Home' MHD Supply Chain Solutions : MHD Mar-Apl 2015 Contents who have been conditioned to lower prices will
resist bitterly, change suppliers, complain, shop
around, and do everything to delay the impact.
You will have to pay more.
The fourth impact is really a consequence of
all three of the other short term effects.
All of the above repositioning of cost struc-
tures, pricing, supply bases, etc. means that
there will be a lot of flux and volatility in the
supply chains. This is already happening
where some distributors are unable to release
price lists to the market, as they cannot
commit to pricing for the next shipment as
yet. I expect this volatility to increase and be
with us for all of 2015.
The winners in all of this will be the com-
panies that can rapidly and effectively deploy
price rises into their markets and maintain or
grow their volumes in this environment by just
bringing a superior offer to market.
The long-term effects:
1. Dinosaurs are still dead!
The currency repositioning will not prompt a
return to the good old days. Companies that
ceased operations over the last eight years
will not suddenly reinvest into manufacturing
in Australia on the basis of this change. The
car industry is going to remain dead. For most
products we are a mature market with high
penetration, and if you are going to do a major
investment anywhere in the world, you will be
pre-disposed to making that investment in a
market with high growth opportunities. Australia
provides reasons for major investment in certain
sectors, however, I caution anyone against
believing that the currency shift will provoke
a resurrection of major industries that have
ceased operations. Dinosaurs will remain dead!
2. Capacity utilisation
Many of our clients are already running at
capacity and working with us for further
growth, many others in industry are running
below capacity and can expand output. As
the supply chain adjusts, we expect capacity
utilisation to increase as businesses that have
struggled to gain work in recent years become
more competitive and more desirable to their
customer base. In the short term, this will not
lead to an increase in employment. Employers
are and will resist hiring until it is essential
3. Skills shortage
It is insane that we are still talking about this
issue, given the shrinking in manufacturing
over the last ten years. Many people have
moved out of the industry, others are now
priced out of the market and have been
replaced by automation. Most of our clients
are facing a skill shortage in specialist areas,
and are looking for highly skilled and reliable
employees. This problem will continue. As
margin pressure increased, people cut training,
cut apprentice programs. Apprentice programs
have been on the decline for many years prior
to the currency appreciation. CNC program-
ming skills is just one specific example.
I once heard an economist make a joke
about economic forecasting and how to get it
right. He joked that the more often you made a
forecast the more likely it was that one of them
would be right and you could conveniently
ignore the others. Use forecasts such as the
above as inputs to your own thinking.
What I am outlining above are generic
issues, we are already seeing them in play.
There are also specific companies who have
already addressed these issues, or will be unaf-
fected by one or more of these, due to the spe-
cifics of their industry or their business model.
Look at the short-term and long-term issues
above and factor them into your specific plans
to create and improve your Local Economy!
Jason Furness is the CEO & founder of
Manufacturship. Jason’s career spans over
20 years in manufacturing enterprises where
he has overseen the turnaround, transition or
transformation of many projects from single
production lines through to entire business
units of over 600 people as a general manager.
As CEO, Jason oversees the development
and delivery of the core Manufacturship
curriculum, leads the mentoring of business
owners and managers through the core
Manufacturship process, and sponsors all
Manufacturship client projects. Several of
these have been part of the implementation
of action plans from Enterprise Connect
Business Reviews. For more information call
1300 226 121, email jason@manufacturship.
com, or visit www.manufacturship.com.
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