Just to put things in perspective.

My last job was among other things, running a company marketing water/energy equipment to industry, & the retail trade. Lets do a case study on one item.

When we started manufacturing product X it cost $4.50 to make in Brisbane. 5 years later it cost $8.00, but it was a patented product which saved it's cost about 6 times a year, & still good value.

Along came a Taiwanese company who offered to deliver it, into our store ready for sale for $2.00. The quality was great, we gave up manufacturing. It had always been a hard thankless task to staff & control that part of the company.

Now our $2.00 had to be packaged for display in stores. Clam shell packaging cost $2.50, plus $0.75 for the printed material in the clam shell. Cost now $5.25.

It cost about $1.00 to pick, pack, invoice, & dispatch each item we sold, Cost now on a truck, $6.25.

Freight to a retailer in Brisbane averaged $6.00, Sydney $9.00, but to Perth about $16.75 each. Average delivery cost $11.75, so cost for me to supply into the average customers store, $18.00 each.

Remember this is for that $2.00 item.

I need a 45% mark up on my total cost of supplying any item, with cost of stocking & financing my sales, so I have to invoice this item at $26.10.

The store has to finance its premises, & stock holding, & pay wages, so he needs a similar 45% mark up on stocked items. Recommended retail price becomes $37.85.

No one is ripping any one off, this is the cost of doing business in the very wide open space of Oz. My $2.00 high quality item has to be sold, retail for $37.85.

Continued

Now it gets worse. Some smarty in the US likes our product. He gets a cheep Chinese copy made, landed in the US for $1.20. It's junk die cast stuff, not solid brass, but under the chrome who would know.

He'll sell it to you for just $8.50 in a brown paper bag. God how I wish I could get that mark up.

Just why his freight is only $4.50 I don't know, but it is. You get your brown paper bag, with it's junk product, in the letter box for $13.00, & you immediately tell everybody Oz businessmen are rip off merchants.

I have had my patent ripped off, but I've found they are useless things unless you can defend them in court. That's too expensive for me with 60 products, particularly as when I win the bloke declares he's bankrupt. He is doing the same again next week under a new name, & we are broke.

We may be slow but not totally stupid. We gave up the retail trade, & supplied bulk products to industry, hospitality & health care markets. A lot less people are employed, but who cares, Beattie could put them on the public service pay roll, & we could all party on, for a little while longer.

God I hope my kids are well established when this party turns toxic. I wonder how long it will be before Grease appears to us to be a cake walk.

Well that is where its all changing, Hasbeen. A sensible business
plan today would be to have the same quality as you made, made
in China for 2 bucks. They will make whatever you want. Package
and label all made in China, cost 50c. Order as much as Bunnings,
and ship it around in 50 tonne road trains, along with other goods.
Freight bugger all. Bunnings rent, about 10% of rent in a
shopping centre. Bunnings net margin, around 10%. The result,
happy consumers, who get value for money, happy shareholders who
own Bunnings shares :)

Hi there HASBEEN...

I do commiserate with you, I really do. As I type this little piece, I'm listening to Ross Greenwood (an econimist on 2GB Sydney) speak about Penalty Rates and other work practices that all small business operators need to contend with.

As a former employee of government all my life, I'm now only just beginning to realize just how tough it is for an employer, in small business, in this country, to remain anywhere competitive with countries where there's an abundance of cheap labour.

Is it correct, does anyone suppose, that it's these extraordinary and very generous work practices, that are essentially destroying this country's ability to compete in the world's market places ?

It's got me stumped ?

Hi o sung. This story is from before the current work practices, & I don't think the changes would have effected us greatly. We had very good staff, always paid well above the award, & looked to pay more, not less, if possible.

The people were flexible, so if one needed a couple of hours off, for something important, everyone covered for them, so they did not need to take sickies or tell lies.

The work practices may have had an effect on our cost of transport, & some suppliers, but basically the majority of on costs were due to distance. We ended up more profitable restricting our effort to Qld & NSW. We did supply the SA housing trust, & Vic housing commission, & builders anywhere, when our products were architect specified, but stayed home apart from that.

As you can see, when it costs 6 times as much to distribute a product as it does to make it, the whole thing becomes ridiculous. Fuel costs & fuel tax are a much bigger problem than wages in most small enterprises, except that like the carbon tax will do, the cumulative effect of a few dollars more wages in every area does add up eventually, & become a burden.

Then the fool councils have to make it harder. My neighbour can no longer keep his semi at home on his 10 acre block. He must rent a shed in town, for $1000 a week & park it there. This means he must own another car that spends its days in that shed, just to get to work. It adds another unproductive hour to his work day, & $1500 a week to his overheads, on just one bloody truck. Then they wonder why local government is unpopular.

Enough of this, it's too depressing. Today I did an oil change & service on my little old convertible, not a GST cent to pay, so I'll splurge on a drive down through the boarder ranges tomorrow, just because I can.

Hi there HASBEEN...

It is all too depressive, I agree.

The matter you related, apropos the Semi owner/driver who, because of some inane Council By-law, was required to rent, and park his rig some distance away. And by so doing, necessitating him to drive daily to and from his Rig, before he hauled anything.

Notwithstanding he had available, a ten acre piece of ground on which stood his home........ Gawd help us ?

I could just imagine, there'd be some By-laws person, simply a 'petty bureaucratic functionary', seated in their minuscule office space, musing upon what further mischief in which they could engage.

You never know, perhaps with little effort he/she could completely immobilize transportation throughout the entire municipality.

Yet, this'd be the same person who'd be first to 'bleat' about a transport strike. Wailing unconsolably, how life was so unfair.

Emmmm