It's a warm, sunny Saturday morning here in Newcastle. I'm in at my favorite Cafe, 'The Last Drop Espresso Bar', patiently awaiting breakfast and downing a couple of strong long blacks. As I sit at my table with a fine view of my dearest as she commands her small army of gorgeous servers and admire the tanned, lithe beauties who parade past to and fro from Newcastle Beach. I think about China in relation to the state of manufacturing in Australia and the geopolitical shift that has been underway for the past two decades. Well - I do!!
Everyone's aware of the whole China thing, no new news there though I did enjoy that aliteration. The poor buggers building our iPhones, computers, Telly's etc are getting paid up to 31c an hour (with 36 hr individual shifts) to build them, did you know that? And that's at Foxconn, the 'prestige' factory. What are the smaller business' paying? It's no surprise that the west can't compete with that. How can they? It's slave labour!
My answer? Don't.
We in the west are collectively wringing our hands about loosing our manufacturing jobs offshore to countries who use their population as slave labour. So we need to stop whining about it and get clever.
Reading a Wired Magazine article last year got me thinking. It was about how a small but growing number of companies in the US were shifting their manufacturing away from China. Sure it cost them peanuts to get their products manufactured there, but they were more frequently than not paying hand over fist for poor workmanship, silly mistakes and corrupt cost cuttings from Chinese factories. With some rethinking of different elements within the manufacture of their products and some negotiation on wages with American factories, they were able to sell their products at roughly the same price and for the same profit margin as they had with the Chinese factories but with increased quality and assurance of delivery.
Later in the year, friends of mine went to the west coast of the US for a holiday and bought me back a sensational bottle of Cayenne Pepper sauce. I guzzled it down and went online to try and find some more. In my search I found that the sauce was manufactured by a small company in Kansas called `Original Juan' that bottled, manufactured, marketed and distributes food products, retail and online, by whoever has a great food product they felt needed to be shared with the rest of the world. These were folk who built their own trade marked, small and flexible assembly line for brewing & bottling food products. It's Micro-manufacturing or as they call it Micro-Batch and I reckon systems like and similar to this are the way to go in Australia. We've been conditioned to think we can't compete with China and India, Indonesia etc, because of the costs involved with making a widget. But what price the widget if it’s of poor quality or fails to work to expectation?
Are you following my train of thought?
With some lateral thinking, wage negotiation and courage there's no reason we can't get manufacturing happening again in this country. We can use the gifts that living in the west affords us such as the freedom to create, innovate, question and negotiate that you just can't do in China. Quality and innovation from western countries will easily surpass the countries where creativity and independent thought is discouraged and corruption is part of every day life. We don't have corruption anywhere near the scale they do in the rising asian countries. Just bad laws that can be changed if enough people get on board.
Good service is something successful companies realise is unquantifiable monetarily, (that I know of,) but is part way the reason to many successful companies. The time will soon come when the mining boom will cease, what are we going to do then? It's a way for Australia to level out the two speed economy and keep our population at work when the mining boom ends.
For some people the point of owning and running a business is not to make billions of dollars. It's to earn enough to maintain a modest standard of living leaving enough to retire on. Small manufacturing and related industries can supply this. There's always a chance for some to strike it rich but for the most part, people just want to earn an honest living. This is what living in a liberal western democracy can achieve as opposed to living in a Communist dictatorship. (is it obvious I'm not fond of communism?) We enjoy the freedom to be creative and bold - we just don't use it.
Through the week I wrote to the lovely folk at Original Juan telling them about this article and asking permission to use their company as an example and if they had any comment. Here's their reply;
"Hi Ross, thanks for contacting us. I thought the blog was very well written, thanks for including us. I have a few points to include, you can word then however you want.
1) The food system in America is becoming more and more concentrated. Four to five major corporations control a great deal of the food system. Companies like ours meet a lot of opposition in stores because our prices are slightly more expensive and we don't pay slotting fees. We have to operate at a smaller profit margin than larger companies to get on the shelves. The benefit to consumers is we help keep prices competitive in stores. There are a lot of barriers to get into major chains when you are our size. We have been successful through a lot of determination and a little bit of luck.
2) Companies like ours depend upon the loyalty of our customers. We are thoughtful in the quality and contents of our products. We are never going to be the cheapest, but we are proud of the quality of products we manufacture. Our customers have a connection with us, they visit our facility, they participate in our social media. Simply put, we know and care about them.
Sorry about the rambling, hopefully there is some useful info to you. Let me know if you need anything else.
Vice President of Marketing"
Thanks so much to Lindsay for taking the time to reply.
I'm going to be ordering more of their sauce and I highly recommend it to you. It's mighty tasty!!
(I had the `Pain is good! Cayenne Hot sauce' It was hot but marked mild, so I'm keen to see what the medium and hot ones are like)