ragtrader.com.au recently published a blog which addressed the issue of Australian manufacturing. One reader puts forward their controversial two cents.
This is a very interesting topic and has been going on now for about ten years in Australia if not longer.
Let's do some quick costings on a locally-made knit top, plain with no print or trims:
- Cut, make, trim (CMT) cost: $15-25 minimum, if you are willing to pay the correct award wage.
- Fabric: $10-15 per metre, depending on the grade of cotton or cotton blend. A minimimum 1.5 meters per garment on average, including grading and wastage, $22.50.
- Trims/packaging/transport etc: $3.00.
- Taxes and GST (10 per cent): $3.68.
- Total: $44.18.
Add a x2.5 margin for the wholesale price (but really, you need to be working on a 4.5 margin) and it comes to $110.45.
Add a x2 margin for retail and the RRP is $220.90.
The answer to this problem is not China or India bashing because all this does is waste time and in the process makes the industry sound like a racist whinger.
The issue with the Australian manufacturing industry - and the same with America, Europe and UK - is that the currency is at a disadvantage.
In the 80s, China set out a master plan to be the factory of the world and they did this by keeping their currency extremely low.
Other measures they introduced were export rebates currently around 30 per cent and import taxes around 40 per cent.
So if you want a fair playing ground, you need our government to impose a currency adjustment to all importers and rebates for all exporters in Australia at the current exchange rate of 6.1.
The other problem with Australia v China is that people always seem to compare a cheap Target or K-mart garment at $19.99 to a $300 locally-made garment.
If you want to compare then compare like for like.
A $US5.50 FOB garment will not look the same as a $US50 FOB garment, which is not made from polyester but real silk.