Visiting the sick

The Australian Government is currently conducting a review of the TCF industries to see what's left after the slaughter it has been metering out over the past 20 years.

Under the leadership of Professor Roy Green there have been interviews and submissions from many sectors of the industry to see what they think ought to be done about the hospital case that both sides of the political spectrum have created

Currently, the textile and clothing industry is being fed intravenously by a protective duty of 17.5 per cent on clothing and finished textiles, and 10 per cent on cotton sheeting and shoes. Yarns and leather have already bottomed out at five per cent.

If the tariff reductions are left on schedule the duty rate on clothing and textiles will drop to 10 per cent in 2010 and five per cent in 2015. This latest review is supposed to see if that's okay and how it can assist the limping survivors with a few new pairs of crutches.

Although Prof Green and his assistant Cecilia Wood are skilful and thorough people, there is feeling in the trade that this review is little more than window dressing. Offering help has a nice ring to it, but the illness is terminal. While there may be some pockets of innovation worth slipping a few dollars into through the SIP scheme, I'll be surprised if the review turns up anything that can earn or save major dollars or jobs for Australia.

Every time there is an enquiry of this sort, the enquirers must start from figures supplied by the Commonwealth Statistician.  He says that there are 20,600 people still engaged in manufacturing clothing in Australia. I haven't been around to count them, but I find the figure incredible and wouldn't be surprised if the TCF Union had helped in the collation with a spot of creative estimating. There's another 5300 beavering away making yarn, textiles and finishing.

Again, where are these mills? Textile products account for 14,600 souls and, while that again is a staggering figure I wouldn't argue the worker intensity needed to make rope (not money for old rope) or floor coverings. Here's another eyebrow lifter: 2500 people are making footwear, even though it is protected only by 10 per cent duty, headed for five per cent in 2010. Maybe included are the inobvious like surgical footwear or ugg-boots made by cottage industry.

We'll know a lot more by the end of August when the prof hands down his conclusions but will all his work be firstly appreciated and secondly heeded. Probably not.

The difference between local and imported clothing prices is stripped bare in corporate apparel, where fashion and brand value do not apply. One supplier, Corporate Profile, advertises Australian made (fabric and garment) polo shirts at $24.80 for a minimum quantity of 50. Prices are lower for bigger quantities. The company also offers a similar quality shirt, made in China, for $15.80, again reducible for quantity. The profit margin on the import is substantially higher than the local, meaning that the supplier is also doing his bit for Australian factories.

Now you'd think that the Aussie shirt would not attract buyers but it does - albeit small numbers of them. Companies and organisations which put Australian made ahead of price obviously take the moral high ground of protecting local employment and maintaining an industry that is on its knees. But you'd have to ask what would happen if the imported polo shirt was $10.

How many companies or organisations would swallow paying more than double for the local product? Maybe the TCF Union would buy them at any price but not too many other organisations or businesses with shareholders looking at balance sheets would.  When local industry can only exist on the milk of human kindness, the milkman is likely to retire.

Corporate Profile did tell me that small organisations which wanted the expensive combination of good quality, low quantity and colour choice were usually prepared to pay for it, but they represented  a small segment of the main game. Stock service on the big sellers, which included business shirts, jackets, suits, lots of casual garments, ties, knitwear and safety garments, accounted for the vast majority of turnover - and most of those are imported.

For its local production, Corporate Profile has been relying on one factory for the last 15 years. Understandably, it would not reveal the name of the factory but it would be interesting to ask its owner what he thought about the future. I'd guess that he's already got  his exit strategy ready in the belief that it is better to close with dignity than whither and drop to the ground

So what can the government do for the TCF industries? Encourage world competitive, innovative products with some support money and arrange a decent burial for the rest.

By Fraser McEwing