Reshoring manufacturing in Australia
The last few years have been very interesting for everyone involved in international trade.
Foreign trade between China, our biggest trade partner is not strengthening. This will be a testing time for everyone who manufactures in China and for those looking for a suitable replacement. India is in pole position, but has repeatedly missed the mark. Examples are where responses to emails are normally 45mins to 1 hour from China. With India, you would be lucky to get a reply within 3 days. For India to achieve success from global trade, they need to understand the global demands from international trade to which (and to their credit) China is a well-oiled and highly disciplined machine.
Considering the turmoil in global trade, if you have been in this business long enough you will know it is an increasingly challenging place to do business. Pre-covid the international trading landscape was relatively easy. With businesses, many of us have known to just hop on a plane, complete business and returning in 3 to 5 days. In some cases, within 24 hours if timings were tight.
Most of us are considering bringing our business back home to lessen the stress of global trade and the uncertainty we are currently faced with.
What to do next?
You need to carefully consider the costs if this is a short-term solution or a long-term solution. If this is a short-term decision then some key things to consider are the cost of returning business, additional cost of repatriating, higher manufacturing costs when producing locally and any other country benefits. For example Brunei, Burma, Malaysia, the Philippines and Singapore have FTA’s with Australia. Are their opportunities there? Can you make your product a little smarter or invest in technologies with your local manufacturer to help them bring manufacturing costs down.
For longer term solutions consider if there are any Government grants available to help repatriate your business back home and grow your business in other markets locally and internationally. Reach out to local manufacturers to see if the same level of product quality is available. In most cases many of the services that were once in their plentiful have now depleted, as the majority of labor intense businesses moved to offshore production.
Research further and do your homework to see if you can replicate or make your product better here. Ask yourself, do the benefits of lower volumes; local currency, easier communication, no exchange rate risk and faster turn around times outweigh the current climate? How long is the current climate going to last?
Can you get the best of both worlds? Is there a way to mitigate your risks by using foreign markets and local? Is this a good time to reinvent your product? A newer and much more up to date version?
If anything, the pandemic of 2020 has clearly highlighted the fragile nature to which we operated our businesses previously. This has allowed us to re-evaluate our current business operations and supply chains. Moving forward it’s time to rethink with an open mind about how to build more robustness and resilience on all levels.
How SDI Plastics can help?
SDI Plastics can help support businesses that are seeking to produce their products onshore, offering a risk proof supply chain through reshoring manufacturing services back to Australia.
There are many business advantages to consider, as manufacturers understand that extended supply chains that go with offshore sourcing adds unforeseen risks that need to be taken into account.
With SDI Plastics, bringing your manufacturing back to Australia, allows the quality to be better monitored, controlled and maintained locally, with local supply, no exchange rate risk, faster delivery and local sustainable manufacturing to produce your products efficiently and with ease.