Policies developed right here in Australia are to blame for the malaise in local manufacturing
There is no denying Australian manufacturing has been in trouble for quite some time.
Local factories once accounted for about 25 percent of Australian jobs, they now account for about 10 percent.
According to the Australian Bureau of Statistics (ABS), manufacturing lost about 18,000 employees from 2009 to 2011 alone.
In recent times, it has proven near impossible for the sector to compete with cheap overseas labour and production costs, with many businesses investing in automation and streamlined production processes to remain competitive.
The strong Australian dollar and carbon pricing haven’t helped, but despite the odds stacked firmly against them there still remain a few dogged, resilient manufacturers making quality Australian buses.
Coach Design at Archerfield, Brisbane is one of these companies.
A rare breed of business, Coach Design operates from an old tin shed built in the 1950s and employs about 35 workers.
Inside the workshop, there is no automated production line and no high-tech robots, just workers – some grey-haired and wearing blue shearers’ singlets – focused on building buses.
Coach Design director and founder Chryss Jamieson says since its humble start repairing buses in 1986, Coach Design has built about 800 buses and now produces an average of three buses a month.
But it hasn’t been easy.
“There have been a lot changes in the industry,” Jamieson says.
“We have been through hard times and good times.
“We have just been through one of the hard times again.
“And obviously three body builders recently disappeared from the southeast corner.
“The GFC affected tourism and once tourism is affected people stop buying and our production was halved.
“Everyone took a bit of a hit on that.”
AUSSIE FLAVOUR
But despite the unfavourable market conditions, and increasing competition from cheap imports, Jamieson says there has recently been an increase in operators purchasing Australian-made vehicles.
He says the swing toward Australian-made purchasing is providing small manufacturing operations with hope.
“The Chinese vehicles have been in Australian for almost ten years,” Jamieson says.
“In that time a lot of people have tried it and the pendulum has sort of swung back our way.
“We are very busy again right now, and we could probably double the production if we wanted to.”
A recent preliminary HSBC China Manufacturing Purchasing Managers Index, gauging nationwide manufacturing activity, fell in April, signalling a drop in demand for Chinese manufacturing.
The index fell to 50.5 in April from a final reading of 51.6 in March. A reading above 50 indicates monthly expansion, while a reading below 50 indicates contraction.
After the release, the Australian dollar fell from $US1.0254 to $US1.0225.
But Jamieson says the strong Australian dollar and demand for cheap imports are not the biggest challenges facing Coach Design. It is overregulation and staffing inflexibility that worries him the most.
“We have the capacity to do more work here, no problem at all, it’s just too hard to employ people,” he says.
“It’s not so much putting them on – it’s when you have to put them back off.”
He says overregulation is prohibiting expansion and the ability to respond to market conditions.
“There is probably always going to be room for the Australian body builders, but we need to be able to expand,” he says.
Meanwhile, The Australian Council of Trade Unions (ACTU) has recently been campaigning for more employment restrictions to protect workers from ‘insecure work’.
According to the ACTU, a recent ABS report confirms that millions of Australians are in insecure work.
ACTU President Ged Kearney says growth in insecure work is a long-term problem that has not been stemmed despite a period of economic prosperity.
“We need to talk about the very real way in which insecure work is hurting workers and their families, and despite overwhelming evidence from the voices of working Australians wherever you go, business and employers remain in denial about this issue,” Kearney says in a statement.
Kearney also asserts that insecure work is a trap rather than a bridge to permanent employment and calls for urgent action to give workers more job security.
“It is not fair that workers are expected to shoulder the risk of being in insecure work, while the profit share of the economy continues to rise compared with wages,” he says.
“Business groups are burying their heads in the sand about the extent of insecure work and its effects. They need to wake to reality and start working with unions and governments to lessen the impact of insecure work on Australian workers.”
But Australian Industry Group (AI Group) Chief Executive Office Innes Willox says the ACTU’s claims are misleading.
“The unions’ insecure work campaign centres around the bogus assertion that there is an insecure work problem in Australia,” he says.
“There is no such problem.
“The problem is the misguided campaign by unions to convince the public that there is a problem so they can impose a raft of new restrictions on employers.”
According to Innes, the Forms of Employment survey published by the ABS shows the level of casual employment in Australia is actually declining and the rate of casual employment peaked five years ago.
He says the level of casual employment in Australia in 2012 was 19 percent, about the same as it was ten years ago.
He says casual employment peaked in 2007 at 21 percent and the number of independent contractors has also steadily declined in the past few years.
Whether or not there is an insecure work problem in Australia, Jamieson says more restrictions on employment could one day spell the end for companies like Coach Design.
“It is just too hard to employee people, and it’s probably going to be our undoing in the long-term, because if you start knocking back work – well, if you can’t buy a Holden you will go and buy a Ford,” he says.
Current small businesses regulators include The Fair Work Ombudsmen, Fair Work Australia, safety inspectors, Local Government health inspectors, and The Australian Competition and Consumer Commission (ACCC).