Domestic producers to global competitors: manufacturing is alive and well in Western Sydney

Western Sydney companies are reinventing themselves from domestic producers in a small market to become globally competitive businesses. A number of themes are evident among these businesses; the need to innovate, grow into new markets, and compete against low labour cost countries.

As we celebrate the first birthday of our KPMG office in Western Sydney, I pause to reflect on what the future of Western Sydney business will look like.

This is best highlighted by way of examples.

Brand Australia: using quality to sell

As one manufacturer recently told me, Australia has always competed against low cost producers similar to the competition now coming from China. In post war Australia it was Japan, then Korea, Taiwan and now China with Vietnam in there as well. The trick to competing in the Australian market is finding areas where China cannot compete, either through short lead times, short product runs or in products that do not ship well.

Quality is a key differentiator against low cost competition. One Western Sydney business has recently relocated a production line from China to Western Sydney as customers were prepared to pay a 15 percent price increase for a guaranteed increase in quality. And a furniture manufacturer is selling into China at a 100 percent premium to their Australian selling price. Manufacturers who are capitalising on quality premium have access to an enormous market and do not have to compete against much cheaper Chinese manufactured products.

Technology enabled

New technologies with novel execution are making inroads. 3D printing and visualisation is one, with a small local building company adopting 3D scanning to manufacture to exact dimensions. One example where this has worked is in the Barangaroo development. With something like 1600 fire doors a poorly sized door can cause extensive delays. A Western Sydney supplier 3D scanned the actual doorways and then made every door to exact three dimensional measurements. This saved considerable installation time as each door fitted exactly.

Transport companies are also embracing technology with new GPS enabled systems to not only track vehicles but to also track the quality, temperature and condition of goods in transit. This technology improves quality to the customer, reduces risks to the transport company of shipment rejection which in turn improves the bottom line

Innovation & collaboration is key to growth

A challenge to many companies is how they can successfully innovate. The recently established Launch Pad business incubator of Western Sydney University, of which KPMG is a partner, seeks to bring together companies, start-ups, university know how and IP to provide an environment where collaboration can flourish and grow. This is providing enormous benefit to Western Sydney companies seeking to compete globally.

While competition ensures survival of the fittest, it is also an opportunity for organisations to consider where they fit in the global world or if it is time to become part of a larger company or to compete on a specific competitive advantage. This is leading, in Western Sydney to industry consolidation with companies becoming leaner in order to be more competitive.

Western Sydney is on a growth trajectory, not just in population but in innovative skills and technology which are underpinning its success. It is an exciting journey and one I am privileged to be part of.

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