Manufacturing in Australia has had a long and proud history, but over the last 30 years the industry has stagnated. Aussie companies have been unable to compete with our neighbours on cost due to distance, higher wages and the price of energy. Governments and large corporate companies offshored manufacturing projects, rather than support local business and spend the money in Australia.
Today, manufacturing in Australia makes up just 5% of our GDP and 5.4% of total employment. We import many things that could be made here, and many manufacturing companies produce offshore as the cost is much lower.
However, COVID-19 has turned everything upside down. In 2020, supply chains around the world were disrupted and the cost of freight nearly doubled. Australian businesses were also affected by a deteriorating trade relationship with China, and the Chinese government introduced huge tariffs on most of our main export products, including barley, wine and coal.
The Australian Government recently announced a new Modern Manufacturing Strategy as part of its JobMaker plan to stimulate the Australian economy and speed recovery from the COVID-19 pandemic. The strategy will see $1.5 billion invested in Australian manufacturing over five years from 2020-21 targeting six National Manufacturing Priorities, identified as either areas of competitive strength or strategic national priority.
The National Manufacturing Priorities are:
- Resources Technology and Critical Minerals Processing
- Food & Beverage
- Medical Products
- Recycling and Clean Energy
With this renewed attention and financial investment, Australia’s manufacturing industry will be re-energised and more appealing to companies that are making brilliant products here and are looking to export them overseas. At Dearin & Associates we are working with Australian business owners, helping them to go global and amplify their impact on the world. Currently only about 5% of Australian companies are in overseas markets and we want to grow this number exponentially in the next decade.
Going Global in a Post-COVID World
To go global, you need a crystal clear strategy and laser focus. COVID-19 has taught us that you have to be dynamic and agile enough to pivot your business when things change unexpectedly. We work with clients that have had huge success in the last year, despite the turbulence and unfavourable conditions their industries have faced. Without the ability to travel, the world felt a lot smaller and it became easier to do business with anyone, anywhere in the world. Business owners with a clear vision and strategy suddenly had more time to execute their plans and took the leap to either begin their export business, or totally renew their brand and messaging, bringing great results.
I’ve recently spoken to four Australian manufacturers that are killing it on the global stage to see what advice they can offer to aspiring manufacturers who are thinking of going global. Here’s what they said…
Paul O’Brien - AirPhysio
These types of devices have actually been around since the 1980s, but AirPhysio overcame the design flaws of competitors’ products and identified the product’s need in a lot of niches in the market. It manufactures a product that is now sold in five different continents. Co-Founder Paul O’Brien always had a vision to go global, and this mindset helped him develop his business the right way from the start. Paul says that financial modeling that includes global expansion has been critical to his success, along with systemizing business units so they are efficient. AirPhysio has implemented systems across the business, enabling them to train people up faster.
Organisation and looking ahead is also key.
Paul also says that being able to look outside the box and move quickly are extremely important factors. AirPhysio surpassed its full year growth targets by March both this year and in 2020 as the world went into lockdown. What started as a business in his living room now employs over 40 staff in Australia, with plans to have 100 by the end of 2021. As the Managing Director of AirPhysio, Paul knows that he needs to work with organisations that will assist him with developing and executing his business strategies, and giving him the knowledge to go into each market successfully. I look forward to seeing AirPhysio in every continent very soon!
Jill Saunders - Beauty and the Bees
Beauty and the Bees is an all-natural eco-friendly hair and skincare range sourced from Tasmania’s mountains, seas, farms and rainforests.
Jill Saunders came to Australia backpacking from the UK on her motorbike and fell in love with Tasmania’s natural beauty and natural resources. Jill harnesses these resources for her hair and beauty products, which are made from Tasmananian leatherwood honey. When she arrived 30 years ago, Jill had a plan that she would develop beautiful products sustainably and market them overseas. That dream has become a reality.
Jill started at Salamanca market with a card table and a motorcycle. These days she has a 10,000 square foot factory employing eight staff, and a retail store that is renowned for its quality products and friendly service. Over a 30 year period Jill has stuck by her values of making superb (and sustainable) products and delivering service excellence – always under-promising and over-delivering. In 2013, Jill and her business partner identified the USA as a key market and began selling via Amazon.com. In 2021 the brand is in the top 5% of sellers on the site.
The move into the US has been so successful that it now represents 80% of the company’s total revenue. Jill notes that making sure her brand remains fresh in the market is key. Her team recently spent 18 months refreshing and relaunching the Beauty and the Bees brand to ensure its continued success both in Australia and overseas.
Choosing where to manufacture their products has also been important. Jill is moving production out of Tasmania, into Melbourne due to the cost of logistics and freight. She says that as a business owner you need to make these decisions that take time to set-up, but benefit the bottom line. Have a look at the beautiful products at Beauty and the Bees.
Hydro-Dis - Mark Carey
Since then, the Hydro-Dis product has been sold around the world – to India, Malaysia, China, Indonesia, and the Philippines – anywhere where there is a need for safe water. This market diversification has been key to Hydro-Dis’ success, and Chief Executive Officer, Mark Carey recommends being prepared to visit markets in-person. In a three-year period, Mark has visited India 11 times.
Finding the right distribution partner to work with is also a key factor, as is the ability to manufacture and price the product according to the market that you are going into. Hydro-Dis’ cell packs are made under licence in China and the product is finished and assembled in India. Manufacturing elsewhere would mean the product was not competitive in the Indian market, which is extremely price sensitive. Hydro-Dis white labels and mass distributes the product out of India, which allows it to diversify its markets, rather than just relying on one operation.
Marks credits his success partially to stubborn perseverance and he is excited about the future for Hydro-Dis, watch this space!
Richard Dolan - Bec Hardy Wines
Being able to pivot the business quickly is one of the reasons they are still here, and in 2020, sitting in his McLaren Vale office, Richard established nine new export markets, spread across Asia, North America and Europe. This market diversification mitigates risk and presents new opportunities. At the same time, re-building a domestic tourism offering ensures that their brand recognition continues to skyrocket as Australians are staying home and supporting local business more than ever. Richard points out the importance of solid distributor relationships and being able to differentiate your brand is a key to success. He also credits their success to having an entire team of staff producing premium products and offering first class service to their loyal customers. Having a clear strategy from the outset is a must, along with the flexibility to change your path when obstacles arise. Patience in negotiating deals overseas is also important, as it can take years to get a signature on a contract. I’m sure we will see Bec Hardy Wines’ star continue to rise!
These four business owners each demonstrate having a crystal clear vision, combined with sheer determination and the ability to adapt and make changes to ensure success. They also know when to seek assistance from business experts to ensure they are setting up their finances correctly, receiving grants they are eligible for and that their market entry strategy is sound. Australians are known for being optimistic and resilient and with the renewed focus on our manufacturing industry, the next 10 to 20 years should bring a resurgence of Australian companies manufacturing and exporting.
If you are looking at expanding your business globally you must have crystal clear vision and a winning strategy. Contact us to see how we can assist you!