Editor's Note: Pac-ed off to the unknown

And so what was considered as Australia's last great bastion of onshore manufacturing has packed its passport and headed overseas. Frankly I'm amazed the underwear, footwear and clothing wholesaler managed to last as long as it did - given the likes of Blundstone et al have already travelled this well-worn path.

The move comes after Pacific Brands, which manufactures a number of clothing brands including Bonds, Holeproof, Hosiery and King Gee, posted a first half-year loss of $149.9 million. This was after writing $206 million off the value of its assets.

The company also revealed it will undertake an overhaul of its lesser performing brands which will either be sold, folded back into the company or chopped entirely. It is anticipated the strategy will result in cost savings of $150 million a year by 2011

With the announcement coming a mere two hours before this edition went to press I can only assume much of the early fallout of the listed group's decision will focus on the 1850 staff paying the ultimate price for Pac Brands' decision to close its onshore manufacturing base.

In a press conference announcing the decision the woman of the hour - chief executive Sue Morphet - conceded most of the affected staff had been informed that very morning just hours before she took to the pulpit.

The Textile Clothing and Footwear Union of Australia (TCFUA), of course, was quick to condemn the move, arguing it did not accept the complete closure of the manufacturing sites across Queensland, New South Wales and Victoria was entirely necessary. It correctly pointed out that Pac Brands had received millions of dollars of Federal Government Assistance over the years but questioned how a corporate entity could happily take money from the Australian taxpayer without a mutual obligation to keep jobs onshore.

As could be expected shortly after the deputy Prime Minister Julia Gillard took her turn to speak out, announcing in a joint statement that her Minister for Innovation, Kim Carr, had spoken directly with the company and asked if there was anything the government could do.

The answer, she said, was an outright no.

However amid the hoopla and finger pointing that will surely follow such a dramatic attempt to turn a company's fortunes around it appears the point has already been lost that 75 per cent of Pac Brands' product was already being manufactured offshore.

Even a cursory glance at the group's financial statements would reveal that for the Bonds business at least nearly all sales growth comes from product manufactured in countries other than that in which it made its name.

In defending the decision Morphet reiterated the fact the company had little choice but to move the remainder of its manufacturing offshore if it were ever to get its finances back on track.

"If people were willing to pay $200 for underpants it would be a different question," she reasoned.

My heart goes out to those loyal workers who have lost, or will lose, their incomes as a result of the decision but the reality is things have to be kept in perspective. Sometimes there has to be short-term sacrifice for long-term gain.