Engineering & Manufacturing Influence News – Issue 9 February 2013




This month’s main speaker is Dexter Clarke from Futuris.  The timing is opportune as the company, maker of car seats and trims, has announced recently that it has doubled, over the last 18 months, its output from its plant in the port city of Hemaraj in Thailand.  The plant is located in an industrial estate sometimes known as the “Detroit of the East”.  So this month it will be pleasingly to hear a success story in the Australian Automotive industry.

The ”Initiative” presentation this month will give an overview of the New Gillard “Jobs plan for Australian Manufacturing”, which is said to be a $1b investment in our manufacturing future.  While some of the ideas are interesting, it is hard to believe that this is the panacea to all our issues.  The focus is on jobs – but what jobs and where will the money come from?  This question will become increasingly predictable in this election year as both parties make promises filled with financial funding uncertainties.

The other big issue that has dominated the last week is the push from the PM to “Put foreign workers last”.  Then there was the claim from militant Maritime Union that they are insisting on unprecedented guarantees that companies servicing the offshore oil and gas sector will only employ local workers under new four year workplace agreement (AFR 26/2).  One could not help smile at the coalition’s point that the PM’s major advisor is himself on a 457 visa. Union leader Paul Howes, when probed on their enforcement of this point on ABC TV recently, repeatedly cited incidents of rorting of the visa system by unscrupulous bosses and claimed that the government’s, for want of a phrase “Give us a job” site for people wanting jobs in WA, had over 37,000 names yet new 457’s were being employed.  The ‘Lateline’ reporter pointed out that it was fine to want a job but how many Australians had the skills that were required against the jobs available?  Howes repeatedly ducked the question, with the suggested aplomb of a man who has his own name on a jobs wanted list.  It has been pointed out that many of the 457 jobs are in our hospitals and care service and were well paid roles and skilled roles, necessary to support a system that would otherwise collapse.  While 457 jobs in manufacturing are in a minority, one factor that seems to be overlooked or too explosive to mention is, and I speak from firsthand experience, that the productivity of overseas workers is higher than the Australian worker.   While some workers may not have the level of skills required initially, this is compensated for by industriousness, a willingness to learn and perhaps no sign of the Australian ‘mentality’ that is seen in some local workers.  Of course, these overseas workers will work hard and may not know or get their full entitlements because job security is so vital to them but the nationality of the worker is not and should not be the only choice an employer is mandated to make!

The Jobs Situation

Mining Job losses

Even the mining industry is not immune from job losses with the Queensland mining company CQMS Razer announcing it will cut another 60 jobs next week following the 20 people that were removed at the end of last year. (MM Feb)

Telstra cuts 700 jobs

Telstra confirmed on 21/2 that it was cutting nearly 700 jobs from Sensis as part of a restructuring that aims to accelerate the transition of the faltering directories unit to a fully digital media business which will create another 50 positions.  These losses occur as Telstra posts record half year profits of $1.6b. (AFR 22/2)

Boral further restructure

Following Boral’s 700 employee redundancies announced in January, the company today announced it was amalgamating its construction materials and cement into a single division with the loss of one senior executive (MM Feb)

SA dependent on manufacturing (MM Feb)

A leading economist has stated that the SA economy with 70% of its exports coming from the manufacturing sector is heavily dependent on the allocation of the forthcoming federal defence contracts.

Half defence jobs go overseas via bid process

The AFR reported (25/2) that the federal government was outsourcing defence jobs to overseas manufacturers while imposing new requirements on mining companies to use local content.  The article states that local content has fallen from 80c to 53c and the average contract value was lower in value than contracts awarded to Britain, US and European based companies.  The DMO manages 170 defence projects worth of $100b.  However the Australian Strategic Policy institute said “given the globalisation of defence industry, it’s inevitable that work will increasingly go offshore”.

600 Jobs on line at Electrolux – (AFR 8/2)

One of the two remaining large whitegoods manufacturing plants in Australia is under threat.  Electrolux Home Products with 600 staff at its refrigeration plant at Orange NSW is seeking a $50m plus investment from its Swedish partner .  A request that has sparked a company review .  The CEO said this is not a review based on lack of profitability or productivity but by the Australian board looking for new investment.  The challenge is that Orange will compete for investment with 30 Electrolux plants worldwide including lower cost locations like China.  While the Orange plant is under question, the Adelaide Oven factory cannot cope with the backlog of orders for the new and first 90 cm wide oven.  Electrolux have up to 40% of the Australian market – The CEO said “we should stop apologising for Australian made – if you are doing it today you must be doing a bloody good job”.

Industry No to apprentice wage rises

The ACTU along with manufacturing unions are arguing before Fair Work Australia (FWA) that a first year apprentices wage should rise to 60% of an adult’s wage.  The article did not make clear what the current comparative rate is but the case is being watched by business and unions for wage claims of almost 500,000 trainees and apprentices across the country.  The ACTO argue that the increase would stop the high dropout rate and provide an adequate living wage, while the employer associations argue that it would lead to a substantial decrease in apprenticeships being created and so increase the skills shortage.

Other News this month

Coalition rules out changes to industrial Relations

Joe Hockey announced in Queensland recently that the coalition have ruled out both major industrial relations changes and intervention to lower the dollar.  Hockey said productivity is more important than cutting wages.  “We can compete with higher wages provided our output per work is globally competitive” the AFR reported from his speech. “Australia’s standard of living must not go backwards.  There is no national benefit in cutting wages”.  With regard to the high $ Hockey argued that a forced reduction would create higher prices for consumers at a time with many households are under extreme financial pressure.

Academic offers solution for new global companies and praises ANCA

In a recent interview with “Smart Company, UTS Professor and recent advisor to the government, Roy Green has said there has been a recent growth in what he calls “micro-multinationals” who are well suited to Australia’s current challenges.  Some companies will die off, Green claimed, but others with niche offerings and an international focus could adapt.  Either those who produce very bulky items difficult to import or those that are agile and specialised to producing products that operate in niche markets both locally and internationally.  “Micro-multinationals “are those that have a global mindset and are not limited to the domestic market. Examples of such companies were given as ANCA, fabric maker Textor and electrical accessories brand Clipsal.  Vernier’s recent speaker and ANCA co-founder Pat Boland stated that ANCA’s plant in Thailand is able to sell into China under a free trade agreement between the two countries.  This means that there must not be such an agreement Australia and China (apparently such agreements with China are rare) so machines will be more expensive when shipped from Australia.

Government tells manufacturing the solution to current pressures

Gillard in a radio interview, as reported by Manufacturers Monthly says that manufacturers can still survive even with the high $ by making changes to make their businesses in order to stay profitable.  “The competitive disadvantage of the high Aussie dollar is obvious but we can still manufacture things, provided we’re at the forefront of innovation and quality,” she said.  “We can still be a country that manufactures things. But we’re going to have to do it differently.”  The PM’s comments echo Industry and Innovation Minister Greg Combet as reported in the Australian that while the government was committed to supporting manufacturing jobs, business models have to change to become more competitive.  “Industries and businesses that succeed are going to be those that develop new technologies, new processes, that innovate, that apply technology to their manufacturing processes, for example,” he said.  “the manufacturing sector also need to take a leadership role in finding new technology … Industries and businesses that succeed are going to be those that develop new technologies, new processes, that innovate, that apply technology to their manufacturing processes,” Combet said.

Successful UK Entrepreneur questions Australian tax incentives (MM Feb)

Inventor Sir James Dyson (of vacuum cleaner fame) was in Sydney last week as part of a promotional tour for the company’s new Airblade product stated that Australian tax laws do not encourage entrepreneurship through limiting tax breaks for inventive organisations.  The AFR report Dyson as saying “You have very inventive people and very good universities … but if they [government] think 45% tax relief for start ups in Australia is going to help – it won’t.  It’s too small.  We [Britain] are getting more than double that, the French gives more than that.  It just isn’t enough”. Dyson also questioned funding effectiveness. Having to apply for funding where some civil servant ultimately makes the decision is wrong because they are not equipped for the right decisions.  “You should back people who have ideas and want to do them and the way to do that is through the tax system”.  As reported by the Australian newspaper the Airblade was a result of 3 years research by 125 engineers and through 3,300 plus prototypes.