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No manufacturing business 'immune' from economic challenges

07 February, 2014

The CEO of one of Australia's most progressive manufacturing companies has urged SMEs in the industry not to rest on their laurels too early in the new government term.

Tony Panrucker of Sevaan Group believes that every company is still somewhat of a moving target while Australian industry falls into place under a government that claims it will once again re-energise Australia's manufacturing sector and the mining industry.

Until then, he says, don't forget that every SME in the manufacturing supply chain is a potential moving target for a downturn unless it makes strong alliances with other companies in its supply chain to maintain strength and momentum in numbers.

"We should not rest on our laurels just yet as what has been touted at Federal decision making level is not yet bedded in, so I urge all SMEs in manufacturing to be frugal to the greater extent until the economy generates some momentum," Panrucker said.

"For Sevaan Group, we were quite fortunate that our strategy of joint ventures during the last five or six challenging years proved a period of growth not just for us but also the companies who formed ventures with us.

"But for the majority of Australia's manufacturers it almost proved the death knell and at a time when the economy is showing signs of a revitalisation, they are quite stretched and may consider going into an unfeasibly high level of debt to gain momentum with the rest of the market.

"This is the ideal time to put on the brakes somewhat, be gradual in growth rather than sudden, and thus help to proof your business against any unforeseen downturns in the near future until all policies are set in stone and the economy is visibly on an upward curve."

In recent years, Sevaan Group has amalgamated several longstanding engineering companies, invested in its own powder coating, sandblasting and painting facilities and has made joint venture arrangements with clever companies armed with product patents which alone they couldn't step up to the next level.

Rather than conducting ruthless takeovers, Sevaan Group saw it as more beneficial to all parties to come in as a strong venture partner to help the associated business reach the new level.

In turn, Sevann Group itself sustains more growth as it uses any of its large range of technologies, facilities and highly trained staff to uptake more contract work.

This, according to Panrucker, created a solid future-proofing for itself and showed just how tactful a manufacturer must be to grow in the Australian market and eventually become an exporter to the world.

"But we never rest on our laurels either," said Panrucker. "We know that regardless of how powerful you might feel today, no matter how much business is coming through the door, the important thing is to keep innovating at the management level.

"This is often as simple as admitting that under the current structure, your business may be at its maximum potential and to take it to the next level and give it groundwork to continue growing may require partnering.

"Remember, as manufacturers we are always a moving target at the end of the barrel of the economy.

"Only by making strong, sensible decisions along experienced people can you help future proof your business."

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Paul Herbison | Monday, February 10, 2014, 12:04 PM
No Cost Support to Australian Industries. Recent events with Automotive, Processing and Primary industries not receiving grants while reflecting on the current government, are a result of government decisions over the past 3 decades. The reduction of import duties and tariffs from the 1980’s, in an effort to make Australian Industries more competitive, has had a lasting effect. Consecutive governments have paraded on the world stage promoting free trade on a level playing field. While this portrays us as a responsible world citizen we have put ourselves at an enormous disadvantage and created an uneven playing field. Over the past 100 years Australia has developed a world class set of manufacturing and agricultural standards which all primary & secondary industries adhere to, while there is a cost of compliance, all parties agree these standards benefit the community and don’t want to reduce the standards. So what is the current situation? • Any company exporting primary produce must comply with AQIS regulations and meet, or in many cases, exceed the relevant countries regulations. • All Australian based organisations suffer the cost implications of compliance. • Companies importing produce do not prove they are made to Australian Standards, produce can be grown with pesticides and growth promoting chemicals, not accepted here. • We allow importation of manufactured goods that may comply with the regulations of the country of origin but do not meet the standards Australian companies comply with. Some have non-complying wiring and asbestos. • Recent advertising by the Olive Oil association of Australia has highlighted the fact that many imported oils do not comply with the same classifications as apply in Australia. • The recent takeover of Warnambool Cheese & Butter by an international was allowed by the FIRB while the Australian Competition Tribunal was still procrastinating about the takeover by an Australian competitor, putting the local company at a disadvantage. • Government agencies, state & federal, normally only allow a 10% price preference to Australian industries. Statutory benefits including work cover, sick leave, public holidays, long service, annual leave, superannuation etc add around 25% to wage bills. The standards we have established over the past 100 years by industry and governments protect people and set levels which reflect our role as a responsible world citizen. AQIS and other departments need to ensure all companies importing produce and products comply with HACCP and other relevant Australian standards, this includes the way product is grown, processed and labelled. All costs associated with proof of compliance must be met by the importer the same way Australian based organisations meet the cost of compliance. Government bodies can rebuild our economy without expense and therefore increase investment and employment, and reduce requests for government assistance. These are our standards and any company operating here should comply with them.
Rob | Monday, February 10, 2014, 12:53 PM
and as the Federal Parliament returns to waste time on arguing about a royal commission witch hunt, we SMEs are slowly dying. Imagine how much could be achieved if both Liberal and Labor worked together on saving manufacturing in Australia.
quale | Monday, February 10, 2014, 3:46 PM
Totally agree with Paul. If an importer wants to sell in Australia, they should demonstrate that the product is made using labour that enjoys conditions not dissimilar to this country and the product meets our standards. If not whack on a tariff. For the future of this country, we need a level playing field.
Jason | Tuesday, February 11, 2014, 12:09 PM
Couldnt agree more Paul. The manufacturing industry in Australia is already at a disadvantage to that of the rest of the world due to the cost of maintenance and development. In the case of things like parts and equipment, I think we would benifit to import these goods to try to keep our costs down so we can get on with the job at cheaper rates. The cost of manufacturing is too high.
| Wednesday, February 12, 2014, 11:39 AM
I fully agree, Paul. The issue of enforcing quality, health and safety standards of imported goods is being ignored by Govt and the average Joe doesn't think about it. If we are going to allow non-compliant imports, what is the point of requiring compliance of Aussie manufacturers and suppliers?
Lou Furbadamo | Thursday, February 13, 2014, 10:01 AM
It’s anti climactic to belatedly, quasi niche protected, now talk immunity & waffle strategy, after devastating industrial pestilence has already infested and destroyed our biggest and best manufacturers and bulk non Gov. employers? In a healthy, competitive environment, there’d be no need to hedge bets for a smart operator, as the weak would fall away first. Nevertheless, Paul’s valid, often lamented, but never corrected double standards and extra cost burden of local compliance, are only peripheral components of main failure causes. The Auto companies exit justifications were clear; That it’s the total cost of doing business here ie. Titanic labour costs, high exchange rate, highest direct and in direct overheads and the volume crippling lack of local buyer and Gov. support, that’s insanely sinking Aussie industry & thousands of decent workers. Who deserved far better from apathetic, industry betraying and global sell-out, multi incompetent, premature subsidy withdrawing, DoDo governments. The common failure denominator, is uncompetitive, wasteful, redundant, most expensive representation, three tiered government political and bureaucratic systems, which gouge private industry and workers dearly. Hence extreme follow on labour cost pressures. If these over burdening, structural fundamentals remain unresolved, it’s Bye, Bye remainder of our uncompetitive industries, until markets eventually humiliatingly hammer the Aussie dollar down to it’s lower, basket case level? Imagine if workers had been forced to take a twenty percent pay cut last year! Pandemonium would have broken loose? Yet with the dollar at US 85 cents, that’s exactly what foreigners have imposed. And with future transitional waffle failure, higher unemployment, astronomic Gov. debt, social shock and depression. It’ll fall much lower? Pity rash car & vulnerable components companies won’t be around to benefit. Much debate occurred last year, when the economy was still “Juliar dream time exemplary”. But Ford’s , GMH’s and Toyota’s exit strategy was never in doubt, unless basic, uncompetitive, fundamentals were finally corrected. Fat chance? Instead, new one term super Gurus; “Budgie Boy and Cockey ”, who’ve arguably no idea of critical structural solutions, nor disastrous closure knock on effects on unemployment and the economy. Diversion insist, it’s the ever punishable, over taxed Aussie public and catch up worker’s hard won conditions and loadings, that need harsh abrasion and curtailment! Rather than correctly sorting out burdening Gov. excesses, waste, incompetence, corruption and duplication. In order to give industry a competitive, level playing field chance of success, wealth generation & growth. Sadly, Budgie, seems to be the sole daft one in the universe, moronic enough to destructively crap-on and sink, an entire proud nation’s perfectly workable, automotive industry, in one foul swoop? Whoosh! When the rest of the world is doing their utmost to support and expand theirs! His federal “treatschurer”, keeps remedial spouting ”The age of entitlement is over” and that we all must “do our fair share of heavy lifting”, of our recklessly amassed, economic burden? How more devious could conning, Don Chipp warned, dishonest Pollie bastard advice be? When the fair Aussie worker, could easily patriotically carry the load. If only, our INXS multitude of greedy, burdensome Fatties, got off our backs and the bogged public gravy train and shed excesses & greed to an internationally competitive weight, and give us a competitive chance! So, Dream On! If you think our snorters will now awaken to the real causes & solutions! Cheers! Banananana Republic Furbo!
worker1 | Thursday, February 13, 2014, 11:23 AM
Furbo. We haven't miss your ravings, so I wont welcome you back. I didn't read your rant, but I got the summary by your last sentence and I concur.
Lou Furbadamo | Thursday, February 13, 2014, 2:20 PM
Dear unflattering, one and a half wit word “worker 1”! Sorry to wake and revitalise you, from your otherwise permanent dopy bear slumber! Too many words for little you already? But Gee, how I’ve missed straightening some of you incognito, superficial Richard Heads out to no avail. Pity that in addition to your apathy, non understanding, clueless assessment, little sense and irrelevant comment. You don’t have the balls to identify who you “We” are, or come up with your own dubious interpretation and constructive solutions for us to rubbish! Hopefully you’re not some ruffled bunny, still sore from a previous tough touch up and or, there aren’t too many closeted and as seemingly hopelessly daft and illiterate as you! Obviously, if you trolls of few, few words have no idea, nothing constructive to offer and can’t concentrate enough to read unpalatable critiques, without getting confused. You’ll never wise up and our economy will continue it’s downward, second rate, pits, looser slide. Which you’re probably contentedly, at home with? Or perhaps you’re politically ruffled, or you’re a union loving agitated Lefty, who incredibly believes that we’re still the Juliar and Virgin Suwannee Budgeteer “F” booming exemplary economy? If indeed you’re the un-accepting, hostile, clueless worker you pretend? Commiseration cheer up insult all you like, cause your retrenching, punishing unemployment, struggling on lower pay and conditions, harass-able Centre Link dole pittance, morale destroying, poisoned economic, crawling China Century dish, is being served hot and nasty. By our current batch of cost gouging, mining industry pandering, GST taxing, Born again, penal Work Choices Resurrecting, incompetent, Auto industry destroying, non furbo Fascists! So enough of my sincerity and caring rebuke, cause you’ll soon be deservingly, brutally, rampantly shafted with their full course dish out and just deserts, for you’re rejecting insolence. So, Open up and Bon Appetite, Wood Duck! Friendly, Caring Furbo! PS. The beauty of this wonderful forum, if my pert reply is published. Is that even without your actual identity, you probably won’t be able to resist reading my tailored response and you’re initial cockiness and dopey butt, might still be very sore till next time?
Ron | Friday, February 14, 2014, 6:18 PM
haha. You idiot, Lou. I enjoy your ranting....it's always good to laugh at someone else's misfortunes, especially on a Friday afternoon.
Lou Furbadamo | Monday, February 17, 2014, 11:03 PM
Hello and belated welcome Trolling Ron of few words! You must be “worker1’s” special play mate? Teaming up and combining efforts for a full illogical sentence! Had you been a lover, they’d have rightfully called you a Nuisance or Justin? So get the facts straight; that I’ve been comfortably retired from the Auto industry for nine years and fully self funded since. And have never had to rely or burden the public purse for handouts or assistance. So I’m hardly going to be “impacted” by your pathetic, Liberal Gov. Auto industry cock up and disaster policy. That ignorant fools seem keen to insanely promote and support! So shame!, for bumbling the facts and getting your attack so wrong, you truest of true blue IDIOTS. If you’d learnt to read accurately, you'd understand that I'm only trying to help Aussies reliant on local jobs to support their families. Possibly like ungrateful you? Who, despite others best efforts, even lengthy raving. Doggedly insist on remaining nascent clueless and self destructive, under errant guise of defensive Aussie patriotism? Classical Paradigm Australis that doest want to hear what’s wrong and improve, thereby continuing to lead this country down the low gurgler to Rotten, Banana Republic Status. What really irks, is that a bunch of clueless “Budgie come lately clowns”, are about to flippantly, rashly destroy invaluable Australian Icons that have taken generations and trillions of dollars to establish? No wonder you have touchy, touchy Liberal Budgie Boy defensive empathy? But Hey!, if you’re contented with life as a crony ding-a ling! Who am I, to change your woeful Tune? So reverse HA! HA! HA! and may Saints Christopher, Margaret and Mary protect you dopes? Cause it’s your worker misfortunes we’re laughing at? And I laugh at you, not just on Friday! But every day of your failing week. So, send me your address, so when things get really bad in 2016/ 2017, as I predict. I’ll compassionately send you a generous food parcel, gratis. That way you’ll be devastatingly poverty stricken and job desperate depressed etc. But not famished Hungry as well! Friendly, Furbo!