Working Hard Without Much Return: Australian Manufacturers Reveal Struggle to Survive

Molten steel is made in the BOS, slab caster and steel treatment factory at BlueScope Steelworks in Port Kembla, Wollongong in New South Wales of Australia on Feb. 9, 2024. AAP Image/Dean Lewins

Manufacturers have shared with an Australian parliamentary committee about their struggles to stay afloat amid the impacts of high inflation and government policies.

Matthew Fogarty, director of Celsius Manufacturing Pty Ltd, a Victorian-based company specialising in ductwork with 20 employees.

The company has been operating for around 50 years, but Fogarty said the last couple of years had been incredibly tough.

“I see every cost gone up. We buy a lot of steel, we buy a lot of insulation ... all those things have really jacked up our import input costs, which made it really hard,” he said during a recent parliamentary inquiry hearing on the cost of living.

“The costs that we have every day, our utilities, our technology rental, has gone through the roof.”

The director said he had to sell and mortgage everything he owned to run the business, but what he got in return was not much.

“[The company] employs a lot of people, makes a contribution to our country, but I don’t feel that reciprocated,” he said.

“We work pretty hard to get not very much return. And probably the question I’m left with is, why take those risks?”

Simon Whiteley, the managing director and CEO of Corex Plastics Australia, also shared the difficult situation of his company.

“We have a lot of state taxes that are affecting us,” he said.

“In Victoria, my land tax bill, for example, has gone up 200 percent over four years, along with payroll tax and WorkCover [insurance] in particular, ... it went up 78 percent last year.”

Impacts of State Energy Policies

Whiteley also noted that state governments’ energy policy had a massive impact on his company and other manufacturers.

The CEO gave the Victorian government as an example, which made it difficult for companies to invest in other types of energy technology besides solar.

However, Whiteley said it did not make sense to invest in solar as energy prices often stay negative during the day, which did not bring returns for renewable energy operators.

Negative energy prices occur when energy generators pay consumers to generate electricity instead of the opposite, which reflects a surplus of supply over demand.

This issue has raised concerns in the energy industry. According to the Australian Energy Council, negative revenues caused by negative energy prices will rise to around $800 million (US$541 million) in 2024 and over $1.1 billion in 2025.

Jon Seeley, group managing director of the air conditioner manufacturer Seeley International, expressed similar frustrations, saying the Victorian government’s energy policy had suppressed gas supplies, leading to huge price increases for consumers and businesses.

Changes in Industrial Relation Laws Add Burden for Businesses

In addition, Seeley said the recent change in industrial relation laws would result in unnecessary job losses at his firm.

Seeley explained that his companies had two factories that required the hiring of additional casual staff to meet the operational demand during peak seasons.

However, due to the complexity and ambiguity of new laws regarding casual employment, the director had to make the difficult decision to stop employing casual staff and amalgamate the company’s operations into one factory to smooth out the seasonal peaks.

“As a result, some 85 permanent employees in Albury, many of whom have worked for us for up to 20 years, will unfortunately lose their jobs with us next year,” Seeley said.

Meanwhile, a member of the South East Melbourne Manufacturers Alliance told the committee that his company’s overhead costs had increased by $600,000 due to the additional labour costs incurred to manage the change in industrial relation laws.