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Manufacturers Continue to be Upbeat

Manufacturers Continue to be Upbeat

In spite of our volatile dollar, this year’s Endeavour Awards Manufacturer of the Year and major exporter, ANCA, remains positive. Alan Johnson reports.

Like most manufacturers, Pat Boland, director and co-founder of ANCA, the market-leading manufacturer of CNC tool grinders, is a half-glass-full type of person and remains cautiously optimistic going into 2014.

“Our trends in the business are all slightly up, with our major market in the US going very strongly at the moment.

“And while it has been very tough selling into China in recent years, our Asian sales have now plateaued and are now increasing, plus Europe is performing very well for us,” Boland told Manufacturers’ Monthly.

He said he expects the team at ANCA will be very busy going into 2014.

“As well as developing a new platform for our machines in our product development area, we will also be upgrading our ERP system and building a new European headquarters in Germany.

“Plus there are a number of internal issues we have to get right over the next 12 months and then there’s the market and the currency. They are the major issues facing us in 2014,” Boland said.

He readily admits that manufacturing in Australia is not easy.

“It’s tough. When you look at the cost structure we have in Australia, unless you have a very high value niche product, it’s very difficult.

“That’s one of the keys to our success; we do actually have a product. We are not selling a service or whatever, we have a product that we can sell and support and build our business around.

“I think that is the core difference between ourselves and many others. The reason we can survive in this hostile high dollar environment is that we have a product in which we can invest R&D in and develop technologies that people want.

“Our investment in innovation is a key part of our success, but fundamentally you need that. We have something around which to develop our technologies,” he said.

Boland believes the reason many manufacturing companies have been closing their doors in recent years is because much of Australian industry is off-shore owned with absolutely no loyalty to manufacturing in Australia.

“Often the future of an operation here comes down to a decision made in the boardrooms of Detroit or Stockholm, or wherever, with no sense that there might be a need for manufacturing support around their head office,” he said.

Carbon tax

While Boland said the recent federal election and the change of government had no impact on the company’s future plans, he did say the scrapping the carbon tax was a minor positive for ANCA.

“I’m a significant believer in climate change, but I struggled to see how a government could introduce a policy that only applied to Australian manufacturers with no impact on imported goods.

“The end result, if Australia reduces its carbon production to zero, would have been zero impact on the climate.

“The only way to achieve a significant impact on the climate is by combined international cooperation, which is just not there.

“Switching all our factories over would only have been a token gesture, with the rest of the world doing nothing. It was a stupid, ill-thought out policy,” Boland said.

He explained that one of the biggest issues facing ANCA is the volatile Australian dollar, with 99% of its revenue coming from off-shore.

“The value of the Australian dollar has a huge impact on the company. This can’t be understated.

“In fact, the dollar has a huge impact on every exporting business in Australia.

“Our basic strategy is to build into our business as many natural hedges as possible. That was one of the major reasons for shifting some of our manufacturing off-shore.

“The dollar is very volatile, we honestly don’t know where it will be in 2014.

“In fact we deliberately have a policy of not knowing what the dollar is doing. It’s so unpredictable. Some are saying it’s going to fall in 2014, while others are talking about returning to parity,” Boland said.

This article was originally published in Manufacturers Monthly,  Sunday 29 December 2013.