Despite Australia’s reputation of being one of the most expensive manufacturing industries in the world, Keech Australia CEO, Herbert Hermens, says the Bendigo-based company is able to successfully compete on a global scale, and others can do too...
Being competitive in the tough global market is important for Australian businesses. Equally important addressing the perception that Australian business cannot compete.
International clients often have a preconceived idea about Australian business. They think we are going to be too expensive, and they are surprised that we can value add and make our products a viable option for their companies.
It’s hard to break through that barrier.
The only option is to constantly knock on doors and travel the globe to introduce Australian products into new markets. The opportunities are there for the taking, but it’s vital to have that direct contact with prospective clients.
The perception in the market that Australian businesses cannot compete on price has driven some manufacturers to send production off shore, while others have simply accepted they can’t get into particular markets, and this is a great shame.
Australian industry has a lot to offer and we need to promote it.
At Keech, we can – and we do – supply parts that offer value at every level. To be globally competitive we are manufacturing reliable and consistent products. We are up against the world, but we’re able to offer clients the best overall package with a balanced price and a consistent product.
Australian industry has an advantage
Customers want to know what they are getting will meet their expectations.
Australian industry has an advantage over some of our competitors in that regard. We can offer consistency and quality assurance through rigorous QA programs and guarantees that we’ll manufacture to Australian and ISO 9001 quality standards. Adaptability is key to competitiveness.
Yes, price matters, but it’s our ability to quickly adapt to our clients’ needs that keeps businesses competitive not only in Australia, but on the global market.
At Keech, we don’t just focus on one particular part of our company, we work to grow each area of our business and that’s part of the reason Keech remains competitive. We employ 160 people and we purposely seek out and work closely with local suppliers in the Bendigo region where we are headquartered.
We are committed to keeping the manufacturing industry alive in Australia, and therefore, we need to look for things that allow us flexibility, profitability, viability and the ability to rise to global demand.
Since the global financial crisis in 2008, we have made an aggressive strategic push into the global economy. With many such fluctuations in demand and product supply, moving into the global market was just good business sense. The stark reality of globalisation has set in. There is a fundamental need to accept we are competing against every part of the world and not just other Australian companies for local and overseas contracts.
Untapped market in developing nations
Keech cast components are exported to worldwide markets including Japan, Russia, North America, South America, Indonesia and Papua New Guinea.
Most of the talk about overseas opportunity has centred on China and South East Asia, but there is a growing and untapped market in developing nations such as the Eastern Bloc countries of Central and Eastern Europe. Booming mining industries in countries like Mongolia and Kazakhstan represent strong opportunities for Australian rail infrastructure manufacturers.
We have an absolute commitment to innovation in our company and we are increasing our competitive edge four-fold via product, strategic, management and process development. We continually review every element of our company and ask: can we do better?
The reality is that our industry does have to be price competitive. The bottom line will always be a key factor in any business. We continually monitor costs and drive price. But having the lowest price is not the be all and end all of the matter and Australia can certainly deliver to a world-class quality standard.
This means adjusting existing structures to maximise efficiency of invested resources. It is important to utilise fixed capital on a more consistent basis and introduce a flexible labour force to slot into that.
Think outside the box
Manufacturers need to think outside of the box in order to overcome cost barriers without reducing individual wages or sending it off shore. This could be anything from adjusting the flexibility of foundry production hours or daily procedures to investing more revenue in research and development or staff training.
It is essential for Australia to invest in capital and lead with the world’s best equipment, most skilled labour force, and efficient processes – in the eyes of other countries, these are our calling cards. This is not an area where money should be saved or corners cut.
There are new paradigms in the manufacturing industry that bring lower production costs and higher efficiency. Many component manufacturers worldwide, including Keech Australia, have introduced smaller foundries where they can test new processes and invest in new technology prior to implementing at a larger, main site.
This helps to keep costs down, but also assures the manufacturer is capable of serving the global market.
As in any industry, Australian manufacturing must be able to differentiate its products from rival products in order to become and remain competitive and this too requires investment.
*Keech Australia is a third-generation Australian manufacturer of castings. The company originally produced hand tools, axes and small parts at its foundry. The 80-year-old company has steadily expanded its business to cater for railway, mining, construction, agriculture, industrial, defence and the medical sector.