Can Australian-made products compete on price?

manufactured in Australia

Right now, the demand for ‘Australian made’ is higher than it’s ever been.

A recent Roy Morgan poll shows 52% of Australians have a higher preference for Australian-made products since the start of the COVID-19 pandemic.

The same survey shows 89% believe more products should be manufactured in Australia.

When asked the reasons for bringing manufacturing home, here are the top five reasons respondents gave.

  1. It reduces Australia’s reliance on other countries.
  2. It creates local jobs.
  3. To support Australian businesses.
  4. To reduce the risk associated with international supply chains.
  5. To strengthen the Australia economy.

The Australian government is also driving the push for local manufacturing, announcing earlier in 2020 that it would look to awarding 10% of all contracts to Australian SMEs.

But what’s the reality?

Given how the Australian manufacturing industry has been depleted over the last few decades, do we even have the capacity to replace imports with locally produced goods?

I would argue we do, and the solution may come from small and medium businesses, rather than the big end of town.

Many products that are currently sold in Australia are imported.

Not because they’re not available here, but because many wholesalers and distributors have ‘drunk the kool-aid’ and believe the only way to compete is to import from China. They think they’re going to get the best deals buying from Chinese sites such as Alibaba, which is simply not true.

With a bit of good old Aussie ingenuity, it is possible for Australian manufacturers to compete on a global scale. And it’s often the smaller, more agile Australian manufacturers that are leading the charge. The myth that’s usually bandied about is that Australia will never compete due to our high labour costs. But the reality is, by working smarter and more efficiently, manufacturers in Australia can be globally competitive.

Take a recent home-grown example: Bambooli. It’s a small company in Queensland, that supplies eco-friendly loo paper.

The founder of Bambooli, Matt Henderson, paid a visit to China in late-2019 on the lookout for eco-sustainable bamboo products, and more specifically, toilet paper.

Shortly after identifying a Chinese supplier near Wuhan, COVID-19 hit, Wuhan went into lockdown and Matt’s plans came to a sudden halt.

Not to be deterred, Matt went looking for an alternative… in Australia.

Matt approached possible Australian suppliers, and in February of this year, succeeded in finding a manufacturer in Queensland. With some clever problem-solving and a win-win approach, they were able to produce the 100% recycled and eco-friendly loo paper at the same price as Matt’s Chinese supplier.

Three things that can put Australian manufacturers in front

First, Australian manufacturers are more likely to use automation than their Chinese counterparts, so the impact of Australia’s more expensive labour rates is not as high as you’d expect.

Besides, automation also allows for social distancing, so it’s easier for the company to be COVID-compliant.

Second, for local manufacturers, supply chains are much shorter and therefore cheaper.

There is no need for expensive international shipping or customs fees, and no foreign exchange risk.

And with the disruption and delays in global shipping, this makes Australian made even more attractive.

Third, let’s not forget good old ‘Aussie ingenuity’.

Without a doubt, there is a culture of problem-solving and innovation in Australia that doesn’t exist elsewhere.

You only need to look at the many world-changing Australian inventions to understand this. WiFi, cochlear implants, the black box flight recorder and the humble bound notepad are all great examples of Aussie inventions.

Applying this problem-solving ability to manufacturing problems enables local manufacturers to come up with clever (and often cheaper) solutions.

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