Analysis and Commentary

Offshoring: When saving a few bucks can cost millions – by Josh Budd

Analysis and Commentary

By Josh Budd

There’s no doubt that 2020 was an eventful year. The COVID-19 pandemic and its impact on the global marketplace threw a harsh spotlight on the volatility of Australia’s supply chains.

With ongoing supply issues, it’s now truly apparent that the modes of acquisition, distribution and transportation traditionally relied upon can no longer be considered guaranteed for use.

This uncertainty has prompted many companies to revise their own supply strategies and look at ‘reshoring’ their manufacturing activities back home to Australia to overcome the current challenges of stock availability, a disrupted global supply chain and delayed freight services.

Whilst COVID-19, which is considered to be a once in a century event, was the impetus for this inflection, the reality is that companies should plan their future supply strategy around the assumption of more frequent disruptions.

This proactive planning will help to ensure companies are better placed to mitigate or manage any future disruptions. An ideal way to do this is to return to Australian manufacturers.

Back in the 1950s and 1960s, manufacturing accounted for approximately 28 per cent of Australian GDP, and 28 per cent of employment. Fast forward to today, and while manufacturing remains a vital part of the economy; it is responsible for just five per cent of GDP, and only 5.4 per cent of total employment.

The importance of a robust manufacturing industry in Australia cannot be overstated. It is no coincidence that in times of war and unrest our manufacturing industry was front and centre, sustaining our economy, driving growth and providing Australians and Australian businesses with the goods and services they wanted and needed, without waiting for the rest of the world.

Manufacturing is more than just an industry. It is independence, self-reliance and the confidence to know that here in Australia, we can take care of ourselves. It’s time to go back in time.

Josh Budd is Managing Director of McNeall Plastics, a leading plastics and engineering business. The company recently reshored manufacture of its Austlon cast nylon products to its factory at Melrose Park in western Sydney.

Picture: Josh Budd

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