Sometimes on the way to your dream,

you get lost and find a better one.

Thursday, June 19, 2014

Aussie Aussie Aussie, Oi Oi Oi? or Oy Vey?

Once again a major supermarket chain is in the news. This time? False advertising.
Or perhaps it is only partly false.

Wording on the packaging and in the "specials" catalogues delivered to letterboxes on a weekly basis states "Baked today, Sold today" along with "Baked Fresh Daily" and so on.
To those of us who read the small print on packaging, this latest expose is not news at all. We've all picked up those "Baked Today, Sold Today" loaves of bread or packages of rolls and read that they are in fact "Made in Ireland"

So how can they possibly be "Baked Today"?
The answer of course is that they aren't.
Not entirely anyway.

What actually happens is the dough is made and shaped in Ireland, partly baked, then frozen and shipped to Australia. These products are then dispersed to those supermarkets that have In -Store bakeries where these frozen products are "finished" in the ovens, packaged, labelled with the price tag and placed on the shelves for sale.
So, false advertising?  Or not?

After all, the product has been frozen before being shipped and kept frozen until being baked.
How long has it been kept frozen? Nobody knows....

This is the same as frozen vegetables (and fruits), being picked, blanched (partly cooked) and snap frozen before being packaged, delivered to the stores and sold to us, the customers. As "fresh" produce. Freezing does preserve some freshness and certainly preserves flavour.

The packaging also claims these bread products contain 100% Aussie flour.
Fine. Aussie flour is a good, home grown product.

The biggest problem I have with all this is: it is cheaper to send Aussie flour all the way to Ireland to be processed into dough, then into partly baked bread products and sent all the way back to Australia, than it is to complete that whole process here in Australia.

Same with many other Aussie components. Sent all the way to god-knows-where to be manufactured into something that is then sent back here to be sold.
Or the other method, where components are imported and put together here so they can be labelled as "Made in Australia".

Are Aussie manufacturers pricing themselves out of business with high costs and wages?
Or does the fault lie with shares and sales of shares? 

Think about it.
Really think about it.

Here's a (fictional) little company that may have started life in someone's kitchen or shed, providing a product that people want and/or need. The product is good. Maybe even excellent.   

Word gets around and sales improve. Bigger manufacturing premises are required, more workers, maybe more machines. Business is good. Business is better. Profits begin to be made. The owners of this little business are happy.
Soon there is more expansion. Instead of selling locally, the product is soon sold nationally. Shops open up in capital cities of all states, then major towns too. Even more profits are made.

Eventually the company is so big it is a household name, everyone knows about it and the product.
There may be more varieties of the product by now.
Diversification.
Profits are higher than ever. The big bosses decide to "share the wealth". By selling shares, which initially bring a nice influx of extra cash. For their pockets. More shares are offered. More people buy. And here is where (I see) the trouble begins.
Those who have bought shares, whether five or five hundred, want to see some return on their investment. They want a "share" of the profits as promised.
To be able to deliver those share-profits, even more money must be made.

Yet manufacturing and delivery costs are higher, wages for the workers have risen too, because of "inflation" and the once profitable little business is now too big for its boots and struggling to find the $$$ to pay all those shareholders. And the wages for the workers, many of whom have been "let go" with silly slogans like "work smarter, not harder" for the rest who do in fact have to work much harder to cover their own jobs and those of the workers who are no longer there.

What to do? Well, outsourcing part of the manufacturing process seems like a good idea...let's make some of the components in a country where costs are cheaper. If we send over enough bulk "raw" product, shipping won't cost too much, surely? Then the return shipping costs, borne by the cheaper country, aren't so high either. We'll sell the product for the same high price, or maybe a bit more, you know, to cover "inflation".


Quality? Well, it looks the same...

Before you know it, almost all of the product is made overseas and the company decides that even more profits for the big bosses and the shareholders can be made if total production is made in a cheap facility in a third world country where workers are paid so much less than workers in Australia and their working conditions are extremely poor. Unsafe even.

So where is the real fault?
Inflation? High wages in Australia? Shareholders? CEOs with impossibly huge bank accounts who don't take pay cuts, but instead downsize the employee pool?

Would the company have been able to survive in Australia if there weren't shareholders demanding profits on their investments?
Can companies survive without shareholders?
They certainly can't survive without workers.

I don't have a business mind, so I don't have the answers.
I don't even fully understand the problem.

All I know is manufacturing in Australia, whether it be boots or bread, cars or confetti, is sinking and drowning.

12 comments:

  1. Oy...my head hurts from trying to absorb all that. To manufacture things in the 'home country' is much more expensive than if the operation is farmed out..but...will people spend the extra money to purchase something made at home?

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  2. Delores; that's half the trouble these days. People used to take pride in buying local, but with costs rising faster than wages many people buy the cheaper product, especially those on low incomes.

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  3. Nice work. While you can't compare Australia with Brazil, Brazil is a huge market for the world and the government says to companies, no, you can't just sell your products here. Build a factory, employ local workers and use local resources and then you can sell here. The overseas company still makes profits but with some or all of the product being made locally.

    Why doesn't our government take some control, rather than leaving it up to business which is there purely to make a profit.

    Then there is the whole business of monster world companies paying little tax in any country.

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  4. It's a problem I can't solve, so I spend my money as close to home as possible.

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  5. I do like Andrew's point about the huge companies and the tax they don't pay. And wish I had answers to the problem as a whole. I do try and buy locally, but it isn't enough. And is expensive.

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  6. To Andrew's suggestion of the government taking control - we've had a few of those businesses in our Canadian province, and what ended up happening was that the government (read: us taxpayers) subsidized the businesses when they couldn't make a profit. I'm not sure politicians make good business decisions.

    As Elephant's Child said, it's expensive to buy locally. My approach is to try to live as simply as possible, buying to meet needs rather than wants, using up and wearing out things as completely as possible, buying second-hand to reduce the demand for production of new items. Yet you can't live without buying SOME things.

    River, I'd say you have a pretty good grasp of the problem!

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  7. Andrew; our government take control??? Thanks, I needed a good belly laugh. The only thing our government can do is sell stuff off. And call it a level playing field. Hah!!

    Why is this print so damn small? What's happened to my usual font?

    Joanne; I try to buy local products, but there's not much available in the stores that is 100% Australian and within my budget.

    Elephant's Child; I try to buy locally too, I don't buy things unless I really need, the most shopping I do is groceries. With fruit and veg it's easy enough to buy local now that products must be labelled as imported if they are, but with everything else it's a matter of reading all labels and trying to work out just how Australian the stuff is.

    jenny_o; I don't think politicians make good business decisions either, but then I probably don't know the full story behind any decisions they make. They only tell us what they want us to know. There is so much that is hidden.
    One thing I didn't mention in my post is my concern at how much of our farming land is being bought up by Chinese persons. We all know about their deplorable growing methods, they've been on TV enough, who's to say they won't use those same methods here in our own country and people will happily buy the vegetables etc because they are Australian grown, probably without knowing who the grower is and how they are grown.

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  8. River, I had not known about the purchase of farmland. I wonder if it's the same in Canada.

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  9. One has to spend extra time at the supermarket these days...almost needing to take overnight bag with you in case you have to stay overnight - because it takes so long to read the labels; and to make matters worse the print on said labels is growing smaller and smaller.

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  10. jenny_o; I'm not the worrying type, but this large scale buy up of our farms by Chinese persons is scary, knowing what we know about their farming practices.

    Lee; I may start taking my magnifying glass along.

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  11. ...it's why I'll never buy shares: I don't want to be part of the problem.

    However, I'm all for companies paying their real share of tax!

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  12. Kath; That's the same reason I didn't buy shares every time Coles offered them. Do companies ever pay their real share of tax?

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