Making the most of Ridout's unlikely union

There's always something faintly amusing about a union and two business lobby groups in furious agreement, and so it was yesterday when the Australian Industry Group and the Australian Food and Grocery Council both backed an Australian Manufacturing Workers Union campaign to encourage the public to help shore up the future of Australia's manufacturing sector.

The AMWU, which started on the weekend with a 30-second television commercial, argues that the manufacturing sector employs one million people and encourages viewers to send their local MP a simple message – keep Australia a place that makes things.

The union – and the business lobby groups that represent employers in the sector – want the Government to recommit to industry assistance via R&D incentives; investment in training, investment attraction for "green" technologies; and mandated levels of Australian-made product in Government projects.

The AIG sent out a special press release to throw its weight behind the campaign.

"The AMWU's Manufacturing our Future campaign shines another important light on the critical role that our manufacturing industry has in maintaining a balanced and diversified economy in Australia," chief executive Heather Ridout said.

There is little doubt the pressure on manufacturers right now is enormous. Take Susan Day Cakes, which collapsed late last week and now faces an uncertain future.

From the outside at least, the company appears to be battling rising raw materials prices, rising input prices (such as energy and water), poor consumer confidence and two extremely powerful customers (Coles and Woolworths) intent on driving prices down further and further.

Throw in relatively high labour costs compared to competitors from Asia and it's hardly surprise that companies like these are bleeding.

The question is: What do we do about it?

The idea of an economy where very little is manufactured is not appealing, even if you can put aside the huge hole it would leave in employment. The linkages that run through the economy from manufacturing – through suppliers and customers, research labs, universities and training institutions and entire communities – are crucial.

Without manufacturing, we would be an economy based on digging stuff up and selling services to each other.

However, we have been among those that have criticised the amount of money that has poured into manufacturing for the last few decades – particularly the amount pouring into the car sector – while programs to encourage smaller, high-growth companies has been reduced.

In many ways, the union does seem to be on the right track. While throwing money at a car sector that has been slow to read global trends is not smart, industry assistance aimed at helping the sector evolve – particularly R&D incentives and incentives to encourage a shift towards a greener manufacturing sector – should be supported.

If properly structured, these incentives for manufacturing can help spread innovation throughout the economy and help keep a crucial sector afloat.

This article first appeared on SmartCompany on March 22. Republished with permission.