Australian manufacturers have always seen competition from Asian manufacturers, and ASP are certainly no different when it comes to competition.
In the 1960’s we saw price based competition from Japan and over the last thirty years we have seen the competition move on to Taiwan, Korea and more recently China. In all cases the price competition was matched by lower quality and as quality increased so did prices. Over the past two years we have seen China becoming more expensive and several larger organisations moving their manufacturing back to Australia.
The following are several issues that need to be considered when comparing ASP to off-shore manufacturers.
ASP
- Same price for machines,
- Same price for raw materials,
- Same price for power,
- Labour more expensive but also more efficient,
- Shorter production runs,
- Easier to sit down and talk,
- Stable workforce,
- Sydney, Melbourne, and Brisbane can get deliveries overnight,
- Stronger focus on innovation,
- Rapid response to customer requests,
- Strong understanding of the importance of protecting intellectual property,
- Strong experience in the moulding of engineering grade materials, and
- Truly a culture of being a one stop shop.
Asia
- Forced to buy large quantities,
- Hard to address quality issues,
- Cost of floating warehouses,
- Longer lead times,
- Frequent product substitution,
- No security over IP,
- Skills often lost to an organisation as entire departments move over a couple of dollars per week,
- Freight expensive if products don’t nest,
- Cheap labour but often inefficient,
- More of a focus on copying or Me-2,
- Exposure to exchange rate fluctuations, and
- Frequently outsource parts of manufacture without customer knowledge or approval.