Australian Job Losses

[McLovin]

You have spent a lot more time in the US than I so i wont doubt you. OUr experiences over there were when comparing apples with apples (or in this case a nice bar's burgers in each country) then it was very similar. Perhaps it is because we specifically sought out places in the US that were known for their food

I guess it depends. America does do dude food better than anywhere else. And it's nice if you're on holiday there, but it's seriously heavy, which is my biggest criticism of American food. They don't seem to know how to work with nuanced taste and so instead they just overload it with fats and oils (which of course will taste nice!). Some American food is seriously tasty though! Kansas City style BBQ, In and Out Burger etc. Delicious.

I think Australia really does have some of the best food in the world but of course you pay for it. In America once you take into account tax and tip the difference isn't that large. It's like when friends used to come over and to NY and we'd go out and they were impressed how cheap drinks were, until I pointed out you had to tip $1-2/drink.

 

[prawn_86]

I think Australia really does have some of the best food in the world

Me too. The food culture here is amazing and so is the produce. I still think one a like for like basis the US ends up a bit cheaper, but you do have to spend more time trying to source that quality food over there also imo

 

[drsmith]

If the USA and Europe introduce carbon taxes on shipping and aviation fuel it would quickly change the economics of a lot of manufacturing. For 2 decades I've never understood why we use so many resources to ship items from a rich country to a poor then a middle income then poor and finally the finished product is sent back to a rich country.

Mac computers in the 80s literally traveled to the moon and back when you added up all the miles each component had traveled.

It might produce cheap goods, but that's because a lot of the negative effects are not costed.

Even if it was a when as opposed to an if, it's still an economic dead weight regardless of other factors increasing energy costs until all other major economies follow through with the when.

The full economic impact of the carbon tax is yet to be seen.

 

[FlyingFox]

Shouldn't we want to live in a high wage economy? I'd hate for us to move towards a US system where people in retail have to work 2 or 3 jobs to get a livable income. I think we need to have a minimum wage that provides a decent income for a full time worker.

While I agree with your sentiments and we should have decent income, having a relatively high minimum wage pushes all other wages and costs higher. Economically this is very uncompetitive.

 

[Garpal Gumnut]

While I agree with your sentiments and we should have decent income, having a relatively high minimum wage pushes all other wages and costs higher. Economically this is very uncompetitive.

The Unions bear much responsibility for this state of affairs.

While their leaders earn $2-300,000 pa , they have not really benefitted their members all that much.

Look at the HSU and AWU.

Their only recent achievement has been to rebrand some of the more ineffective ones as "Together" , "Koala" or "Whale".

Workers need protection from predatory bosses, and they ain't being protected by union leaders with an eye on international travel via ALP endorsement for Parliament.

gg

 

[Smurf1976]

You are right.
So our kids from year 10 onwards prefer to do the VAT (Vocational Test something for TAFE) than going for year 12 whereas kids of South Asia and South East Asia origin venture for universities. Look at most of the universities and see who are there. Trolley pushers - look who are running there. Well our Aussie kids of British/Australian origin go to TAFE become excellent Fitters, Shot firers (mining), Electricians - earn excellent money to buy big houses but end of the day skill gap remains in other areas.

One of the interesting points is that, at least when I was that age, there was a massive push to the effect that anything other than university was a second rate choice.

I did year 12 and achieved good results but had no interest in going to uni. I did an apprenticeship because Smurf likes electrical things, not because of any financial or social status considerations. So no uni applications but I'm sure I filled out an awful lot of forms (and even a few psychological tests) trying to get an apprenticeship (eventually with success).

The trades would pay less if there was more interest in doing that sort of work. But to a significant extent they do attract people not overly interested in it and who end up doing something else after a few years thus creating a perpetual shortage. If someone becomes a doctor in their mid-late 20's then the odds are fairly high that they'll spend their entire working life, or at least the vast majority of it, in the medical field. But looking at those who were in the same class as me at TAFE, a lot are no longer working as electricians. They've either moved into an electrical-related supervisory or management role or are doing something completely unrelated. I too spend much of my time sitting in an office these days although it's electrical-related and I still work with tools from time to time (by choice since I could quite easily avoid it if I wanted to).

On a different matter, regarding things in the US, I was there on holiday a few months ago. Observations:

1. Cheap food is considerably cheaper in the US than it is in Australia. Returning home, I'd almost forgotten just how expensive something simple like a roll from a take away shop is in Australia. We did an assortment of dining over there, but none of it in the "fine" category - were too busy doing all sorts of other things to worry about food to be honest so I'm not sure what a top restaurant charges. Mid range ones were reasonable value however but not a lot cheaper than Australia once tips and tax are included.

2. Taxis etc are considerably cheaper in the US even when you add tips.

3. Things we bought were generally cheaper, although the extent of the difference varies. If you buy cheap then there's no real saving but if you're buying mid to upper (eg clothes) then that's when things are cheaper in the US.

4. There are a LOT more poor people clearly visible on the streets in the US than there are in Australia. I'm sure I saw more homeless people on the streets of San Francisco than I've seen in all Australian cities combined. A lot more and it's the same in other American cities too. It's not one or two here and there, think dozens or even hundreds per city block in some cases at night.

5. Physical infrastructure in the US looks run down. Go outside the tourist precincts and it quickly becomes very obvious. Things that would be fixed in Australia, such as as footpaths falling apart, are simply left. And there's plenty of old planes (still in use) to be seen at airports too that you'd only find in some sort of museum or exhibition in Australia. Things are run down, that's very obvious once you get even a short distance away from key tourist spots etc.

6. Practically everything you buy, there's an extra charge for some reason. A tax, tip or whatever. Always some reason to ask for more money than the stated price. And in most cases such payments are not optional and you won't know the full amount until it's displayed on the register. Just because the price sticker says $5 doesn't mean you can hand over $5 and walk out of the shop with the item - there will be a tax or some other charge on top that isn't disclosed up front. The only exceptions I spotted were vending machines.

7. Forced service is a big part of it. Don't want the service? Well that's just tough - you're getting it and paying for it whether you like it or not in many cases.

Despite all that, it's a great country to visit in my opinion with a lot of diversity. It's also a lot easier, and safer, than you might think. Just don't forget the tips and taxes.

 

[sydboy007]

The Unions bear much responsibility for this state of affairs.

While their leaders earn $2-300,000 pa , they have not really benefitted their members all that much.

Look at the HSU and AWU.

Their only recent achievement has been to rebrand some of the more ineffective ones as "Together" , "Koala" or "Whale".

Workers need protection from predatory bosses, and they ain't being protected by union leaders with an eye on international travel via ALP endorsement for Parliament.

gg

Considering CEOs earn 4-500 times the avg income of their employees I'm not sure blaming only the unions is fair.

The unions may not be perfect, but unfortunately there's not a lot out there offering help to workers, and to argue that collective bargaining is wrong when the individual is up again a large corporation, well we'd all tend to get shafted.

We really need a complete overhaul of the tax system in this country. Lower taxes at the bottom end of the scale and freeze wages for awhile would do a lot of good.

I don't see any of the major political parties wanting to remove a tasty trough from the tax paying piggies though. Once you start handing out the money it's nigh impossible to stop

 

[Smurf1976]

Considering CEOs earn 4-500 times the avg income of their employees I'm not sure blaming only the unions is fair.

If someone at the top is earning a ridiculous sum then it's hard to take calls for wage restraint seriously.

Not much more can be said really. A CEO on anything more than $1 million a year is at best provoking the unions and you can't blame them for responding in the inevitable manner. It's like flaunting personal wealth in a poor neighbourhood - that's just a dumb thing to do and almost certain to provoke trouble.

 

[DocK]

Manufacturing needs to change or face ruin: Combet
Federal Industry Minister Greg Combet has sent an ultimatum to the struggling Australian manufacturing industry, calling for the sector to change its business model or risk collapse, according to The Australian.

According to the newspaper, Mr Combet told manufactures hoping for a fall in the Australian dollar and resulting improved conditions to adjust to the realities of the economy.

He said the high value of the currency was "here to stay" and that "the economy has to adjust to the reality of a higher dollar".

The comments come as the government makes final preparations on its plans to help the manufacturing sector cope with structural economic changes.

Labor will release its highly-anticipated industry and innovation statement next month, which will launch a new body aimed at monitoring developers' use of local manufacturing products.

http://www.businessspectator.com.au/bs.nsf/Article/Manufacturing-needs-to-change-or-face-ruin-Comebt-pd20130125-49R5C?OpenDocument&src=am&utm_source=exact&utm_medium=email&utm_content=169675&utm_campaign=am&modapt=news

http://www.theaustralian.com.au/national-affairs/adapt-or-sink-greg-combet-warns-industry/story-fn59niix-1226561351777

Industries and businesses that succeed are going to be those that develop new technologies, new processes, that innovate, that apply technology to their manufacturing processes for example," he said. "And part of all of that is to develop a closer relationship between business and especially manufacturing and our research community and that is going to be a focus of our statement.

"We have a world-class research sector but we don't perform as well as other countries in ensuring that our research effort is translated into positive business and economic outcomes."

My interpretation: "Suck it up Princess, you're going to have to compete with cheap overseas labour costs indefinately". In our business we've invested in new technology to the point where we've reduced our workforce by two-thirds - and the end result has been Aussie jobs lost and we're still competing with cheap overseas imports made using the same technology, but with far cheaper overheads.

 

[Julia]

My interpretation: "Suck it up Princess, you're going to have to compete with cheap overseas labour costs indefinately". In our business we've invested in new technology to the point where we've reduced our workforce by two-thirds - and the end result has been Aussie jobs lost and we're still competing with cheap overseas imports made using the same technology, but with far cheaper overheads.

Dock, how is the carbon tax affecting your business? Too early to tell?

 

[prawn_86]

450 jobs lost at a transport company

http://www.abc.net.au/news/2013-01-25/trucking-firm-to-shed-450-jobs/4484618

 

[DocK]

Dock, how is the carbon tax affecting your business? Too early to tell?

A couple of suppliers have raised prices due to the effect of the carbon tax, but not dramatically. We've negotiated a good discount on electricity through AGL and have not seen any price rise as yet. Most of our profit comes from our expertise rather than a markup on raw materials so it's the lack of sales volume that's hurting us most. Our main impediment is a sluggish economy, vastly reduced building activity, lack of luxury boat sales and competition with much cheaper imported finished products.

The beginning of the year until Easter is traditionally our quieter period, and it's actually looking more positive than same period last year - so far. Last July/Aug/Sept were our worst months in 12 years, but we're beginning to hear a bit of optimism from some of the larger businesses we provide services to, so here's hoping that the worst is behind us! We're luckier than some in our industry in that we have been able to diversify into different markets to offset the effect of vastly reduced volumes in others. Unfortunately, a lot of the cabinetmakers we've dealt with for several years have either gone into liquidation, closed their doors or drastically downsized. The luxury boat builders likewise. Mr Combet can tell them to embrace technology all he likes, but it's hard for a cabinetmaker to compete with Bunnings when they're importing complete kitchen setups from China.

 

[sydboy007]

A couple of suppliers have raised prices due to the effect of the carbon tax, but not dramatically. We've negotiated a good discount on electricity through AGL and have not seen any price rise as yet. Most of our profit comes from our expertise rather than a markup on raw materials so it's the lack of sales volume that's hurting us most. Our main impediment is a sluggish economy, vastly reduced building activity, lack of luxury boat sales and competition with much cheaper imported finished products.

The beginning of the year until Easter is traditionally our quieter period, and it's actually looking more positive than same period last year - so far. Last July/Aug/Sept were our worst months in 12 years, but we're beginning to hear a bit of optimism from some of the larger businesses we provide services to, so here's hoping that the worst is behind us! We're luckier than some in our industry in that we have been able to diversify into different markets to offset the effect of vastly reduced volumes in others. Unfortunately, a lot of the cabinetmakers we've dealt with for several years have either gone into liquidation, closed their doors or drastically downsized. The luxury boat builders likewise. Mr Combet can tell them to embrace technology all he likes, but it's hard for a cabinetmaker to compete with Bunnings when they're importing complete kitchen setups from China.

What do u suggest as a solution to this?

Do we raise the tarrif walls again?

On aggreggate terms we all benefit from free trade between nations.

At the micro level there are always winners and losers.

I still have bitter memories of dubya bush giving tax incentives for US companies to move jobs back to the USA. My company at the time decided they'd take advantage of that and move the Syd AsiaPAC NOC back to the USA.

They'd have probably only been in front for a year or 2 as from what my boss told me we did something like twice the volume of work per USD of costs as the yanks did. We also had higher levels of satisfaction from customers.

I've worked at 2 truly global companies with networks spanning the globe - actually worked for the company with the largest network presence - and I can assure you that Aussie workers just get it done, don't work to the line of the rules, and when there's a problem we will generally fix things then ask the hard questions later. The yanks and europeans become so specialised they lose the ability to see the big picture. I'm coming from an IT network background, but would assume what I have experienced would be similar for a lot of other industries.

 

[CanOz]

You know whats going to bring home the jobs in the US?

Energy costs. Is there an opportunity for Australia too?

CanOz

 

[white_goodman]

We really need a complete overhaul of the tax system in this country. Lower taxes at the bottom end of the scale and freeze wages for awhile would do a lot of good.

I don't see any of the major political parties wanting to remove a tasty trough from the tax paying piggies though. Once you start handing out the money it's nigh impossible to stop

yes we need an overhaul but I hardly think creating more inequality(steepening progressive taxation) is the answer

 

[DocK]

What do u suggest as a solution to this?

Dunno. I'm neither an economist nor a politician. I just know it's bloody tough for little businesses at the moment, without much light at the end of the tunnel. I wish I could have a "lightbulb moment" and come up with a brilliant idea to save all of those small Aussie businesses that are doing it tough, but I'm just not that smart.

Do we raise the tarrif walls again?

On aggreggate terms we all benefit from free trade between nations..

Agreed. My business, and those of most of my customers, would be helped by protectionist measures, but I agree that that course is simply not necessarily in the best interests of the nation as a whole. What helps one industry would probably hurt another, and there are many intricate diplomatic and political considerations involved also

At the micro level there are always winners and losers.

Indeed. It would appear that the manufacturing industry, especially at the small end, is going to be one of the big losers.

I still have bitter memories of dubya bush giving tax incentives for US companies to move jobs back to the USA. My company at the time decided they'd take advantage of that and move the Syd AsiaPAC NOC back to the USA.

They'd have probably only been in front for a year or 2 as from what my boss told me we did something like twice the volume of work per USD of costs as the yanks did. We also had higher levels of satisfaction from customers.

I've worked at 2 truly global companies with networks spanning the globe - actually worked for the company with the largest network presence - and I can assure you that Aussie workers just get it done, don't work to the line of the rules, and when there's a problem we will generally fix things then ask the hard questions later. The yanks and europeans become so specialised they lose the ability to see the big picture. I'm coming from an IT network background, but would assume what I have experienced would be similar for a lot of other industries.

There's a big difference between working for a very large IT company and running a small service/manufacturing business.... Aussie workers may indeed be superior in every way to their European or American counterparts (although that's very arbitrary), but that won't help them if there are no jobs for them. In my industry we are being forced to compete with imported products and materials that have been produced overseas at a vastly lower cost, imported into Australia and sold by retailing behomoths. It is simply not possible to compete on a like-for-like basis whilst paying Australian wages, factory rent, electricity costs and raw material costs. That's simply the way it is. No amount of "Aussie workers just get it done" attitude is going to make a scrap of difference to the numbers. Therefore, our industry needs to innovate, develop niche markets, and concentrate on those aspects that either we're superior in, or the service aspect that can't simply be imported. The buying public is increasingly less reluctant to pay more $s for quality, and our throw-away culture seems happy to pay much less for often inferior imported products - so we're struggling to expand, or even retain, our marketshare. "Innovate or perish" is all well and good, but if your marketplace is shrinking there simply won't be room for as many sellers. That's just the way it is, and I can't see any obvious solution. A lot of SMEs will cease to exist, along with the skills that were required in them. Should Australia ever find itself in a position where those skills are required in a big way, we may regret their loss.

 

[IFocus]

You know whats going to bring home the jobs in the US?

Energy costs. Is there an opportunity for Australia too?

CanOz

The shale gas / oil in the US is massive with massive environment issues further down the road but yes it will quite likely become the spark to ignite US consumption / economy again.

The effect on OZ will be two fold one we develop our own shale gas and two the price of oil / gas comes down affecting the likes of WPL etc ....maybe.

 

[MR.]

It is simply not possible to compete on a like-for-like basis whilst paying Australian wages, factory rent, electricity costs and raw material costs.

Yes we pay higher for all four. I couldn't buy the material in bulk for some of the components I've made in the past when compared with what I could have imported "Finished". Even if you wanted to compete it was impossible on many products. However, a market at the time, was found eliminating the middle man. As you have pointed out the “majors” import more and more directly reflecting even cheaper prices.

Most manufacturing on the Gold Coast outside of boats would be building associated. Your business is making cabinets? We (the Gold Coast) are the hardest hit area in Australia for building. Councils reduced the PIP charges and we do have lower interest rates, can only help some. You've reduced staff/wages by 2/3's by installing automated machinery. What about your rent? Or is that not a high expenditure for you? Many of these investors which pumped up our property prices and "rents" are now wanting out! In our case it is cheaper to buy, can only make us more competitive in the future instead of being locked into rents increasing PA. You could have the opposite.

With less work to go around I think “how can I be better than the next Australian”. Sad conclusion, as I wasn’t always this way. I've been in manufacturing for too long.

 

[clowboy]

The shale gas / oil in the US is massive with massive environment issues further down the road but yes it will quite likely become the spark to ignite US consumption / economy again.

The effect on OZ will be two fold one we develop our own shale gas and two the price of oil / gas comes down affecting the likes of WPL etc ....maybe.

or it stimulates the US economy, in turn stimulating the global economy, in turn raises oil prices and WPL goes up......

 

[DocK]

Yes we pay higher for all four. I couldn't buy the material in bulk for some of the components I've made in the past when compared with what I could have imported "Finished". Even if you wanted to compete it was impossible on many products. However, a market at the time, was found eliminating the middle man. As you have pointed out the “majors” import more and more directly reflecting even cheaper prices.

Most manufacturing on the Gold Coast outside of boats would be building associated. Your business is making cabinets? We (the Gold Coast) are the hardest hit area in Australia for building. Councils reduced the PIP charges and we do have lower interest rates, can only help some. You've reduced staff/wages by 2/3's by installing automated machinery. What about your rent? Or is that not a high expenditure for you? Many of these investors which pumped up our property prices and "rents" are now wanting out! In our case it is cheaper to buy, can only make us more competitive in the future instead of being locked into rents increasing PA. You could have the opposite.

With less work to go around I think “how can I be better than the next Australian”. Sad conclusion, as I wasn’t always this way. I've been in manufacturing for too long.

I hear ya. We're not cabinetmakers, but are closely alligned to that industry. Luckily we're a bit more diversified.

So far as rent is concerned, we're fortunate in that our SMSF purchased the factory from which we operate several years ago - so our business pays rent to our SMSF.

I think there are a lot of us in our last decade or so of running our businesses that echo your sentiment: "I've been in manufacturing for too long". As we retire, or give up and close our doors, I think a lot will struggle to find buyers for businesses that are becoming obsolete. Perhaps if China is somehow forced/enticed to allow free floating of their currency matters might improve - but I'm not holding my breath. The nature of the workforce in Australia will change over time, it seems inevitable. When ever anyone asks if our kids are likely to take over the "family business" we're quick to say "hell, no!".