Dynamic Export » manufacturing

Business runs skin deep

Jennifer Blake — Sun, 16 Oct 2011 22:00:09 +0000

Skincare maven Samea Maakrun was nicknamed ‘Sass’ by her family for her unique brand of wit and charm. She had a fair amount of ‘savvyness’ too, putting her background in business and accounting to work mentoring women in business. “Back then, there were so many females complaining about their lives. They had so many issues and so many problems,” she says. “That’s when I decided to set up my own lifestyle and wellbeing company [Sasy n Savy]. I wanted to develop a product or service to help women, but not necessarily to cost them a fortune.”

After a few months of research, it became clear that there wasn’t a one-stop-shop type brand in Australia that sold affordable products which would make a difference in women’s lives. “There were expensive brands out of Europe for skincare and cosmetics, and there were cheap brands out of Asia.” Maakrun launched Sasy n Savy as a skincare and aromatherapy company pitched somewhere in between. The name combines two aspects of her personality. “Women are sassy and they’re also savvy. They’re beautiful, they’ve got flair, they’ve got passion. They get what they want, they know what they want and they go out and get it.” Which is exactly what Maakrun herself has done.

The Asian opportunity

Starting with just her own savings and a small loan from her mother and sister, Maakrun began developing essential oils and aromatherapy from native Australian plants, launching the brand at the Mind, Body, Spirit expo in 2004. A week later, the brand was on shelves in Hong Kong. “We picked up a Hong Kong distributor and started developing the Asian market. We spent a couple of years just travelling around the Asian market, knocking on clients’ doors, presenting what we had.” Over the years, Sasy n Savy has developed a range of skincare products to complement the aromatherapy range, and Maakrun expects that will continue to grow.

The brand now sells in Hong Kong, the Philippines, Malaysia, Singapore, Taiwan and Japan, but Maakrun says Sasy n Savy’s Asian success didn’t happen overnight. “We’re constantly visiting, doing expos, seeing visitors and seeing what their demands are.” Sasy n Savy now has a Hong Kong office. “Because if you’re not there, a competitor will come along. There’s no brand loyalty because retailers want high profit margins and high turnover. You need to have an actual physical presence in the market for the longevity of the brand.”

Australian products are popular in Asia because they are perceived to be clean and green, Maakrun says. Realising Australia has strict research and development procedures and high quality ingredients, some Asian brands actually get Australian companies to manufacture for them, under their brand. “Big brands have been using our ingredients for a very long time. We import the end products back in and pay 20 times the price,” she adds.

The Australian edge

The ‘Australianness’ of the brand is its unique selling point, Maakrun explains. “We use Kakadu Plum, which is the world’s most vitamin C rich fruit. It stimulates skin cells and collagen. We use wild rosella and grass lily. Those ingredients will create the vitamins, antioxidants and nutrients for your skin’s daily intake.” While the ingredients may be unfamiliar to an international audience, customers understand the value of Australian natives. The brand has been using the ‘Australian Made’ logo from the beginning, and Maakrun wants to do more to capitalise on the popularity of Australian products. “We’re changing our packaging to slap ‘Made in Australia’ right across everything.”

Following its success in Asia, Sasy n Savy looked for a distributor in the Middle East (“it took three goes to get the right person”) and now sells throughout Europe. “Overseas, you’re competing against the top notch European brands that sit beside us on the shelf at Harrods. But people travel. The UK market is full of Asian and Arabic buyers, and it helps that we have a presence in Asia and the Middle East. People know the brand, that it’s from Australia and all that.”

Maakrun is determined to keep Sasy n Savy’s manufacturing in Australia. “There’s not many of us left. My aim is to still say Australian made, Australian owned.” But disappointingly, selling in Australia has been a difficult path. Many Australian retailers don’t have any confidence in Australian brands, Maakrun says. “A lot of retailers will only take on the big brands with the big marketing dollar. They want products to hit the shelf and walk back out again.” It’s starting to change, but many companies find it more profitable to invest in developing sales outside the Australian market. “We were doing expos, we were advertising in magazines, we had the website presence, we were doing seminars, newsletters, fax outs, everything; but at the end of the day the investment compared to the return wasn’t to be seen compared to the international market.”

Finding a way to finance Australian product development has been key to the brand’s success on a business level. This came in the form of private label manufacturing. After seeing Sasy n Savy products in a luxury hotel in Hong Kong, the Marriott hotel in Sydney approached Maakrun and suggested private label. One deal begets another, and now Sasy n Savy does private label manufacturing for a number of 5-star hotels in Australia and internationally. “The R&D for product development is extremely expensive, trying to get products right, testing back and forth,” Maakrun explains. “I’m not an expert so we have to consult that part out of our business.” Despite never advertising private label manufacturing, the profits now pay for product development.

Highs and lows

Manufacturing is a consistent challenge, Maakrun says. “”Every day is a different day. It’s non-stop, go-go. Nothing stays the same: regulations are changing, laws are changing, aromas are changing. Different countries like different aromas and different colours.” Finding and maintaining relationships with distributors can be extremely difficult, Maakrun warns. “You don’t always know who to trust and who’s ethical and professional and who’s not.” Distributors come and go, so you need to have a firm market presence in the country that isn’t reliant on that contract. “Then you’ve got a firmer hold on the country and more activity in the market.”

After nearly a decade of export triumphs and the odd mistake, the 37-year-old entrepreneur has learned it is vital to do your research and understand your market if you plan to trade internationally. “Understand your customers and your competitors, and make sure there’s a good profit margin in it. Be passionate and just go for it.”

Immensely proud of the work the brand has achieved to date, Maakrun says customer feedback remains her guide for measuring success. “People start to say my skin’s feeling firmer, tighter, nourished. You get a lot of good feedback from our products.” Most importantly, the Sasy n Savy team of 12 have travelled the world and had fun growing the brand. “We’ve enjoyed our life. Which is one of our trademarks: Live, Inspire, Feel Good and Empower. We’ve managed to do that by developing these products for our lifestyle.”

Toyota vows to keep exporting

Jennifer Blake — Fri, 26 Aug 2011 23:52:15 +0000

Toyota Australia has said it will continue to export, despite the difficult trade conditions imposed by the high Australian dollar. Unveiling a new Camry Atara range this week, senior executive David Buttner said exporting was “an integral part of our production strategy at Altona”.

“There’s no denying that it’s a very, very tough environment. You look at the high value of the Australian dollar, you look at our overall cost base, it’s a challenging time,” Buttner said. “But we’ve been building vehicles for 50 years in Australia and we made a commitment some time ago to ensure we could sustain that investment.”

Strong demand in the Middle East for the new Camry model has boosted Toyota’s sales overseas. The Camry has a history of success overseas, with 850,000 of the family sedans exported since 1996.

The Altona plant, currently undergoing a $300 million upgrade partly funded by the Australian Government, employs 3,200 people. “We like to think that as a large manufacturer in the largest manufacturing sector in Australia we can continue to engage positively with the government, to make sure that our parent company (in Japan) can see an environment where it’s appropriate to invest fairly large sums of money.”

Manage Production in China

Lisa Goodhand — Wed, 25 May 2011 00:00:26 +0000

Many importers currently dealing with Chinese factories will already know that manufacturing there can be wrought with complexity. They don’t always deliver on time, on spec and on budget as the project managers like to put it. Few importers, though, understand the complexities existing within the factory that significantly impact their ability to deliver. By having insight into the manufacturing process, you can better manage the risks!

Visibility in an important tool for importers—it means understanding the many manufacturing issues that could impact their project and being able to respond to them. In Chinese factories visibility can be a difficult, given that communications are complicated by language and cultural barriers. Importers rely on email, Skype, phone calls and the occasional quick trip to China to visit the factory. This means much of the onus is on the factory to update the importer on developments—both good and bad.

Cultural factors

While we shouldn’t generalise about why factories get it wrong—as there are plenty of factories that manufacture to an excellent standard—there are those that present the same common challenges. One such challenge is the challenge of communication, which can be seen at many different levels.

Key role

Your import success hinges on your sales manager’s communication skills. When working with a Chinese manufacturer your first point of contact is the sales and marketing department. This department plays a significant role, being required to not only source new customers but also service them, passing on all your product specifications to the production department (who are generally Chinese speaking only).

Employees in this sales role must firstly have an English (or other) language competency that allows them to communicate with their export market customers:—i.e. you the importer. As a general rule this is a highly sought after role with good advancement prospects for any Chinese employee. And for this reason, you will notice that good sales managers are often not long in one position, tending to job shop due to the being in high demand.

Communication at the beginning of a manufacturing project is critical. The sales manager must understand and then pass on your product information to the relevant departments in the factory. If you are fortunate to work with a sales manager who has great language skills, understands the manufacturing process and is efficient, you are off to a good start. If they are lazy, overburdened, have limited English or only a basic understanding of the manufacturing process, then this could be a warning sign. A communication blockage at the beginning of a project could result in the wrong product being produced, unclear lead times, unapproved materials changes and unforeseen costs.

Nepotism in this position is also a recurring feature. Given the prestige attached to being a sales manager in China, it is often a position filled by family members, partners or friends. In a shoe factory we know, this role is held by the owner’s nephew. The nephew has no English language or shoe making experience, nor is there an expectation for him to gain these skills. Simply turning up is considered sufficient. Even worse there is no recourse for poor performance, laziness or when he makes blatant mistakes.

Having this barrier limits our client’s ability to pass on product information efficiently. It also means monitoring the progress of sample making and full scale production is almost impossible. This can be a costly process, as the client in this situation is forced to wait until the products are 100 percent complete before they can assess whether or not the products have been made according to the specifications.

How do you address the sales manager challenge? Find out who your sales manager is, what their experience is and whether they are happy working in the company they are with. Monitor their performance and always double check their work. Communicate with them daily to ensure they do not forget you. On the flip side, do not burden them with longwinded wordy emails. Set out the facts in plain English and ensure you product requirements are prepared in a detailed specification sheet—not over the course of 10 emails.

Make sure you also have realistic expectations and don’t leave change to the last minute, then expect immediate results. Expletives, CAPITAL LETTERS and ‘!!!!!’ are all clearly understood in China, so think twice before firing off an angry email, you may be shooting your only messenger.

Nissan Australia wins $150 million export contract

Jennifer Blake — Fri, 25 Mar 2011 04:51:01 +0000

Nissan Australia’s casting plant has won a global tender to manufacture parts of the company’s flagship electric car.

The contract is to produce three cast aluminium parts for the inverter box of the battery-powered Leaf model, currently sold in Japan and the USA. The deal will guarantee more than $150 million in export revenue over the next five years, saving 150 jobs at the Dandenong plant Nissan Casting which faced possible closure this year.

Dan Thompson, chief executive officer of Nissan Australia, said the manufacturing plant took on significant competition from Thailand, China and Mexico to win the contract. He added the deal proved Australia was becoming a credible player in the “fierce” global automotive manufacturing industry despite tough conditions locally.

Nissan secured the tender with the assistance of a $3.5 million grant from the Australian government’s Green Car Innovation Fund. It has been working with the CSIRO and the Centre for Applied Special Technology Co-operative Research Centre to develop a new aluminium casting technology.

Thompson credited the breakthrough as one of the lynchpins for winning the contract. “It just blew away a lot of the Japanese engineering and procuring specialists,” he said.

“It’s the first time this advanced aluminium casting process has been applied commercially in Australia, which marks a new and exciting chapter for automotive manufacturing in Australia as we embark on the future of what is zero emission mobility.”

The Nissan Leaf will be available in Australia in 2012.

Imports hurt Australian food sector

Adeline Teoh — Wed, 27 Oct 2010 05:55:13 +0000

Falling exports and rising imports will damage Australia’s $102 billion food and grocery industry, according to a new report by the Australian Food and Grocery Council (AFGC) and KPMG.

The annual State of the Industry 2010 report details the pressure the sector has come under in the last six years, underlining the $4.5 billion surplus in 2004/05 to a $1.8 billion deficit in 2009/10.

“This alarming result shows food and grocery manufacturing—which employs 288,000 people—is now a net importer of food and grocery products which impacts industry’s growth and competitiveness,” said AFGC chief executive Kate Carnell.

“Industry is still a major exporter but imports are rising fast, eroding the trade surplus historically enjoyed by the industry. To protect Australia’s food supply and overcome this challenge, there must be a ‘whole-of-government’ national strategy to ensure food and grocery manufacturing’s long-term growth, increase export earnings and boost competitiveness.”

The report also recognised the importance of protecting the future needs of industry in terms of job growth and investment as well as meeting the significant food supply needs into the future.

“The industry employs more than three percent of all employed people in Australia but lost 3,400 jobs since 2006/07. The sector pays wages of more than $13 billion a year,” said Carnell. “There are also real challenges facing the industry including the increasing cost of energy, availability of water, the surging Australian dollar and the availability and cost of good employees.”

Download the full report State of the Industry 2010: Essential Facts and Figures at www.afgc.org.au.

Exporter named Telstra SA Business of the Year

Adeline Teoh — Thu, 05 Aug 2010 00:11:17 +0000

Machinery exporter Kelly Engineering has been named Telstra’s 2010 South Australian Business of the Year. A machinery manufacturer which custom-makes equipment for agricultural purposes, Kelly Engineering took home the top honour at the recent awards ceremony.

Now located in Booleroo Centre, Kelly Engineering started as a hobby business on a farm 20 years ago and is still family-owned. The business also won its category, the Panasonic Australia Medium Business Award.

“Kelly Engineering should feel a great sense of pride because the calibre of the 14 finalists in this year’s Awards was very impressive, reflecting the strength of Australia’s small and medium business sector,” said Deena Shiff, Telstra Business Group managing director and ambassador for the Telstra Business Award.

“Judges said Kelly Engineering is an impressive and socially-responsible family business that is servicing world markets with unique, patented and constantly-evolving products backed by strong customer service,” she added. “They have adapted their business model by expanding globally to protect their company and employees against local market fluctuations. While financially strong, they have significant growth opportunities ahead of them.”

Kelly Engineering supplies innovative farm machinery to markets in North America, Denmark, South Africa and New Zealand. It employs 38 staff and is a significant employer of apprentices in SA’s northern agricultural region.

VIC biscuit manufacturer on the rise

Adeline Teoh — Tue, 20 Jul 2010 02:09:44 +0000

Victorian Premier John Brumby last week opened a major manufacturing facility for biscuit and cake makers Unibic, proving that manufacturing is still an important part of the state’s business.

“Victoria is Australia’s food bowl, leading the nation in food production, processing and export and we will continue to work with the industry to further increase the competitiveness of Victoria’s food business in domestic and international markets,” said Premier Brumby.

Unibic’s new $44 million facility will service the Australian and New Zealand market, as well as their growing markets in Canada, India, the UK and the USA.

“Few biscuit brands have ever achieved success outside of their own domestic markets due to consumer loyalty for brands they have grown up with. However we have seen first hand that consumers worldwide value the very qualities that Victoria stands for: fresh ingredients, with minimal processing and artificial additives. Victoria holds the recipe for international success in its hands,” said Michael Quinn, managing director of Unibic.

Premier Brumby praised Unibic’s commitment to Victoria. “Unibic’s investment is great news for jobs, great news for the local economy and great news for the future prosperity of Victoria’s food and beverage production industry,” he said.

“This impressive facility has created over 50 new Victorian jobs and as Unibic continues to expand its production and research and development capabilities, even more new jobs will be created.”

Food manufacturing remains a key part of the Victorian economy, contributing more than $25 billion and employing some 140,000 Victorians.

Manufacturing in China: review

Lisa Goodhand — Fri, 25 Jun 2010 05:25:35 +0000

Want to read a book about China and the people who actually work in the factories? My good friend Steve Welsh (IMS) recently lent me Factory Girls: Voices from the heart of modern China, by Leslie T Chang and I have to highly recommend it.

Factory Girls is a modern account of the lives, loves and day to day challenges of the women who work in Chinese factories in modern China’s factory hub, Dongguan. Leslie spends countless hours with some of the local workers, who left their rural hometowns to find work and money in the big smoke.

The reason I like this book, is that all too often people get caught up in the day-to-day business of international trade and manufacturing and forget the human element to this equation. They forget or have no idea in most cases what goes on behind the scenes away from the flashy trade fairs, glossy magazines and glorious websites. Sometimes, knowing what really goes on helps you to make better business decisions and fewer unrealistic expectations.

The people side of manufacturing

Manufacturing is a process that requires many elements. It requires the sales team to take your order, the sampling team to interpret your specifications and then the manufacturing team to take instruction to mass produce your goods. Before they start though, they must communicate with one or many sub-suppliers who deliver the raw materials required. Once delivered and prepared, production can start as soon as the production line staff have been educated about the product requirements and what their role is on the production line.

There will be many departments inside and outside the factory that need to talk with each other. On the production line, the production manager should oversee the production and if he has given good instructions there should be no problems. The quality manager should understand the desired outcome and then watch the production to make sure the goods are to specification and ensure the materials supplied are the right colour, shape, quantity and quality.

Once complete the packaging team is then responsible to safely package your goods with cardboard, foam, glue, strapping tape and so on. They then hand over to the logistics team who liaise with your freight forwarder to pack the goods onto your container and then deliver it to the port where it will be shipped.

I would happily testify that no one worker on the production line would have had the opportunity to travel overseas. In most cases, people lower in the administrative chain, would not have even ventured into a high-end western style supermarket or 5-star hotel. Next time you demand ‘I want it to Australian standards’, think about whether they really know what you are talking about?

The key to successful manufacturing and thus importing is knowledge, training and due diligence. In part, your Chinese manufacturer will take on this role. But you will also need to share this information depending on the factory’s exposure to the way us westerners want things —yes, you need to get involved!

Next time you contact your manufacturer, think about what happens after you place that order? Who is the person talking to you on Skype? How do the managers educate their employees? Why is their written English better than their spoken? What happens if someone doesn’t come back from their Chinese New Year holiday? Who suffers when the sample is not right, the client demands a refund or the production team forgets an important step in the manufacturing process?

—Lisa Goodhand is the director if China operations at China Blueprint

Manufacturing advances calls for skills

Adeline Teoh — Tue, 11 May 2010 23:45:06 +0000

National Manufacturing Week and Austech (NMW 2010) began yesterday with a call for more people to enter the industry as the advanced manufacturing sector grows.

“Despite international competition, the GFC and other challenges, Australia’s manufacturing industry is alive and well,” said Shane Infanti, CEO of peak body Australian Manufacturing Technology Institute (AMTIL).

“Manufacturers contribute more than $280 billion to the economy each year, employ more than 1 million Australians and invest nearly half of Australia’s contribution to R&D. Despite this, many still consider that manufacturing is a dirty or dead-end job – and so the best and brightest tend to discount manufacturing as their first career choice.”

Infanti said the industry needed more secondary and tertiary graduates interested in a career path in management, advanced technologies such as robotics, engineering, computer programming, and related areas.

NMW 2010 runs until May 14 at the Sydney Showground. Entry is free, register on site or at www.nationalmanufacturingweek.com.au.

Advanced Manufacturing Australia

Adeline Teoh — Thu, 08 Apr 2010 07:31:27 +0000

Australian manufacturing has suffered a number of blows over the years, and it’s the advanced segment that’s bouncing back from the ropes and the business is still going global.

Manufacturing is dead. At least, that’s what the media seemed to report when Pacific Brands moved their textile production offshore last year. But it seems manufacturing still has a life in Australia as the success of advanced manufacturers such as ResMed and Cochlear show, indicating that not only is manufacturing still alive in this country, it’s evolving.

Traditionally, advanced manufacturing includes precision engineering, diemaking and tooling, composites, automation, and new materials, says Hayden Williams, Austrade’s manager for advanced manufacturing. “From an Austrade point of view we see it as high value-added manufacturing. We have automotive, defence, security, aerospace, marine and rail, plus enabling sectors.”

Medical instruments and biotechnology production also fall under the umbrella, though tend to be classified under medical exports. In addition to goods, Williams says exports include intellectual property, services, technology, and inbound and outbound investment.

Dr John Blakemore, principal of Blakemore Consulting and president of the Manufacturing Society of Australia, takes a slightly different view, separating the manufacture of advanced products from advanced manufacturing process. “Australia is not greatly renowned for any advanced manufacturing process. We have some companies that make advanced products, which is quite different, though not a lot of advanced processing is used to make them.”

Advanced manufacturers innovate the process of manufacturing to make a finished product, he explains, thus the sector includes value-add resource processing in the mining industry where we have “refineries with world class technology”. The product may not be high-tech, but the process is.

And taking the definition of manufacturing as a conversion of raw materials to an output via a series of activities, Blakemore adds film production, including computer-generated imagery (CGI) and other types of technical production, under advanced manufacturing.

New exporters

“Australians are very good at short production runs because we have a small domestic market. Our manufacturers tend to be flexible, producing goods of high value and high quality, perhaps in quantities that other manufacturers overseas aren’t interested in doing,” says Williams, outlining some of our key advantages.

His advice to new exporters in this space is to choose an international market carefully. “If the company is export ready, we want to work with them to pick the right market. The world looks to be full of opportunity, but you have to prioritise. It also depends on the specific sector and whether the market requires them to have a presence or not.”

Governments and industry associations run workshops and missions that will give new exporters an insight into the most suitable global markets for their particular segment, he advises.

Existing exporters

Looking for growth markets and growth opportunities is the key to expansion for existing exporters, says Williams. Asia and India are growing markets, particularly for automotive parts, but the space is competitive, he warns: “When the US auto market declined, a lot of Canadian and US auto companies were looking for opportunities as well.”

Blakemore recommends starting a relationship with Asian countries now if you intend doing business there, particularly China. “You have to build long-term relationships with the Chinese, so you have to start early.”

Diversification across sectors has also been helpful for many businesses, according to Williams. “Once where they might have been 90 percent auto, they’re now 50 percent auto and they’ve gone into defence, marine, aerospace. Some have gone into medical instruments. One company went into artificial limbs.”

This especially helps if the nature of the sector is hard on the bottom line, such as with the “lumpy” payments experienced by suppliers to the defence and auto industries, he says. “They have to even out the lumps otherwise, when there’s a downturn, a lot of them go broke.”

Advanced exporters

Austrade has developed cluster programs for more advanced exporters to develop relationships with others. Williams says clusters and missions “aim for cross-fertilisation where companies can help each other with projects” and encourage businesses to be “cooperative rather than competitive”.

Using a supply chain model will allow Australian businesses to focus on our strengths, says Blakemore. “We have a well educated workforce. We can do all the design work for products that could be manufactured anywhere.”

This is an objective of the Federal Government, says Williams. “Most of this industry is global so the imperative is to get Australians into the global supply chain. We have a skilled workforce and we’re interested in keeping the R&D and operations in Australia. If that’s not viable, Australian companies might go offshore to manufacture part of the product, or we look into foreign direct investment.”