000
Key Commodity Manufacturers –AutoCRC -Melbourne Key Commodity Manufacturers Network, is part of the AutoCRC’s Automotive Supplier Excellence Australia (ASEA) Division. It will undertake projects with the Tier 1, 2 and 3 metal stamping and plastics commodity suppliers for the automotive industry to improve existing supply chain efficiencies and explore new product development in other sectors. $600,000
Recreational Vehicle Manufacturing Association of Australia Ltd (RVM Australia) – Hawtho RVM Australia will undertake an automation feasibility project that will look at improving productivity for large, medium and small recreational vehicle manufacturers by reducing the time spent on the compliance requirements during manufacture $15,000
Strategic Lean Improvement Consortium – Hawthorn The Strategic Lean Improvement Consortium will engage the Institute for Lean Systems to conduct lean assessments with non-competing SMEs with the aim of identifying productivity improvements for each business. $49,000
Supply Chain Ecosystem Project – Scope (SCEP-S) Wantirna The Supply Chain Ecosystem Project – Scope (SCEP-S) under the auspice of Australian Manufacturing Technology Institute Limited (AMTIL) will scope network projects that will bring together SME suppliers and key industry primes from the automotive, heavy transport and defence sectors with research institutions to identify supply chain related areas of improvement. $45,000
Victorian Vernier Society Beaumaris The Victorian Vernier Society will undertake capability audits of participating network firms and conduct a workshop to explore collaborative approaches for improvement. $17,250
Wimmera Grains Cluster Horsham The Wimmera Grains Cluster will undertake the next phase of the ‘Protein Extraction Project’ which includes commercial site testing for protein extraction from grain by-product, and to further explore market opportunities for protein use. $30,750

There was an interesting story in the AFR about how Japan must revive is car sales to China and take advantage of the lower yen.  It seems that with the burgeoning car market in China, quality is not an initial consideration for a first time buyer – it is just that new car feeling and this suited Chinese makers.  But now these first time owners are thinking about resale with a nascent used car market.  Apparently for every 3 new cars sold in China, 1.2 used are sold compared to the US at 1:3 and Japan at 1:2.2 and so the Chinese are now starting to consider quality in their buying decision and this should open up the Japanese Honda, Nissan and Toyota appeal.  But at the same time in another article on the Chinese car industry it showed Great Wall as the fastest growing of all Asia’s car makers.  GW sales have risen 60% with a 75% increase in half year profits and a net profit of 16%.  Compare this to Toyota who taking advantage of the falling yen saw profits increase by 46% but net profit only rise to 7%.

The Fair Work Commission has awarded first and second-year apprentices pay rises of up to $100 a week. ACTU secretary Dave Oliver called the decision a “great outcome for current and future apprentices and for the broader economy”.  “Current wages see apprentices barely able to meet living costs; they are considerably less than other job options and barely more than the Newstart allowance,” he said.  “There is also little recognition of the needs of adult apprentices. Today’s decision is a real step forward.” T  However, the Australian Manufacturing Workers Union (AMWU) was less enthusiastic about the decision.  Andrew Dettmer from the AMWU criticised the decision on the grounds that those who are already in the system will receive no pay rise.  “We know that there are many apprentices who are failing to complete their apprenticeship because of the low rates of pay and that was the evidence that we led and wasn’t contradicted,” Dettmer said.   But the Master Electricians Australia (MEA) said the increases “would destroy the apprenticeship system and kill future apprenticeship opportunities for the building and construction industry”.

Senators John Madigan from Victoria and Nick Xenophon from South Australia have paid $5,366 each on a 750-piece dining set, saying they were appalled that Parliament House was using crockery sourced from the United Arab Emirates.


Ballarat based Maxitrans, Australia’s largest road transport equipment group have just announced  a net profit of $26m for 2013, an 111% rise on 2012 based on an increase in revenue of 31% to $363m.  It has been a busy time for the company with acquisitions in the last 18 months of a Bundaberg based trailer outlet Azmeb as part of a strategy to expand into the mining and resources industry, along with a major share in a SA company.  In 2012 the company acquired QDS in Queensland to extend its wholesale and retail parts arm, which has now been rebranded as Maxiparts.

Hunter engineering company Varley Group has missed out on a five-year contract to build truck bodies for the Australian Defence Force (ADF).  Winning the work would have been worth tens of millions of dollars to Varley and created 75 jobs.  The decision has angered Varley managing director Jeff Phillips who claimed that he believed his company had won the contract.  Phillips said Varley had worked with Rheinmetall, the German head contractor for the job, for over a year, “But something has changed since the contract was announced and it looks like we’ve been cut out.”  Rheinmetall is required to use 35 per cent Australian content in the $1.6 billion job.  According to a Rheinmetall that requirement will be met and an Australian company will be awarded the contact.  “We are still in the final stages of the selection process and under the preferred bidder arrangements another Australian company is number one and Varley is number two, and is still in the game.”

Although not a manufacturing company, it was interesting to read that the founder of T2 (for lovers of tea like me this is a great shop) has just sold her business to the world’s largest tea company, Unilever.  The AFR 7 September states that for Unilever, which owns the Lipton and Bushells brands, the acquisition is part of a strategy to expand in the premium tea category and use its global scale to take T2 brand into new markets. The purchase price was not disclosed by T2 sales are around $57m for a company of 40 shops that has been going for 17 years.  Just shows how a good idea pitched into a niche market can eventually grow into a very successful company.

Hills Holding, originator of the famous washing line is continuing its move out of manufacturing industries by its latest move to sell its plumbing business after previously selling its steel businesses to Bluescope.  Hills has also reinvested $33.5m with the procurement of Merlon Healthcare Communications and HTR, which create communications systems and TV screens to hospitals.  ‘The Australian’ saw these moves as a continuation of the policy to move out of manufacturing towards a provider of technology solutions as confirmed by the CEO statement that they were focusing on being a service provider in trusted environments.

The Geelong Future Industry Funding program has award $500,000 to Cytomatrix which is a collaboration project between a local biotechnology company and Deakin University.  The project will develop a world first pilot manufacturing plant for the production of short nanofibres that have properties that lead the technology to a wide range of applications including filtration, medical sciences and biotechnology, environmental science and public health.  It is said the project has the potential to create and exciting new industry for Geelong.