A team from the University of Sydney developed an emergency ventilator in response to Covid-19 © Lisa Maree Williams/Getty Images
A team from the University of Sydney developed an emergency ventilator in response to Covid-19 © Lisa Maree Williams/Getty Images

Call for reshoring of Australian supply chains

8 June 2020

Reshoring supply chains within Australia could play an important role in reigniting the country’s manufacturing sector, according to a report.

The report, A New Deal Plan for Manufacturing, was crowdsourced during April and May from within Australia’s manufacturing communities.

Considerations on whether to purchase Australian made or imported goods need to acknowledge not just price comparisons but the “total cost to the nation”, the report said.

“The Covid-19 pandemic has thrown into stark relief the risks associated with supply chains which extend beyond Australia’s borders,” it said.

“Those risks have now been recognised and the need to onshore manufacturing for safety-critical items, medical equipment and personal protective equipment to make Australia self-sufficient has been championed by politicians.”

However, it said that to focus on just medical equipment and pharmaceuticals, as some experts are doing, failed to recognise the importance of having resilient supply chains overall.

“Time, money, and talent all weigh in, getting the data to build a comprehensive total-cost-of-ownership analysis,” said the report.

The report was launched by the Australian Manufacturing Forum and is set to be delivered to government.

Government should rapidly create an import replacement programme to generate new opportunities for Australian manufacturers, the report urged.

New, transparent procurement policies should emphasise value for money for the economy as a whole over the life of the product, as opposed to initial upfront costs.

“The wider benefits of the shorter more robust supply chains and the critical part played by SME manufacturers needs to be considered when developing a new manufacturing industry plan,” said the report.

Strategic alliances could cover joint procurement, common standardisation of non-critical components to help leverage combined buying power, and supplier management.

The plan called on federal and state governments to make greater use of public procurement as a stimulus to develop industry.

It praised the Victorian government decision to purchase locally-made trams and trains with a policy for minimum of 50% local content, saying it was creating thousands of skilled jobs.

However New South Wales’ purchases of rolling stock from overseas “has limited industry opportunities”.

“Government needs to develop winners through smart procurement, because only then will they truly incentivise investment in new technology and growth,” said the report.

The report criticised Australia’s “unhealthy dependence” on outsourced supply chains, specifically in Asia.

It was hard to argue with this on cost, as these were typically 20% lower than Australian competitors but Asian sourcing comes with “a long list of cons which we have been happy to accept or have simply ignored until now”.

The report said onshoring provided benefits such as lower shipping costs, reduced inventories, less storage space and higher employment and tax receipts.

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