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The Forum > General Discussion > Australian Manufacturing

Australian Manufacturing

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Well no, its actually increased our standard of living, especially for our poor, who now can actually afford consumer goods. Its also dragged millions of poor people in the third world, out of poverty.

Its no point making consumer goods locally, if they are so expensive that the locals cannot afford to buy them.

Who for instance benefits from those cheap clothes at Target? Local consumers who are trying to feed and clothe their kids on a limited budget. As we can see from the numbers, Target is in fact not making money, or very little.
Posted by Yabby, Friday, 30 August 2013 11:55:51 AM
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Good valid points Yabby;
However what do we do for a living ?

Taking in everyone's washing does not seem to be practicle.
This is what is the problem with the service industry we have as an alternative at present.

If we do not have jobs then it won't matter how cheap Kmart is.
To produce food will occupy a lot of people but those buying the food
will have to have jobs of some sort, producing something wanted by
the farmers and other eaters of food.

International trade will decrease quite significantly whether we like
it or not. The cost of container freight must rise especially when
the current glut of shipping capacity declines as ships are scrapped.

The cost of fuel is continuing to rise and the ships cannot slow down
much further to save more fuel or their crew costs will escalate due
to increased voyage time.
Manufacturing of certain ranges of products has already left China
looking for cheaper labour.
This can only continue for a short period as shipping costs will
eventually overtake the labour savings.
Already sailing ships are being employed experimentally in some areas.

So Yabby any suggestions?
Posted by Bazz, Friday, 30 August 2013 5:07:51 PM
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Bazz, the cost of sea freight is in fact a tiny part of the final cost of most products. You can ship a tonne of grain or iron to China, cheaper than you can cart it 150Km by land. So even if sea freight charges double, it is not going to matter for most goods.

As to what we do, for a start we have to get real on costs. Things like long service leave, holiday leave loadings, 2.5 times overtime etc, are simply a joke in the real world and we won't get anywhere whilst our unions live in the 1960s. Next we have to get smarter.
If a university student in Australia can take a 1000$ and start a breakfast cereal company which now exports to about 30 countries, because its simply a great product, (Carman's) available at your local supermarket, then other Australians can do the same, if we give them a chance. We produce huge amounts of ag products, they can be value added if Australians can be bothered to do so. But we can't even convince our polies that they should get off their arses and take breaking down other trade barriers too seriously. NZ runs rings around us in that department. My conclusion is that Aus has had it good for too long and needs a bit of pain to learn what the real world is all about.
Posted by Yabby, Friday, 30 August 2013 5:58:19 PM
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Yabby said;
the cost of sea freight is in fact a tiny part of the final cost of most products

Grain perhaps is very compact for its value and can be bulk handled.

I can see that for some products, but there must be a large range that
are affected otherwise they would not be running 25 knot ships at 15 knots.

Shipping costs plus now cheaper labour in the US has restarted many industries in the US.
The "Insourcing" is quite significant there.
Most furniture sold here is made in Australia because as in the US,
I suspect its bulk makes it expensive to ship.
Our problem is how do we get our labour costs to be similar to the
US's without a tremendous upheavel ?

However I agree with you about a need to realise the world does not
owe us a living.
I think the free trade rules are gradually becoming obsolete.
We are entering a whole new era of low to zero growth in which the
old rules will be a very poor fit
Posted by Bazz, Saturday, 31 August 2013 9:39:55 AM
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Bazz, there is overcapacity of container ships, so it would be pointless to run them at top speed and then sit around doing nothing. Much more efficient to run them at a slower speed and save money. From Australia, one of our major exports to Asia is containers of hay, for their dairy cows and race horses to eat.

Yes a number of companies are returning to the US to manufacture. Cheap energy from fracked gas is one of the reasons. The gas which we export to Asia, costs them around 14-15$ a unit. The same gas costs 3-4$ in America. Our wages here are now so extreme, that the Americans are saying in many of our industries, they are double what it costs them in the USA. Totally unrealistic
Posted by Yabby, Saturday, 31 August 2013 10:07:38 AM
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