2014 will see some turmoil in Australian manufacturing overall, which leads to extra issues for the mechanical power transmission supply industry.
Change of focus away from automotive manufacturing
The plight of the Australian automotive manufacturing sector is well documented, with a steady stream of evacuees taking flight since 2008 (Mitsubishi, Ford, Holden). As is also well documented, these businesses were taxpayer-subsidised to some degree (like most car makers in the world), so their exit has been received with mixed feelings.
One thing that hasn’t been so well documented is the outcome of the closures on the significant amount of automotive parts suppliers, that constitute far more workers than the car manufacturers themselves. The Federation of Automotive Product Manufacturers (FAPM) alone has 80 members, which rely on the critical mass of business from more than one automotive customer to remain viable.
As it stands, Toyota remains the only manufacturer in Australia from 2018, although doubts about their future are also recognised. Obviously, Toyota’s departure is the absolute end of the road for an industry which once contributed 2% towards total GDP on its own.
With a change of focus away from the automotive manufacturing sector, the underlying question remains: What sector should the focus move towards?
Strength of the Australian dollar
As the fifth most traded currency in the world, the Australian dollar reflects the overall strength of the economy. Overall, the Australian economy has been on a sustained high thanks to the boom from mining sector investment, which has resulted in relatively high interest rates and added currency attraction.
An attractive currency has brought about mixed blessings for those in the manufacturing sector. For one thing, the price of exporting goods is higher than it otherwise would be, which makes local manufacture less sustainable. Obviously, imported competition is also more cost-competitive, resulting in a two-edged sword for the locals.
It’s not all bad news. Input costs (apart from labour and utilities) tend to come down with the higher dollar. Nearly all power transmission products that are available in Australia are imported, which means that pricing for these items remains stable.
Ability to attract quality staff
The sustained mining infrastructure boom, a widening gap in the sell price to wage cost ratio and the diminishing engineering focus in schools have all played a part making the manufacturing sector less attractive to new employees. Not only that, the learning curve for power transmission industry newcomers is so steep that many leave before they have a chance to get settled.
This problem is not unique to Australia, however, as the US-based Power Transmission Distributors Association (PTDA) has recognised the need to increase industry attractiveness. To do this, they have come up with the University of Industrial Distribution, and a series of four-day courses.
At All Torque Transmissions, our ongoing commitment to training sees us utilising the knowledge base that we have with our existing staff, augmented by formalised training from our supplier partners.
Power Transmission – Industry Copies
Are you get what you’re paying for? Many reputable power transmission brands (including Motovario and SEW-Eurodrive) have long been victim to imitations passing themselves off as the real thing. As the copiers become increasingly brazen, the risk exists that even more brands are going to be exploited.
Manufacturers in the bearing industry are fighting back, with the WBA’s Stop Fake Bearings campaign, which has helped to uncover numerous pass offs being manufactured on a commercial scale. Members of the geared motor industry have yet to form an alliance to curb the growing trend of ‘reverse engineering’, but this is something that is surely not too far away.
No industry remains in the same state all of the time. It is through change that development takes place. 2014 is going to see a fair bit of ‘development’.