Reports in mainstream media are generally forecasting a positive economic outlook for Australia, which is something certainly being reflected in the Reserve Bank's recent rate rises. While positioning Australia as one of the global powerhouses to survive the global financial crisis (GFC) is good news for the national economy, I am not convinced this optimism is being felt by the manufacturing industry. QMI Solutions' recent survey of industry issues indicates manufacturing is yet to feel the benefits of the economy bouncing back. As one of our survey respondents indicated, "we have a two-speed economy and we (manufacturing) are in the slow lane".
The purpose of the survey was to gain an understanding of the main issues affecting individual companies and the manufacturing industry as a whole. From the 195 businesses surveyed, there are two dominant issues affecting individual companies:
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"not enough orders" (17%)
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"slow demand because of economic downturn" (17%).
While it is reasonable to assume that a slow economy results in minimal orders, it is also possible the two issues are unrelated. Following these are issues pertaining to staff attraction/retention (11%) and productivity (10%). Grouping staff-related issues together totaled 37% (staff attraction/retention 11%, can't get/keep the right people 10%, leadership problems 6%, too few staff spread too thin 6%, ineffective staff practices 4%). Productivity-related issues totaled 16% (productivity 11%, quality/defects 5%).
We then asked respondents what actions they would take to deal with these issues. The majority (21%), indicated they intend to ramp up sales and marketing efforts, 15% will conduct innovation-focused activities, while 14% will focus on staff-related strategies such as retention/attraction/ training/downsizing to address the issue. Fourthly, 13% of respondents indicated they would improve productivity and implement an action plan and almost 9% of respondents did not know how to handle these issues. The survey also gauged pressing issues affecting the industry as a whole. An overwhelming 27% of responses indicated that "cheap, low-quality imports" are a prime threat for the Queensland manufacturing industry, but interestingly, this was rated comparatively low (9%) as an issue for individual business. The "economic downturn" came in at second with 14%, and this rated just as high a concern for individual businesses.
Overall, the three fundamental findings of the survey are:
Industry is still recovering from the global financial crisis:
The GFC is still having a profound effect on industry with recovery moving slower than expected. Of the issues most affecting industry, slow demand, perhaps GFC-related, is affecting one in three (34%) companies. Staff-related issues affect one in four (26%), and productivity-related issues are affecting 16%.
Productivity and people are key issues:
Productivity emerged strongly as one of the Top 5 issues for companies, while slow demand as an issue still rated highly. The remainder of the Top 5 issues for industry were staff retention/training and competition related. Staff related issues such as training and availability comprised four out of the Top 10 issues and are an issue for one in three businesses. Nine percent of respondents each indicated that "staff ability/availability" rated third and almost the same amount rated "government red tape (coordination)" as the fourth most pressing issue facing industry.
Low cost importers & market volatility are the greatest threat to industry as a whole:
From a whole of industry perspective, cheap, low quality imports was thought to be the most pressing issue. Consolidating issues concerning increasing costs, GFC and market volatility totaled 33% – more than the cheap, low quality imports (27%), but together indicate that 60% of respondents believe that the most pressing issue facing the industry is market volatility due to the GFC and associated rising costs and increased competition.
The results of the survey validate what most of us suspected, but QMI Solutions is here to help you:
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better position your business to be involved in the State's major projects program
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address staff issues regarding attraction, retention and training
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improve performance through more efficient processes
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become more competitive through innovation
Additionally, there are Government subsidies available to assist eligible companies with these activities. Apply the accelerator to get your company into the economic "fast lane" and contact us on info@qmisolutions.com.au
For more information or advice, please contact:
Consultant: Jim Walker
Phone: 07 3364 0700
Email: info@qmisolutions.com.au