MANUFACTURING capability development organisation QMI Solutions CEO, Gary Christian, knows the rejuvenation of the Australian manufacturing sector is a complicated challenge.

But QMI Solutions research, he said, reveals a more holistic approach like that being undertaken by Germany and the UK, is now urgent and vital for Australia.

"An enormous amount of work is already being undertaken to address the issue of manufacturing competitiveness, and industry leadership needs to be fostered at a holistic level where the entire value chain and all relevant industries are represented," Mr Christian said.

While he does not shy away from the extent of that challenge, he warns action must be taken urgently or Australia runs the risk of losing certain formerly successful manufacturing categories, not just individual businesses.

"To effectively address the declining competitiveness in Australian manufacturing, the definition and understanding of the manufacturing industry needs to change to include the entire value chain," Mr Christian said. "This includes R&D, design, supply management, production, go-to-market strategies, logistics and services.

"Effectively, manufacturing is a collation of industries which include not just traditional clothing and car manufacturers, rather more inclusive of manufacturing inputs and services to mining, chemicals and engineering, among others.

"By taking a broader view of the value generated by manufacturing and taking a holistic view of the industry, Australia can improve its resource allocation and strategies to boost productivity."

Mr Christian said QMI Solutions research and industry contact over a long period of time - QMI Solutions began as the Queensland Manufacturing Institute in 1993 and has progressed as a partnership between the Queensland Government, UQ and QUT to now encompass the four divisions of Australian Institute for Commercialisation, Industry Capability Network (Queensland), Manufacturing Skills Queensland and QMI Productivity & Improvement - revealed a broadening of scope was vital. This approach was buoyed by results in other developed economies facing similar challenges.

 "This approach will enable Australia to view the fruitful work and progress currently being made and to implement impactful change and policies which address the most significant issues affecting all facets of manufacturing," he said.

"Similar reasoning is already proven in other developed economies such as Germany and the UK."

The good news coming out of QMI Solutions research, Mr Christian said, was that Australia could turn things around, as long as there was decisive action.

"Australia can create a favourable and effective platform to reinvigorate manufacturing," Mr Christian said.

"This is critical to help rebalance the economy away from debt-financed expenditure, to a long-term strategy centred on tradable goods. 

"The mining industry is now maturing and a medium to long term strategy in high value manufacturing will help sustain mining by providing more competitive local inputs and services.

"To accomplish this, the various industry groups organisations, unions, academia and government need to come together to develop an effective strategy," Mr Christian said.

Mr Christian said this would happen by "prioritising manufacturing industries and developing a tailored action plan according to their maturity and their comparative advantage in domestic and international markets". He was eager for QMI Solutions to be a catalyst in "developing a strategic action plan and industry policy by pro-actively engaging industries".

Mr Christian said, "Holistic policy and industry action needs to address and redefine manufacturing and consider how each element of the value chain impacts the competitiveness of the Australian manufacturing industry, from R&D and design to distribution and after sales service."

QMI Solutions is also an Industry Expert member of Queensland Leaders, the organisation helping to develop the next generation of leading companies in Queensland.

http://www.qmisolutions.com.au/

http://www.queenslandleaders.com.au/

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SUPER Retail Group is keeping a firm hand on the future with the way it is utilising its 23 percent growth in net profit after tax (NPAT) for the 2012/13 financial year, which amounted to about $102.7 million.

Super Retail Group has managed a remarkable year, well served by its major brands Supercheap Auto (pictured), BCF, Rebel and Amart Sports.

While the big winners for the group were Supercheap Auto, BCF Boating Camping Fishing, Rebel and Amart Sports, as expected, the pleasing news for investors is the focus on developing the group's multi-channel retailing capabilities and restructuring under-performing business brands.

The current Super Retail Group policy of distributing 55-65 percent of underlying NPAT as dividends, according to a board statement, enables the group to balance investing in growth opportunities and building group capability, gradually paying down debt and increasing dividends to shareholders.

Super Retail Group managing director and chief executive officer, Peter Birtles, said it was pleasing the company had delivered strong sales and profit growth in all three of its divisions while also restructuring under-performing businesses and continuing to invest in developing group-wide multi-channel capabilities.

"We sustained strong like-for-like sales growth in each of our divisions despite the widely reported slowdown in wider retail spending," Mr Birtles said.

"Our focus on retailing products that our customers predominantly use as part of their leisure experiences has served us well. We believe our customers will continue to spend money on their passions even when they tighten their belt in other areas," he said.

"The key drivers of our performance continue to be merchandise renewal and presentation, private brand development, engaging marketing, sourcing and supply chain execution and the passion of our team members.

"We are particularly pleased that our larger businesses; Supercheap Auto, BCF Boating Camping Fishing, Rebel and Amart Sports, have all grown market share and operating margins.

"We completed a review of the Ray's Outdoors, FCO Fishing Camping Outdoors and Goldcross Cycles businesses and implemented a number of business improvement initiatives to deliver sales and profit growth, with encouraging early results. Associated non-recurring restructuring costs of $16.2 million were incurred.

"Last year, the group commenced a three year program of initiatives to develop the capabilities that our businesses will require to successfully operate as integrated multi-channel retailers. During the year, the group invested circa $53.9 million in capital expenditure and $4.1 million in operating expenses on these programs."

Mr Birtles said although retail conditions were forecast to remain patchy, the group expected to deliver solid like-for-like sales growth in each division and to maintain or grow operating margins while generating working capital improvements.

Peter Birtles

"The year ahead will be another year of growth and development as we maintain our focus on growing our existing businesses and building our multi-channel capabilities.

"We will be investing in opening new stores and refurbishing existing stores in all of our businesses with around 25 stores opening across the group," he said.

"We will complete the development of two new distribution centres at Brendale in Queensland and Erskine Park in New South Wales.

"We have made a strong start to the new financial year with like-for-like growth in group sales of circa 6 percent in the first seven weeks of the year.

"We will continue to develop our loyalty programs and increasingly use data analytics to develop relevant targeted marketing campaigns. We will also continue to develop our fledgling Auto Trade Direct and Super Retail Commercial businesses."

The Super Retail Group board declared a fully franked final dividend of 21 cents per share resulting in the fully franked dividends declared for the full year totalling 38 cents per share. This is an increase of 6 cents per share (18.8%) over the prior year.

The final dividend will be paid on October 2, with a record date of August 30.

The company will again provide shareholders with the opportunity to reinvest their dividends through its Dividend Reinvestment Plan. Dividends will be converted to shares at a nil discount to market value and the shares will be acquired on market to neutralise the effect of the Dividend Reinvestment Plan on all shareholders.

 Super Retail Group 2012/13 financial highlights:

• A 22 percent increase in group sales to $2.02 billion;
• A 22 percent increase in the group's EBIT to $172.3 million;
• A 13 percent increase in Earnings Per Share to 52.3 cents;
• Solid like-for-like sales growth achieved across all three of the group's divisions;
• Increased gross margins in the Auto and Leisure retailing divisions;
• Contribution from Rebel and Amart Sports businesses continues to exceed acquisition business case;
• Group's multi-channel development programs progressing in line with plan.

www.superretailgroup.com.au

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GOVERNMENT and ‘think tank' reports continue to emphasise the importance of hi-tech engineering and manufacturing for Australia's economic future - but that is largely where the emphasis stops.

Rowan Gilmore, managing director of EM Solutions.

Many of the world's leading telecommunications technologies - designed and manufactured in Australia - are sold to blue chip companies in the US and Europe, but are continually overlooked in Australia, by Australian corporates and even by government and defence organisations.

This is the unfortunate ongoing experience for Queensland-based engineering group, EM Solutions.

"EM Solutions struggles to sell its products to large corporations here at home, even government entities, while we are able to do so to blue-chip customers overseas. Why is that?" asked EM Solutions managing director Rowan Gilmore, who is also a former CEO of the Australian Institute for Commercialisation.

"A recent report by Professor Graham Schaffer, commissioned by the Queensland State Government, has accentuated the importance of engineering and engineering intensive firms to the Queensland economy," Dr Gilmore said.

" Growth of the industry has the potential to add $10 billion per annum to the Queensland economy with Brisbane as a world engineering centre for the global provision of specialist engineering services. 

"I attended an excellent event in the new Brisbane Convention Centre recently, at which these challenges were debated. It struck me that the company I lead, EM Solutions, an innovative designer and manufacturer of broadband telecommunications radios for microwave and satellite links, is an iconic example of one such firm.

"We employ 15 engineers, seven of whom have PhDs. For the past five years we have reinvested over 25 percent of our revenues into research and development.

"The founders of our company, through their persistence and contributions over the past 30 years, have been responsible for spawning several new companies and the growth of a high-tech electronics industry in South East Queensland that now employs many hundred staff.

"Technological innovation is important to compete in such an industry. But it is not enough.

"If taxpayers are spending $40 billion to lay a broadband network across Australia, why aren't local innovators thriving on the back of that?

"If Australian Defence is spending billions upgrading its telecommunications equipment, why is it all

imported?

"It seems our large corporations don't like to take risks, to work with SMEs, to nurture home grown innovative firms.

"They prefer to work with accredited suppliers, large organisations they think are more trustworthy than small businesses.

"One solution to prevent the further hollowing out of manufacturing in Australia is indeed to innovate; but another is for our big corporations to innovate in their procurement as well, and better manage the risk of working with small local businesses.

"Otherwise, we'll all end up the poorer."

www.emsolutions.com.au

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IN NOVEMBER 2010, CrispTech got the call every company dreads - its number one category killer product, a miniature overcurrent circuit breaker, had just failed an Australian audit and had to be withdrawn from the market.

Duncan Andrews: CrispTech's lights went on again by launching new Lumigen business.

Three short years earlier the company had been in the right place, right time with a new product when changes to Australian regulative requirements came into effect.  

Now CrispTech was managing a product withdrawal, only to discover that the Chinese manufacturer failed to honour warranties.  The company was faced with a seemingly irrecoverable situation, given its available resources and with no manufacturer support.

CrispTech went into voluntary administration in July 2012, but by October of that year Brisbane businessman Duncan Andrews purchased the company.

Mr Andrews had insights into the business's potential and saw its strong base from which he could resurrect CrispTech's fortunes - he knew he was able to draw on the loyalty of suppliers, customers and, as he said, "the all-important staff".

CrispTech started with a new strategy.

First, the firm created three new divisions: Ethernet Australia (industrial communications), Lumigen (LED lighting) and Elindus (standard electrical products) .

"Industrial communications is the backbone of the company but it needed a clearer focus which Ethernet Australia provides and the world leading communication brands it represents," Mr Andrews said.

"But it was the LED side of the business that really interested me and the opportunity that existed with energy saving products."

While CrispTech had been involved with LED for two years, rapid technology change and declining product quality were adversely affecting the LED market.

"So, learning from recent experiences, we visited China three times over the past six months to select the right manufacturers with the right products, and to audit their factories to ensure everything meets our agreed specifications," Mr Andrews said.

"With my background in food manufacturing where safety and Quality Assurance are a given, I see no difference that the same process and discipline are brought to importing LED products.

"We are serious about quality and eliminating the pain factor for our customers by building confidence in Chinese manufactured products."

http://www.crisptech.com.au/

*CrispTech is a 2013 Member of Queensland Leaders, the organisation helping to develop the next generation of leading companies based in Queensland. http://www.queenslandleaders.com.au/

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