Summit Matsu's Daniel Rollston explains why Australian manufacturers are in the best position to deliver the best results for customers.
The high quality of people and information that a local manufacturer can provide to customers will always ensure the highest possible quality of product, installation and lowest risk of project delay.
Manufacturing companies are larger than distributors, and as a result have the overhead to be able to fund and implement a quality process that applies to sales, manufacturing and after-sales service.
A company that distributes on behalf of an offshore manufacturer will not have the overhead to implement such a quality process.
Quality at the engineering level means an in-depth knowledge of site requirements and legislative requirements for mechanical trades and electrical trades.
Summit Matsu Chillers engineering manager Scott Rollston is a mechanical engineer, licensed electrical contractor and licensed refrigeration and air conditioning contractor.
"Quality in the sales process means having a thorough process for identifying all relevant information for a chiller project so that risks to the project success can be managed," Rollston says.
"Quality in chiller service means having a single person oversee the factory-run testing of a chiller, and then be responsible for installation and commissioning success of the chiller in the field.”
Manufacturing in Australia employs 953,000 people, represents eight per cent of Australia's GDP and produces 29 per cent of Australia's exports.
Manufacturing contributes over 25 per cent to Australia's R&D annual spend. This is more than mining at 21.4 per cent.
Manufacturing employs almost four times as many people as mining, and it does so right across the country.
An April 2012 report from the Boston Consulting Group shows that 37 per cent of US manufacturing companies with revenues of more than $1 billion were considering re-shoring operations from China to the US due to rising wages in China, increased operational supply chain issues, transportation costs and less attractive exchange rates.
The result, the report found, could mean the on-shoring of up to one million US jobs.
Mining equipment maker Caterpillar has recently moved operations back onto US soil and electric car companies like CODA and Tesla have opened new factories; not in China, but in California.
Ning Su of the University of Western Ontario says hot competition among Asian nations has generated a race to the bottom where wages and business incentives are concerned.
Re-shoring is a very real trend, but the bigger question is what kinds of jobs should the US economy want to see re-shored?
Su says its more high-end manufacturing that is integrated with service and R&D.
"Those are the jobs where the US and Canada have a competitive advantage and those are the jobs that are able to create more value and even more jobs,” he says.
In the UK, Toyota chooses to manufacture its new hybrid engines at its plant in Deeside, and ship them back to Japan.
Luxury fashion house Mulberry recently expanded its manufacturing facilities in Somerset and GlaxoSmithKline will invest £500m in its first new UK plant in 40 years.
In the UK, manufacturing creates 20 per cent of national output, and employs four million people, producing 60 percent of exports. The government has put in place generous R&D tax incentives for manufacturers and increased availability of funding for SMEs.
Derek Hill of Advanced Technology Services says today’s manufacturing jobs are ‘cool’ and appealing.
“Workers are now required to be experts and operate the most sophisticated equipment in the world,” Hill says. “They can cut steel with lasers, water jets and plasma cutters and can program robots to paint, package and palletise products.
"Computer programming and other high-tech skills are needed, which dovetails precisely with what younger people love these days; these jobs can be more fun and, ultimately, more satisfying than many service-sector jobs.”
There are plenty of case studies on the Internet showing that there are also supply chain issues that are also shaping the on-shoring trend.
One example is a company that has sourced raw materials from China at what appeared to be very attractive low unit costs.
In one case the high minimum order quantity and long lead times meant the company had to lease an additional unit to hold the stock, tying up large amounts of money in both the stock, and the leasing of the unit.
Another case study mentions a high minimum order, delivered in full, with a quality defect.
The Chinese supplier agreed to replace the shipment, but at a three-month lead time.
This had an enormous impact on the company’s delivery schedules.
These issues can be applied to the chiller market. An imported chiller may appear to be cheaper up front, but what is the impact of a quality issue with the chiller?
Buyers should consider how many days' down-time it will take to offset any “savings” gained by purchasing an inferior product.
Another question to ask is if an imported product breaks down, is there full back-up service for the unit? What is the quality of this service, is it endorsed by the manufacturer, and what is the speed of the service?
These are all good reasons why Australian manufacturing matters, and why Australian-manufactured chillers are better for customers.