Amcor laid off 300 people yesterday and attributed the redundancies firmly to the “continued strength” of the Aussie dollar but as Amcor’s profits soar it shouldn’t really be blaming our currency.
The strong Australian dollar has been something manufacturers have had to deal with since 2008, so to characterise it as a recent surprise is mischievous.
Many successful manufacturers have taken into account a strong Australian dollar that sits above parity with the United States dollar in their business plans and strategy.
The clever ones have purchased more efficient technologies to drive higher productivity per machine and employee, sourced and procured better pricing from international material suppliers and lower cost inputs and invested in better IT and machine diagnostics to increase up-time.
Savvy manufacturers have increased and accelerated new product development that delivers customer value propositions and sourced and procured higher quality imported parts, components, systems and modules to enhance purchased capacities.
Yes, the high Australian dollar makes things tough for manufacturers, but it is too simplistic of Amcor to say the Aussie dollar has made it impossible for its sites to remain competitive.
As union representative Leigh Diehm said, a major factor which Amcor has ignored was the buyout by SAB Miller of Amcor’s key customer CUB late last year.
Rather than bemoaning the high Australian dollar, manufacturers like Amcor need to get used to the fact that it is here to stay for the time being.
While there is a high Australian dollar at the moment, there are also low interest rates which manufacturers can use to assist in buying new technology to enable them to manufacture in a more cost-efficient way.
The executives at Amcor well know that problems in the manufacturing sector can’t all be blamed on the strong Aussie dollar.
Read about how your company can get the best out of foreign exchange transactions on SmartCompany’s Indecent Exposure blog by currency strategist Jim Vrondas.