Another All Blacks Victory!
Australian rugby followers are sick of the New Zealand All Blacks beating Australia mercilessly. That whipping is being extended to agribusiness, and unless the Australian leadership wakes up to itself on the subject of penalty rates, our food manufacturing sector will continue its structural decline at pace! And please don’t blame the high Australian dollar on increased food imports.
JR Simplot Company was established in 1923, is based in Boise, Idaho, and is one of the largest privately held food and agribusinesses in the world with subsidiaries in several countries. Terry O’Brien is Managing Director of the Australian subsidiary and he has just announced the retrenchment of 228 staff from its Bathurst, NSW and Devonport, Tasmania facilities over the next few years.
O’Brien said the input costs across the supply chain were putting the Australian manufacturing operations in jeopardy. “It’s the labour that’s built into the inputs right through the system,” he said. That included transport and freight costs throughout the process.
For example, labour costs at the Bathurst plant were A$52 an hour during the peak production period, whereas competitors in New Zealand, including McCain and Heinz, were paying close to A$20 per hour, inclusive of penalty rates and superannuation.
O’Brien said labour accounted for 27 to 28 per cent of total costs at Simplot’s Australian operations, and that needed to be driven down to 15 per cent for long term viability!
In another blow, the Swedish whitegoods giant, Electrolux, announced Australia’s last refrigerator manufacturing plant in Orange, NSW will be closed from 2016 with the loss of 550 jobs. This represents over 4 per cent of the Orange workforce. Electrolux will move this refrigerator capacity to its plant in Thailand.
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jeffrey excell
:
While we always love beating you Aussies at Rugby, we seem to whipped by you regularly with cricket being the most obvious ( & amercias cup most recent)………Anyway friendly competition good for us all.
Your comments on manufacturing are interesting as the evening news here in NZ would claim all the same problems with high structural costs. NZ has continual layoffs and factory closures going on, particularly in rural towns. NZ will benefit from a few of your industry restructurings as a way to save costs but the real cost savings will come from industry relocation’s to Asia………..unless we change something.The Currency is the real culprit here and an industry killer to both of us. Economies built over 150 years on mineral resources and agriculture can not thrive with low commodity prices or high currency as something will give. If the world wants to reward us with strong currencies for relative fiscal discipline, then we must both add value to the basic commodities we export.
In NZ some industries have added value, adapted and are thriving ( Dairy = now exporting ice cream instead of milk powder) and some like meat haven’t changed in 20 years ( a frozen carcass is still a frozen carcass).
Adding higher product and industry value in a world marketplace is the only way to maintain the high wages and that we enjoy in our little corner of the globe.
Roger Montgomery
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Thanks Jeffrey,
Always great to hear from our friends in NZ. Exporting ice cream seems so much more sensible. If we can’t get food right down in this corner of the world, what can we get right?
Ryan Gruenthal
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I fear just like the reign the AB’s have over the Wallabies, this will take some time to correct. The heart of the problem lies in the high wages Australia pays to low skilled workers, which is partly a function of the IR laws that shift too much power to the employee and does not focus on productivity. A great example of this is the penalty rates for employees who work on the weekend, they are exorbitant. Change needs to be made here.
Go the Wallabies!!