When Karen Andrews, Australia’s Minister for Industry, Science and Technology, spoke last week about the benefits of local manufacturing during COVID-19, I couldn’t help but smile. Her comments are timely and refreshing and just as relevant to our New Zealand and Pacific Island clients as they are our Australian clients.
Minister Andrews said, “I refused to accept the advice that Australian manufacturers would only be able to fill small gaps in supply. Capability exists in this country. What was needed was a change in the culture of how we think about our capability, about how we challenge the status quo … when they were called on, our manufacturers stepped up to deliver.”
We understand the benefits of course because we regularly see how efficiently manufacturing operations run. But I often forget that not everyone has that visibility, and — pre COVID-19, at least — would regularly find myself in discussions explaining how onshore manufacturing is not just viable, but also profitable.
Now, COVID-19 has demonstrated just how fragile supply chains can be when dependent on offshore production. The offshoring cost benefit analysis often involves weighing up the cost per unit benefits against the generally lower standards of environmental safety and labour protection. For the next few years at least, businesses now need to consider the added risk of disruption and model the impact on their business if supply lines from at-risk areas are cut.
The last few months have shown that many local businesses don’t have a viable manufacturing continuity plan in place. This time it was a pandemic; next time it could be extreme weather, economic or political instability, strikes or any number of other factors.
Uninterrupted access to food and energy sources are traditionally the most discussed national security concerns. The rapid shortages in medical equipment have highlighted how important it is to focus on the other, less obvious products, as well.
We’ve been delighted to see many of our clients rapidly pivot their manufacturing processes to supply much-needed medical devices and health equipment like PPE, shields and anti-bacterial products. As the world continues to lean away from globalism and towards nationalism, governments and businesses are realising that we must be able to ‘stand on our own two feet’ when required.
As a local manufacturer, you may not be able to offer the same cost per unit, but you can offer things that are just as valuable. Proximity to the client, design agility and speed to market through just-in-time manufacturing are all huge benefits at a time when consumer tastes and expectations are constantly changing.
You’re also capable of producing smaller batches, which allows you to demonstrate the false economies of offshore manufacturing. A low cost per unit often hides storage costs, transport delays and the risk of obsolescence. These are dramatically reduced when businesses manufacture onshore.
There is, of course, the additional brand value available to a business when their product IS made locally. Market research has found that 9 out of 10 Australians prefer to buy locally made goods. Marketed the right way, your manufacturing capabilities offer your clients a chance to improve how they are perceived by their customers, building long-term brand equity. This is especially true in food, beverage, medical and the products they rely on to ‘just work’ every day.
As Minister Andrews said, “I know a number of businesses are actively looking at boosting local procurement because they know many Australian consumers are planning to closely examine their own purchasing decisions in the future … I sense a groundswell of community support for Australian-made products, which is good news for local manufacturers.”
Of course, we don’t expect everything to be made locally. But there is so much more that we can — and should.
When manufacturing businesses are established with the right inputs, systems and processes and a clear path to market, they can be a sustainable and significant source of jobs. At the same time, they can also be a massive contributor to the innovation and resourcefulness of the nation and the growth of our economy.
Outcomes you’d be hard pressed to argue against at this point in time.