Friday, January 13, 2006

The Australian schizophrenia editorial


Why does the australian think biscuit makers shouldn't be protected but reserves the right for govt policy to protect 'strategic' industries like coal export or carbon emmitting heavy industry?? You'd think the same argument for biscuits would be valid for everything but i guess the biscuit lobby ran out of money...

Bake a better biscuit
Australia can't compete on price but it can on quality

FOOD manufacturer Kraft is replacing a biscuit factory in Melbourne with a new plant in China, where manufacturing costs are much lower. For the 150 workers who will lose their jobs this is bad, if not surprising news – they expected the plant to shut by July. Nor is it surprising that we are hearing the usual complaints from the usual suspects – union officials who are appalled at what Kraft will do to make a profit. And their point is? Making money by providing products people want is what businesses do. If Kraft can bake the same quality biscuit cheaper in China than it does in Melbourne, that is what the manufacturer will inevitably, and properly, do.

And there is not a thing we can, or should, do about it. The days when the jobs of Australian bakers, or butchers and candlestick makers, for that matter, were protected from international competition by high tariffs on imported products are gone. And in a global market where everybody watches, and learns, from everybody else any idea that an industry is safe from international competition is archaic. As The Australian reported on Monday, expat experts are helping China develop a wine industry which one day could undercut Australian products in markets all over the world.

But there is never much money to be made in a race to the bottom on price. The real challenge for Australian grape growers and vintners is to stay in front on quality. And if tens of millions of Chinese develop a taste for wine, thanks to cheap domestic products, an opportunity will emerge to sell them superior Australian vintages as their palates improve. The phenomenal success of the Yellow Tail wine label, created in Australia for the American market, demonstrates how it is done. With unemployment still at generational lows Kraft staff, especially those with trade training or business skills, should not be out of work for long. And there is now a challenge on offer for any entrepreneurs among them, or anybody else who sees an opportunity to take on Kraft – by baking a better biscuit.


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