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Strong Aussie dollar is failing to deter exporters - Survey

21 June, 2007

Despite a rising Australian dollar and high fuel prices, Australian exporters remain confident about the future, especially those exporting to Europe with 65 per cent of those surveyed expecting an increase in orders to that region over the next year.

The 2007 DHL Export Barometer has also found that with world economic growth at a 30 year high, 69 per cent of exporters expect an increase in orders over the next 12 months. In addition, more companies are investing in technology to facilitate trade, and the biggest supply side constraints are manufacturing capacity and access to supply chains. 

These are the key findings of the 2007 DHL Export Barometer, a joint industry survey conducted by DHL, the world’s leading express and logistic company, and Austrade.

According to Tim Harcourt, Chief Economist, Austrade “Overall Australian exporters remain resilient in light of the dollar’s strength and high oil/fuel prices, partly due to the health of the global economy and a renewed focus on Europe as an export market.”

“A return to the more traditional markets such as Europe suggests exporters are diversifying their opportunities, although China and South East Asia continue to remain strong as key trading partners,” Harcourt said today.

The 2007 DHL Export Barometer has shown something of a role reversal, with China at 61 per cent and South East Asia at 56 per cent now behind Europe (65 per cent) as the markets where exporters are most likely to increase their orders in the coming year.

Paul Bellette, Strategic Development Group Manager, DHL Oceania said “Overall the results of the survey are positive for our exporters. The number one ranking for Europe was surprising but it proves that companies here are taking a global approach and are not relying on specific markets.”

“The good news for exporters looking to increase their orders to the continent is DHL’s investment of more than US$400 million in a new global hub based in Germany which will assist our customers to expand throughout the region,” Bellette said.

“However, despite Europe’s ranking, China remains a key driver of the global economy and Asia Pacific is DHL’s fastest growing region,” added Bellette.

According to the 2007 DHL Export Barometer, manufacturing capacity and supply chains remain key constraints.

“Over the past three years supply chains have proved an increasing issue for exporters, up from 12 per cent as an area of concern in 2005 to 44 per cent in 2007. Consolidation of suppliers is one way exporters can reduce supply chain inefficiencies and costs,” said Bellette.

The survey results show that infrastructure bottlenecks are also an issue, though less so than previous surveys.

“The main supply-side influence was manufacturing capacity, that is: a shortage of plant, skilled labour and capital, which suggests contrary to popular belief, demand for Australian manufactured goods is strong,” Harcourt said.

However it is exporters’ bullish confidence that is seeing an investment in new technology. Of those surveyed, more than half had invested in new technology capabilities in the past 12 months. Exporters in the mining (77 per cent) and manufacturing sectors (67 per cent) are significantly more likely to have invested than the other sectors.

“Technology is a good indicator of export confidence and the survey results show 85 per cent of exporters now use the internet extensively for sales and marketing. The Barometer’s findings support DHL’s experience, with two in three of our customers processing their shipments electronically,” said Bellette.

The 2007 DHL Export Barometer finds that in Australia’s strong performing labour market, 80 per cent of Western Australian and 79 per cent of Queensland exporters expect wage increases over the next 12 months.

“The resources boom is continuing to drive up demand for labour and the growth in wages. Western Australia currently boasts an impressive 3.2 per cent unemployment rate, therefore it is no surprise that workers expect fuller pay packets,” said Harcourt.

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