In November 2009, the Australian government awarded a $6.245 million grant to a local footwear consortium. Here, consortium member and Footwear Manufacturers Association of Australia (FMAA) executive, Peter Eames, offers an update on the grant.
Why did you apply for the grant?
Peter Eames: The reduction in the level of and increase in competition for government support in combination with low-cost, off-shore suppliers, minimal Australian government strategic purchasing, retailer strategies and consumers looking for better value propositions mean the industry is facing a considerable decline in local capabilities. The government has replaced its Strategic Investment Program with the more selective Strategic Capability Program. If this round of the TCF SCP had not been applied for, it is unclear how long would pass before another opportunity would present itself. This uncertainty combined with the end of the SIP could have had serious consequences for the long-term survival of the local manufacturing industry.
How and why did RM Williams, J Robbins Manufacturing and Shoe Lasts Australia become involved in the project?
PE: When combined, the three companies possess skills, capabilities and experiences which cover the spectrum of shoe manufacturing and retailing. Each company has a very long association with footwear manufacturing in Australia and are loathe to just let the industry wither as a result of the just "move to a more low-cost location" attitude.
What are the goals of the mass customisation project and how
do you plan to achieve them?
PE: The goal is to create a local, advanced footwear manufacturing industry that can provide individualised product to customers throughout the globe. We hope to achieve this via the linking of mass production's efficiencies and economies of scale with small-scale batch production techniques. If successful, the project will establish a new industrial capability by integrating the operations of RM Williams, J Robbins Manufacturing and Shoe Lasts Australia, enabling all parties to extend their operations and product ranges. The goal is to be able to scan a consumer's foot and – with the information derived from the scan – be able to point them to the shoes most suitable to their feet. The ultimate dream would be to go one step further and work backwards from the scan. That is, have a shoe last and pair of shoes developed for the customer based on the results of their foot scan. We have established Australia's shoe manufacturing industry cannot compete on high-volume, low-cost manufacturing. We want to implement a change in management whereby the focus becomes catering to the customer. We are not aware of any other companies in Australia investing in and utilising the technologies that will enable such individual customisation.
What are the benefits of the mass customisation project for Australia's shoe manufacturing industry at large?
PE: This strategy provides a high-value technical, intellectual and skill base for footwear manufacturing in Australia in conjunction with a low-cost supply option for customers in Australian and international markets. The major risk is that it could flounder through technological or logistical hurdles, or due to the fact that customers will only look to improve the footwear value proposition by reducing the price they are prepared to pay for footwear. In addition there is the practical risk that production techniques and equipment may not be able to be changed as desired.
How is the consortium matching the government's funding?
PE: The consortium will fund its share of the project out of cash flows from each of the companies involved.
When is the project scheduled to be completed by?
PE: The contract expires in June 2014.
• The TCF SCP is a five-year, $35 million grant program designed
to support large-scale projects that will fund innovative capacity. Funding runs from July 2010 to June 2015.
• The minimum grant size is $250,000 and must be matched on a dollar-for-dollar basis.
• There were 10 grant recipients in round one including a footwear consortium comprising the FMAA, RM Williams, J Robbins Manufacturing and Shoe Lasts Australia.
• The FMAA estimates the Australian shoe manufacturing sector currently employs between 2000 and 3000 people and produces product worth between $450 and $500 million in retail sales annually.