Australian Shelving Manufacturer – a lonely breed

David Kemp, the Managing Director and driving force behind Australia’s largest domestic shelving manufacturer BDS Pty Ltd., announced recently that his company will continue to promote their ‘Australian manufacture’ policies but would widen their focus to take in a broader market.

Over the past several years the hardware press reported the expansion that transformed the BDS Group from a handful of employees in 1989 to arguably Australia’s largest manufacturer of shelving systems. With over 120 staff, two manufacturing plants on the outskirts of Brisbane and branch warehouses in Sydney, Adelaide and Perth – soon to be joined by a new branch warehouse in Melbourne – their investment in plant and equipment has made them a leading supplier within their targeted markets.

These markets have included the traditional retailing outlets of hardware, discount variety, department store and grocery. However, most of those sectors have seen significant change in their strategies and policies with takeovers, buyouts and management changes influencing many of their buying decisions. The result in a majority of cases is the decline of brand loyalty, with a shift from service and flexibility of product availability to a hard noses bottom line where the cheapest price gets our business mentality.

Mr. Kemp said that five years ago there were several Australian shelving and shop fitting manufacturers in full production on Australian soil. This industry employed 3000 workers and supplied shelving and merchandising products to retailers, with the hardware industry being one of the segments targeted by the collective business. Today, this manufacturing sector has all but disappeared, offering employment to fewer than 250 workers.

Practically all the Australian manufacturers have capitulated to the impact of ‘cheap imports’. Whilst Mr Kemp remains committed to manufacture within Australia and the employment of Australian workers, most of his competition now comes from imported goods. They are not in any way manufactured within Australia and contribute little if anything to the Australian economy.

This is the ‘level playing field’ we find ourselves on and whilst companies like BDS comply with all manners of Governmental rules, regulations and associated costs, they must compete with products made in societies that have little or no compliance costs, low wages, and little or no Australian content – all they offer is a bottom line which at a glance looks attractive.

Mr. Kemp is frustrated that Australian companies like BDS spend several years devoting time and resources to working with Group store planners and merchandisers. Specifics are developed and reputations as reliable and preferred suppliers are established, only to be confronted by ‘importers’ offering product that in many instances is not compliant with the Group’s branding specifications to which BDS was tied.

In order to minimize the onslaught of ‘cheap imports’, companies like BDS Pty Ltd have to address this threat and broaden their customer base in order to make a very lop-sided playing field as level as possible. Mr. Kemp said his company was fortunate to be an established major shelving and shop fitting equipment supplier to many retailing groups that opt to remain loyal to the ‘Australian made’ ethos in their investment on capital equipment. These Groups identified such benefits as quicker response times as well as the flexibility and dynamics of being aligned to a domestic manufacturer. BDS continues to manufacture within Australia and offer competitive pricing for quality products of like nature – or as the saying goes “apples for apples”.

However, BDS will not compromise the integrity of its products to reduce the cost of shelving in an effort to combat the imports. Additionally, amongst some retail executives and many political practitioners there is a frightening lack of understanding of the enormous impact this syndrome has on industry throughout Australia. Everything is rosy, as the nation rides the crest of the resources boom. But where to in a few short years time when the heat goes out of that sector?

For a simple equation, imagine if Mr Kemp took BDS offshore and imported all his products. The wages paid to his employees, the purchases of raw materials, steel, powder coating, consumables, Federal, State and local government taxes and charges etc. would amount to some $25 million dollars annually, stripped from the domestic economy along with its flow on effect.

This is not the path Mr Kemp is following, but unless the nation embraces ‘import reduction’ strategies and puts the brakes on this ‘slash and burn’ mentality, Australian manufacturers like BDS will stop paying the enormous ‘on costs’ associated with retaining onshore production facilities.

The decimation of ‘Aussie’ industries will continue, and where to from there we may well ask? Will it really be the last man standing syndrome?