Decreasing tariffs, declining domestic infrastructure, increasing imports. Australia's footwear manufacturing industry has been doing it tough since the 1990s but as Peter Eames notes in his submission to the Federal Government's review into the TCF sector, the love between 'competitors' is not lost.
Call it the Aussie way.
Individual footwear firms are increasingly looking to overcome these challenges by working closely with each other, local suppliers, infrastructure providers, educational institutions and other relevant agencies.
Such cluster-based developments are based on the premise that a company can realise higher levels of competitiveness when it looks beyond its own limited capacity and strategically partners with others to address challenges and solve problems that it unable to solve as comprehensively or effectively when operating as an isolated entity.
J Robins and Sons and Laura Benini is one example of a women's fashion footwear cluster.
J Robins and Sons has been designing, manufacturing, marketing and distributing footwear for nearly 130 years predominantly through its Sandler and Easystep brands. Within the market segments for medium priced women's fashion and casual shoes and middle to high priced high quality, female fashion footwear, the company is the preeminent Australian manufacturer.
Laura Benini is amongst Australia's fastest growing designers and manufacturers of female fashion footwear, marketed and distributed through an extensive party plan network throughout Australia. This newly developing method of providing access to personalised shopping and product selection is proving so successful that Laura Benini's original factory - of some 500 square meters where all its shoes were made predominantly by hand - was unable to produce all the footwear that was being demanded by the market.
Beninia was faced with the prospect of having to outlay millions of dollars for a new factory and equipment.
J Robins, which had undertaken some contract work for Laura Benini, undertook a study into the benefits of co-locating in J Robins modern factory in Belmore, Sydney. Laura Benini footwear is now manufactured in the more efficient J Robins system.
"This has enabled us to do what we do really well," says managing director Ian Francis. "We design high fashion footwear and provide an incredibly customised service."
"Robins are one of the best fashion footwear makers in the world and now Benini shoes are amongst the best made in the world as well - it's fantastic that we now have virtually no problems with returns due to failed componentry or other quality issues," he says.
"It gives us another view into what the market is demanding that we normally wouldn't get through our department stores and helps keep up the use of our making track."
The additional market intelligence and increased capacity utilisation is one small way that Robins is looking to improve its effectiveness in one of the most competitive footwear markets in the world.
"Having another producer in-house requires a different way of managing the facilities," Butt says. "However, the skills and insights we can share and the services we share can make both our businesses better and stronger as well as help secure the employment of over 160 employees."
Hand in hand
Cluster based initiatives have a number of benefits beyond the direct support provided. These include:
Increased levels of local expertise. This provides companies with a greater depth to their supply chain and allows for the potential of inter-firm learning and co-operation.
Giving firms the ability to draw together complementary skills in order to bid for large contracts that as individual units they may be unable to successfully compete for.
Allowing for potential economies of scale to be realised by further specialising production within each firm, by joint purchasing of common raw materials to attract bulk discounts or by joint marketing.
Strengthening social and other informal links, leading to the creation of new ideas and new businesses.
Improving information flows within the industry. For example, clusters may enable finance providers to better judge the sustainability of a business given the larger operating environment within which it is sustained and operates, rather than being an isolated concern completely dependent upon its own internal resources.
Allowing for the development of an infrastructure of professional, legal, financial and other specialist services.
Peter Eames met with Senator Kim Carr, Minister for Innovation, Industry, Science and Research last week to discuss the next stage of the review and its 15 recommendations.