Future of manufacturing relies on support from younger generation

Australia’s increasingly vibrant manufacturing sector needs the support of the country’s younger, globalised generation, if it is to continue its growth trajectory according to new research.

A St.George survey of over 1000 consumers revealed ‘Australian made’ is not as important to 18-24 year olds (23 per cent) when purchasing a product, compared to 69 per cent of 55-74 year olds, even sustainable businesses.

The youth age group are also not willing to pay more for Australian products (45 per cent), and 36 per cent don’t believe they are better quality than overseas counterparts. Matthew Kelly, head of manufacturing and wholesale, St.George, said even though the manufacturing sector in Australia has seen 23 consecutive months of growth, the challenge businesses face is competing with low-cost imports, particularly when it comes to younger generation.

“The sector is far from fading; automation, artificial intelligence and pure inventiveness are enabling new business models and processes that are transforming an industry which already contributes $100 billion to Australia’s GDP.

READ MORE: Snack food manufacturing develops a taste for the future

“However, it’s clear from the research that the industry needs to do more to create a compelling value proposition for the next generation aligned to what matters most to them when purchasing products. This could be through the reduction of carbon emissions, investing in innovative manufacturing techniques to reduce costs and future sustainable materials,” Kelly said.

St.George’s Future of Manufacturing Report has identified greater collaboration and partnerships are needed to drive the sector forward and support a new wave of advanced manufacturers who are future-proofing the industry.

According to the report, to succeed in the face of disruption, advanced manufacturers need connections to research and development, skilled workers and access to financial support.

“St.George is collaborating with scientist and engineer UNSW Professor Veena Sahajwalla and the Australian Manufacturing Growth Centre (AMGC), to help businesses unlock their potential through access to research and grants to build capabilities towards a tech-powered advanced manufacturing future.

“We are also forming partnerships to help address industry pain points, such as rising energy prices, through working with energy efficiency consultancy Verdia which  customers a financial solution for solar and energy programs.

“Advanced manufacturing has the ability to be more competitive and offer better value to consumers, importantly those who are less loyal to Australian made products. These businesses aren’t necessarily new tech companies, they are well-established organisations reinventing themselves and willing to invest in new ways of doing things,” he said.

One example is NSW manufacturer Genneral Staircase who spectacularly boosted productivity using data analysis and robots to streamline processes, which resulted in the 48-year-old business increasing production from two staircases a day to between 30 and 40 a day.

“New technologies are also bringing a new generation into the manufacturing sector, such as drone manufacturer JAR Aerospace. Founded by four graduates in 2017, the business uses innovative technology to ensure it can compete on a global scale and is now working with its first Defence Force contract,” Kelly said.

The report concluded there is significant room for Australian manufacturers to increase adoption of advanced characteristics through greater collaboration on research and development, generating different revenue streams with new product and service offerings and increased technology investment.

Professor Sahajwalla, director of the Centre for Sustainable Materials Research and Technology (SMaRT) at UNSW Sydney and Director of NSW Circular, an organisation that brings manufacturers, industry, governments and researchers together to help develop the circular economy, says her work is benefiting from closer collaboration with manufacturers.

“We know consumers do value sustainability so there are longer terms benefits to manufacturers who embrace ‘circular solutions’ to their materials and waste challenges. A game changing opportunity is to produce niche products and supply high value materials.

One example is what we do at the SMaRT Centre MicrofactoryTM, producing filaments for 3D printing from waste plastic which is almost always imported from overseas. Demand for filaments is expected to grow and this type of technology is ideally suited for manufacturers looking for innovative solutions.”

Kelly added: “We understand one of the significant barriers to manufacturers investing is cash flow shortfalls. St.George has a unique understanding of the sector and specialised expertise and products to help businesses grow and succeed, including an invoice discounting solution that helps manufacturers access capital tied up with aged debtors, and equipment finance to support business growth.

“Transformation can be confronting, but as an industry I believe we all have a role to play in nurturing businesses that will fuel the sector and St.George is committed to helping manufactures create new models for growth.”

Consumers know best – the key to making new products flourish

Why do products such as Cadbury Marvellous Creations’ popping candy chocolate and Chobani’s high-protein Greek yoghurt succeed, when others fall short of the mark?

Because the people behind these products listen to consumers and offer the best packaging to get people grabbing for their products.

Food innovation expert Angeline Achariya explains that companies often forget to find out what consumers want, which leads to products failing before they even hit a high.

“Take a consumer inspired approach. Understand the market, understand the consumer,” she said.

READ: Food companies can learn from start-ups, Practical Innovation says

“In FMCG (fast-moving consumer goods), 90 per cent of products fail in the first 12 months of product launch,” said Achariya.

Perhaps with better consumer knowledge and packaging this wouldn’t be the case.

In a presentation hosted by St.George Bank, in Sydney in July, Achariya talked about “finding the next UBER in food”.

Food producers and manufacturers gained valuable advice on how to introduce new products to the market that will bring consumers back for more.

Achariya is the chief executive officer at Monash University’s food innovation centre. She and her team helped Chobani succeed in the Australian dairy retail sector, and she recalls Mondelez buying “all of the popping candy in the world” for its Cadbury Marvellous Creations range.

Cadbury listened to consumers. People liked the chocolate melting on their tongues to reveal textured candy with a satisfying crunch. They liked the crackling on the roofs of their mouths, which reminded them of their childhood, said Achariya.

“The most successful things in the market place are always meeting a need. It’s really about making sure that consumers want it.”

During the innovation cycle process, focusing on packaging first was necessary, said Achariya.

When it comes to launching new products, it’s what’s in the outside that counts at first glance.

“Consumers eat with their eyes first,” said Achariya.

Beak & Johnston founder David Beak agreed that good market research, and the right packing, helped the success of a product.

Beak’s company is a family owned food processing business with 30 years’ experience dealing in fresh cut and value added meat products, fresh soups, sauces and prepared meals.

It wasn’t always smooth sailing for the company, which brought products, such as fresh ready meals, out a decade too soon, Beak said.

“A lot of the ideas we had 25-30 years ago were 15 years or 20 years too early. It comes back to doing market research,” he said.

Although it could be daunting to launch a new product, it was all about perseverance, Beak said. “Don’t give up.”

St.George relationship director Mark Burgess said the event was about supporting businesses in the food and beverage industry.

“We love bringing our customers together to showcase different perspectives and trends in the industry.”

Learning more about consumers’ needs and wants, and making sure this is reflected in packaging, could help a new product succeed.

These steps may seem simple, but speakers at the event, Achariya and Beak, highlighted them as they can get lost in a large list of ‘must-do’ tasks.

 

Making Western Sydney Greater 2018 Survey launched

National accounting firm William Buck, in partnership with St. George, the Western Sydney University and Western Sydney Business Connection, have launched the latest edition of the Making Western Sydney Greater 2018 Survey.

This initiative is a collaborative project between the four organisations to identify the important issues and priorities for businesses in the Western Sydney region. The organisers use the insight collected from the survey to produce a report and coordinate a number of activities in the region.

Over the next decade, Western Sydney is expected to have an additional one million residents living in the region. The plans to create a city with better accessibility with new transport networks will have a big impact on local businesses.

The last edition of the survey in 2017 found that over 48 per cent of Western Sydney businesses expected to increase their full-time and part-time workforce. Last year, 86 per cent of Western Sydney businesses had plans to grow their business with a projected growth rate of 15 per cent.

In this latest edition, the survey focuses on the benefits and obstacles of a strong digital marketing strategy, the impact of better connectivity and new transport networks, and take a look at the growth and employment outlook for businesses in Western Sydney.

All Western Sydney business owners and managers are encouraged to take part in the survey.

Participants who  take the survey before 8 August, go in the draw to win 2 tickets to the 2018 Bledisloe Cup and watch the ultimate Trans-Tasman rivalry at ANZ Stadium.

To participate in the survey, click here.

Banking services help an F&B business grow

Directus is a leading supplier of processed fruit and vegetable ingredients and speciality ingredients to food and beverage (F&B) companies in the Australasian region. Their clients include impressive names such as Coca-Cola Amatil, Lion and Asahi Beverages. But they provide business-to-business (B2B) ingredients to a diverse portfolio. With a strong focus on innovation, product development and capability enablers, Directus has carved out a name for itself in the industry.

The company is a family business and was founded in New Zealand by Tony Beattie in 1976. Directus Australian operations began with the company importing fruit juice concentrates into Australia from the US in 1984. From the beginning, Beattie has travelled extensively to find products that could not be sourced locally, or products that were in short supply, and marketed these successfully to Australian and New Zealand F&B businesses. This business formula worked, and the company has since expanded to growing operations in the US and Southeast Asia and recently added Directus Equipment Services, dedicated for supply, service and spare parts for a number of specialised principle partners in the food and beverage equipment supply.

An organic evolution
Peter Gates, the CEO of the Directus Group, says these business fundamentals – which are built on bringing suppliers and customers in the F&B industry together for their product and service requirements – have set the company apart from other companies in the sector.

“Directus is always looking for ways to add value. With today’s globalisation it is very easy for companies to source ingredients, but there are special skills required to provide that competitive advantage,” he explained. “Security of supply for brand owners is an important measure alongside quality and price. Directus can ensure ethical sourcing from reputable suppliers and with a consolidated purchasing model we can ensure our customers can obtain products from our local stock holdings.”

The company has also evolved with the F&B industry, gauging the needs of their customers and the market in general. A part of this growth has included the supply of organic ingredients.

“Directus is organic certified and can supply a full range of organic ingredients. We have aligned with world-class suppliers; always leaders in their fields. For example, Doehler is one supplier we are partnered with and they are a recognised leader in specialty ingredient and natural colours and flavours,” Gates said.

In the last few years, Directus has enjoyed a growth spurt. While this has occurred as a result of their diverse product offerings and an increased number of customers, Gates also attributes part of this success to their relationship with St. George Bank.

“With our increasing customer base and product offerings comes higher local inventory hence our enhanced facility with St.George Bank,” said Gates. “Our business is different in that there is a lot of foreign currency and exchange involved and we are a unique B2B supplier – so quite a bit different to other F&B manufacturers or retailers,” explained Gates.

Personalised business service
In his experience at Directus, Gates said that St.George Bank has gone out of its way to understand the business, which has been a real point of difference when it comes to the services they provide.

This has been a particular focus of the bank since they adopted an industry-alignment model several years ago. As part of this change, a F&B portfolio was created. This allows for customers such as Directus to benefit from a team of managers who have in-depth knowledge of their industry and the specific issues that they face within this sector. It entails a more personalised approach to the customer’s needs. As a result of the industry-alignment model, the bank won the “Best Service Business Bank” at the Australian Banking and Finance Business Banking Awards in 2016.

As far as Gates is concerned, this personalised approach and the relationship his company has with St.George Bank has been really beneficial to business.

“We have regular catch up sessions, where we provide our financials, but they also want to understand what aspects of the business can improve the cash flow or might need funding. They really want to get in and understand the whole process of how we contract with an overseas supplier, how we bring in a specific ingredient, store it and deliver it. This is one of the key things we’ve enjoyed in our relationship with St.George Bank and one that we feel is unique.”

Banking on growth
In terms of growth, Gates said the business has definitely profited from St.George Bank’s services, such as Invoice Discounting.

Invoice Discounting provides instant cash flow, allowing a business to borrow money that is tied up in outstanding invoices. It empowers businesses by giving them control over working capital and is an excellent way of funding business growth.

“This product has really worked for us as we’ve been growing so quickly,” Gates explained. “St.George Bank has good systems in place. They’re robust but malleable at the same time. They’ve really helped us maximise this facility.”

Other banking products that Gates said are integral to Directus include trade finance and foreign exchange. “Trade finance is really key to our business, as is our foreign exchange cover. They are probably the key products we use besides the invoice discounting. And St.George Bank provide all of these products and services to us, so there is no need for additional consultants,” Gates said. “It certainly makes our work easier, being able to get all of these services from the one bank.”

Approachable and dedicated
Besides the banking products that St.George Bank offer, Gates says the relationship itself is unique between Directus and their dedicated relationship director.

“It’s a formal relationship when it needs to be but can also be quite informal – in terms of being able to regularly touch base and discuss different aspects of the business or bounce ideas off of each other.”

Having a banker who is focused wholly on the F&B sector makes a difference and Gates says that Directus benefits from said much more than they would from traditional banking services.

As part of their unique product and service offerings, St.George Bank provides “industry business snapshots” which give businesses like Directus an insight into current industry benchmarks and trends. It’s another example of how the bank is providing a more specialised service.

“We meet with our relationship director on a regular basis. They are always available, very approachable and looking for ways to help us improve our business,” Gates explained. “We also have access to a network of other businesses in our sector, which can provide us with some interesting and useful insights.”

Directus
www.directus.com.au

St.George Bank
Mark Burgess, Relationship Director – Food & Beverage
mark.burgess@stgeorge.com.au, 0404 832 035

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