Tuesday, 21 May 2013

How can Manufacturing Grow again

Our analysis is that selective tariff protection (starting with structural steel) is the only answer and we invite anyone to offer an alternative view. My email is kurriman@hotmail.com
This would give work for Australians in steel supply, design, detailing, fabrication, painting and erection. Car manufacturers might leave. these people would not - they live here.

My plan is a baby step to apply a selective tariff  on fabricated structural steel from India and/or Indonesia. The reason for starting with those two countries is based on my own experience. I was working at the steelworks at Port Kembla when the Columbo Plan was producing such great results. We were teaching Indian engineers how to produce steel more efficiently.

Many decades later I was part of a small team sent to Indonesia. We taught young Indonesian engineers how to be better at controlling the extensions of the Krakatau Steel Plant.

India and Indonesia accepted that they could become more productive and we were pleased to assist.

Our questions are:

 Does the Australian Establishment:

 1.   Accept that our growth  rate is steadily  decreasing.

2.   Accept that our manufacturing has put us into 25th place out of 26 countries in a recent survey

3.   Realise that no economist has countered that presented by a professor from Monash University in Churchill Victoria that:

It has been good for Australia to eliminate traditional manufacturing to make way for cost based innovative industry.


The only two examples  he gave were niche aircraft manufacturing and cutting edge animation design.  The aircraft company he referred to went into free fall two weeks later. The half dozen or so jobs produced by animation design will find it difficult to match the more than a million jobs lost.

    4. Be prepared to even think about presenting the case for a selective tariff – even for a trial period?


Two weeks after the niche aircraft initiative  was suggested the local newspaper heading was "Aero Jobs in Free Fall." The detail tells that the company would have collapsed before an Indian company bought the  majority of the shares. The new overseas owners now feel that the next version of the aircraft should be manufactured offshore.

About a million jobs were lost while  traditional manufacturing is being  phased out and perhaps innovative animation design might support 4 or 5 people. No wonder we are cynical


Warren Truss talked of Australia's future in manufacturing in "cutting edge products." This sounds wonderful but Australia has bad history in making discoveries but having to go overseas for them to be made commercial. Some examples are cat's eyes on roads, black box recorders and various solar panel initiatives.


History of Australian Manufacturing

At the turn of the 20th century Australia rose on the sheep's back. As that situation started to change manufacturing expanded because of the tyranny of distance made imports very expensive.

World War II saw another tyranny - the threat of invasion. Manufacturing growth was a life or death imperative.

After the war Australia enjoyed the influence of Australian patriots like Lance Endersbee who started his working life on the Snowy River Scheme. His story of his involvement in  thwarting Sate Governments trying to scuttle the project is inspiring.

Near the end of his life he could see the future of Australia taking advantage of The Asian Century by the plan he released in 1997 which we have given the unfortunate title of "Have we missed the Asian Century?"

In a DVD he released in 1996 Lance told that Australia needed to maintain its level of manufacturing and agriculture. Both have since reduced considerably since then.

Current manufacturing history is a combination of politicians and at least one economist telling how well manufacturing ie going to achieve as more manufacturing is being imported (see graph) as manufacturing employees are reducing as shown on the HOME page.

How Important is Manufacturing?

The Coalition is advising that manufacturing is one of the five pillars which will allow Australia to continue to prosper as the mining boom phases out.

Both major parties talk of taking advantage of The Asian Century. Obviously this will not happen just because of geography - it has to be exports in excess of imports and Australia's imports are high and getting higher. Normally the list of exports would include:

LNG sales
Education income  but less income costs for those studying overseas.
Tourism income but less costs of Australians holidaying overseas
Profits from export of animation expertise (as described by an economist)

The graph of ever increasing manufacturing imports shows how difficult for current trends to be reversed.

Require People to advertise problems

Agricultural problems are visually confronting.

Manufacturing problems are only seen by fewer cars in company car parks or gates locked outside empty work shops.

Please make contact (on kurriman@hotmail.com)  if you can assist with advertising the problems

Difficulty in Attracting Attention
An economics professor claims that the reduction in tariffs has been good for manufacturing because it has reduced "Manufacturing as we know it" which is not viable due to high wage rates to make way for niche manufacturing.

With professors, editors, reporters and industry representative having feelings like that it shows how difficult it will be to get enough votes to change the direction of both sides of Government. When the web page was being designed the motif was to represent global warming. The message here is that it probably could represent tears - big ones!!

Monday, 20 May 2013

Economist specialising in Manufacturing sought

A recent discussion with an economist ....

Tony Abbott indicated that manufacturing is planned to be one of the pillars which will take up the slack as the mining boom and also any gas and coal seam gas strength dissipate. We are asking many politicians to refer us to an economist who can relate to how manufacturing can halt the downward spiral and return it to growth. Tony tells us that the removal of the Carbon Tax will save manufacturing. Your comments are welcome. My comment is that the savings on power costs will be as noticeable as a pimple on a pumpkin.


The cost to the nation of losses in manufacturing has been greater than the losses in agriculture but the visual impact is less than seeing trees being bulldozes because it is represented  by fewer cars in work place car parks and locked gates at former work shops.

One definition of a Developed Country is shown in Wikipedia as "a post industrial country" which  implies that Developed Country can never be able (by some undefined force) to reverse the downward trend in what Lance Endesbee referred to as Production. Lance showed the stark difference in the Production percentages of GDP between Developing and Developing countries as shown in the columns shown below. To the credit of the United States they appear to be developing technologies to achieve a "bounce" in the percentage of Production. Europe and Japan do not appear to be making any positive moves. The challenge for Australia (and especially to politicians) is that I cannot see any visionaries such as Lance Endersbee on the horizon. The question we all should be asking  is whether we accept the contention of the economist who I talked to who sees Australia's contribution to the World Economic Order as a quarry but not as a manufacturing country. The economist argues that only countries with huge populations can support strong  manufacturing. His comment was that whatever manufacturing we have in the future should have a  minimal labour component due to Australia's high wages. His examples includes a niche aircraft manufacturer and people producing world accepted animation  technology for film and video. My contention is that each of these would have to grow about 1,000% to have the impact which would be required to bring our Production percentage of GDP up to 30%.

After talking to the economist a newspaper headline appeared later advising "Aero Jobs in Free Fall." The article advised that the company had survived only because it is now controlled by an Asian company. That company has chosen to look elsewhere (in Asia?) for manufacture of the nest version of the aircraft. Refer to "Are we missing out on the Asian Century.  

If this web site does nothing else it would be great if it can generate discussion on this subject.
From a theoretical point of view it would be appreciated to have an assessment by a different economist from the  one with whom I argued.

My wish is that two economists could debate these issues. My last economics lesson was from Mr. Frank Taylor at Griffith High School in 1948 but I would welcome a debate with the economist from Monash University
From a practical view it would be great to see green shoots appearing somewhere. Could it be the very innovative and financially aware manufacturer in Morwell, Victoria with whom I worked?
Could it be Kwinana where we founded Kwinana Entereprises Pty Ltd in 1968 and did many magnificent things?
Could it be Port Kembla  where I did my apprenticeship and engineering?
Could it be Port Hedland where I lived in a construction donga many decades ago? If agriculture is going to sprout in the North why not have manufacturing sprout in the North? Many, many decades ago during Australia's manufacturing high point there was a proposal to develop a direct reduction HiMet Plant. The budget was exactly $100m. A very good friend of mine who was an excellent estimator told me that he felt that the estimate was too low. I am no longer quite as keen to call him a friend because he worked all week on his own time and produced a very detailed estimate totaling $105m. They scrapped the plan.
Way back then I wondered what would have happened if they has gone ahead with a target of $100m. My job was to control time schedules and be associated with the cost controllers. What if the cost had blown out by 10% and hit $110m? I would have done my darndest to justify any schedule and cost over runs. .
I will be sending this web address to Post Offices in Kwinana, Port Hedland and Wickham and hope that a miracle might occur.

I discussed these graphs with the economist

The first four columns on the left were copied from a DVD by the late Lance Endersbee while the heading and the two columns on the right hand side are mine. When I saw the DVD in 2011 I did not want to believe it. I phoned ABARE and was devastated to learn that they assessed that Australian agriculture had reduced to 2% of GDP and what Lance referred to as Production had reduced to 26% of GDP. I have asked the Senate Inquiry into citrus to advise their estimate for agriculture in 2013. I will be asking Darren Chester the Federal member for Gippsland to obtain a figure for Production and/or manufacturing.

The editor of "The Area News" is very realistic. He allows weak economic outlook for agriculture to be presented so that improvements can be initiated. The editor of the LatrobeValley Espress prints only good news so the following letter will not appear in print:



From:Jeremy Beck (JB@cecaust.com.au)This sender is in yourcontact list.
Sent:Monday, 13 May 2013 9:13:37 AM
To:BRIAN MILLS (kurriman@hotmail.com)

What is the local situation in Morwell?
A friend works in a factory which lost $200,000 last year and $200,000 the year before. We dsperately want to try to persuade The Latrobe Valley Express and Darren Chester to save yet another Australian industry to die because of the ever decreasing tariffs in the New World Order of Univeral Free Trade.
A design engineer tells of having a staff of over 30 including apprentices diving down to a staff of 6 with no apprentices. He has joined with us prevent his  part of the manufacturing industry disappearing for ever.
Yesterday (13th May 2013) he told of a bank teller saying that customers had dropped by more then half. Her answer to his question was "lack of business."  How can there be business when the manufacturing base of the economy is imploding?

Only ten years ago  steel structures in Australia were designed and manufactured in Australia. As tariffs have reduced I have seen a construction site in NSW where steel structures and equipment were imported from India and so much of the structures and key equiupment items were unacceptable and had to replaced with disasterous results on the project schedule.
On another project piping imported from China required replacement with project schedule delays..