The 2012 Australian Institute of Packaging (AIP) Conference has kicked of in Queensland, and food and packaging experts have already shared their thoughts on the future of the Australian industry.
Tom Schneider, President of the World Packaging Organisation began his address to the audience by saying Australians are “very much like Texans, you meet people well and you enjoy people.”
Terry O’Brien, Managing Director, Simplot had some more controversial comments on the state of the industry and what producers and companies need to dot o stay afloat.
“People keep saying things like ‘If we could just legislate against Coles and Woolworths and stop them bullying companies, it would fix everything.,’ but I don’t think that’s necessarily true.
These retailers take roughly 33 per cent of profit out of the chain; globally, the level is about 25 per cent, so it is higher.
“Woolworths is the second highest profit margin maker behind Walmart.
“The fact that Woolworths is so successful isn’t a fluke, they have worked hard over a number of years and they aren’t stopping.
“And they’re looking for further profit.”
O’Brien shared his view that the rapidly changing food and packaging supply industries will continue to push producers and manufacturers to innovate and improve their business models.
“The press has had a lot of fun with the retailers and the food industry taking shots at each other over these kinds of statistics, rather than getting them together at a table to discuss the issues.
"The AFGC [Australian Food and Grocery Council] has started doing that and some kind of truce has been called.
“There is a responsibility for Coles and Woollies, given their size, for them to respect suppliers.
“When they make decisions to D-list people, they have to understand the impact of that.
“I think they do understand, but they have to communicate those through the organisation.
“They’re not the pseudo protectors for companies in Australia, so if you’re sitting in a company that’s not looking bright, and is not innovating, the future is not bright for you in Australia.
When questioned about yesterday’s news that Woolworths chief Grant O’Brien has extended an olive branch to manufacturers and suppliers to develop an independent body to oversee dialogue between the major supermarkets and suppliers, O’Brien (Terry, who assures there is no family connection) was cautiously optimistic.
“Things are usually settled much better sitting around table than in all out warfare,” he said.
“How far and how deep into issues they would go, I don’t know.
“What he has offered so far is not going to the heart of the issues we have, so we need more discussions about that.”
He said not everything can be blamed on the major supermarkets, and that companies and suppliers cannot expect to continue doing business exactly ads they have done for decades.
“You have to make yourself a corporation rather than a family farm system,” he said.
“I love farmers, I spend a lot of time with them and I wish the model could stay where it is to make money, but unfortunately that won’t be the case.
“Regional areas are going to suffer.”
“No matter which way you cut it, we’re too expensive.
“There’s been a lot of talk about cheap imports, but when I’ve travelled the world, I’ve found that is the normal price, and we pay too much.
“It just costs too much to produce things in Australia, and it comes down to our standard of living.
“We expect to be able to support the standard of living we have, people are widespread geographically and people demand wage increases and things like that.
“But nobody tries to be better than average because average gets them paid.
“We have to be very efficient, and chase constant productivity improvements.”
O’Brien said the increased union activity of late is not beneficial to the industry, nor is the changed attitude to redundancies and retirement.
“The re-energised union movement in Australia is not helping,” he said.
“I’ve always been a supporter of unions, but I’m really pissed off with them now and I think they’re chasing people offshore now.
“And redundancies are just such a big nest egg, people now would love to walk out the door at retirement with a redundancy payment.
“How do you unwind this sort of thing?