Michael Climpson
03 Jun 2019
A good success story in this space is Redback Boots, an Australian footwear manufacturing company with its roots in the early 1900s. Specialising in work boots and army boots for domestic and international markets, Redback manufactures over 1 million boots a year. Key to their future success has been an investment in technology to better understand their customers and automate their operations.
There are a number of challenges facing the sector. Energy, for instance, is a major cost for manufacturers and has significantly risen over recent years. As local manufacturers are competing with global markets, a rise in Australian energy costs cannot simply be passed on, and margins are adversely impacted. Any government intervention that is effective in reducing energy costs would be welcomed by the industry.
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Supporting manufacturing R&DManufacturing punches above its weight in terms of investment in R&D – with one figure stating that $4.8b was spent by the manufacturing industry in 2013-14 – as a proportion of GDP this is roughly four times the economy wide average. |
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Free Trade Agreements should complement local manufacturingAustralians like to buy locally – but if a competing product from overseas is available at a significantly reduced price (for instance 100% of China’s exports to Australia are exempt from tariffs) then it becomes more difficult to compete. |
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Manufacturing to support regional growth and payroll tax reliefManufacturing is ideal for regional areas with many businesses requiring a significant real estate footprint as well as providing employment for a range of skill sets and backgrounds. One way the federal government can support regional areas is to compensate state governments for the removal of payroll tax altogether for businesses that offer employment in regional towns. Governments should not be afraid to contemplate fundamental changes to antiquated taxes. |
