Those tuned into the state of the market would be aware of the rising cost of materials, threatening companies in Australia’s construction and manufacturing sector.
The past couple of months has seen the fall of two construction companies, Probuild in February, and Condev in late March – both attributed to unsustainably high material costs.
An Australian Chamber and Westpac Survey of Industrial trends report found that Australian manufacturers are facing cost pressures they haven’t seen since the 1970’s.
These rising cost pressures are hampering the manufacturing industry’s post-lock recovery which started to kick off this year with rising orders through the early months of 2022 with rising job numbers a key factor (according to Westpac senior economist Andrew Hanlan).
This is raising concerns over profits, with 5% of survey respondents indicating they expect their profits to increase in the year to come, (down from a net 18% of respondents in the December quarter).
Businesses operating on-shore will now be considering how they can continue to operate locally when the cost of goods continues to increase and offshore production may appear to offer a necessary reprieve in financial pressures.
One Australian-made and owned business that is mitigating these issues is the Sydney-based louvre window manufacturing company, Safetyline Jalousie.
Safetyline Jalousie’s Founder and Director, Leigh Rust (pictured), advises that looking at your spending from a holistic perspective will help to mitigate the pressures of rising material costs.
“While we finally thought things were on the up – with a strengthening workforce and increasing orders – the heightened cost of materials is presenting new issues which have to be proactively and strategically navigated,” said Leigh.
“We all know that the cost of materials is rising, so rather than waiting for the impact of this to be felt and being left with a reduction of profit, it’s important to proactively prepare for this by looking at spending in other areas of our business.
“Doing this within our organisation meant reducing spending on temporarily reducing spending on some marketing efforts, company subscriptions, and general office items.
“We’ve also held off on investing in new machinery until things settle back down.
“Going through the process of saving costs involved considering what our ‘non-negotiables’ were, and for us, this was manufacturing onshore with a locally-employed workplace.”
“Saving in other areas has allowed us to maintain our on-shore team, production and profitability.”
Seeing iconic names in the building industry fall this month should encourage other businesses to consider what changes they can make to save themselves from the same fate.