The weakening Australian dollar has given the embattled manufacturing sector – particularly exporters – some much-needed respite.
The dollar is now hovering around US.92c – its lowest level in nearly three years. But while many manufacturers have collectively blown a huge sigh of relief – there are still many challenges ahead.
Australia remains a high cost country and struggles to compete with its low cost Asian neighbours.
Ford’s decision to close its Australian manufacturing plants rams home this point.
When announcing the decision Ford president Bob Graziano said: "Our costs are double that of Europe and nearly four times Ford in Asia."
In other words, manufacturing Ford vehicles in Australia is not a viable option.
It’s not just the strong Australian dollar that has put pressure on the sector.
Manufacturing is being strangled by government red tape and regulatory duplication.
Businesses are struggling to cope with high costs, including rising unit labour costs and steeply rising energy costs.
All of these issues have reduced the competitiveness of Australian companies.
If that’s not enough, a recent AiGroup survey of 330 small business owners found that IR reform is their biggest concern.
Almost a quarter (23.1 percent) said more flexible IR policies would greatly assist in boosting productivity.
Recent changes to the Fair Work Act have made it increasingly difficult for business to operate effectively.
Unions bitterly complained that the Howard Government’s controversial
Work Choices laws were slanted strongly in favour of employers.
Under the Gillard/Rudd Labor government, following strong union pressure, the pendulum has swung back in favour of the worker– much to the
detriment of many small businesses.
The AiGroup now rightly argues that urgent changes are now needed in a number of key areas to provide greater flexibility to employers and to “rebalance” the current “excessive weight” given to union interests.
Manufacturers are now looking for genuine commitment and action in this area from the next government.
The future of Australia’s manufacturing sector depends on it.