News Review Made to last ...

but not forever Stuart Washington 2,630 words 11 February 2012 The Sydney Morning Herald SMHH First 12 English 2012 Copyright John Fairfax Holdings Limited. It bears the fancy name "industrial estate" but there's nothing fancy about the light industry in Revesby. There are big metal sheds with towering sliding doors, cyclone fences topped with barbed wire, patchy grass on nature strips, trucks jerking and braking their way in and out of driveways, and yards with shipping containers stacked three high. In their sheer ordinariness, Revesby and surrounding industrial areas are an unlikely centre of a battle about the future of manufacturing and a battle about what kind of country Australia becomes. Revesby and the nearby areas of Chipping Norton and Moorebank have suffered some of the heaviest casualties in the battle, exclusive statistics analysed by the Herald show. The estates are within one of three federal electorates suffering the greatest losses in manufacturing jobs in the past four years, according to the statistics supplied by the labour market research consultancy Australian Development Strategies. More than 4000 manufacturing jobs were lost in each of the electorates - La Trobe in the outer south -east of Melbourne, Macquarie, covering Sydney's outer west, and Hughes, covering Sydney's southwest including the manufacturing hubs above. The battle is making national headlines in the debate about the future of the car industry, and whether uncompetitive car manufacturers should receive government handouts to survive. On a smaller scale it is a battle about whether the humble industrial estate - and the jobs that go with it - are a thing of the past. Indeed, photographs taken for this story already have the air of museum pieces: harking back to when Australia actually made things. "I would have to say I'm pessimistic, on the current policy settings we have got," Craig Kelly, the MP for Hughes, says when the Herald meets him at the Revesby Cantina, a takeaway shop in Revesby industrial estate. The statistics bluntly spell out the losers in the battle so far. Of the 97,200 manufacturing jobs lost in Australia in the past four years, the five biggest losers were electorates on the outskirts of Melbourne (three) and Sydney (two). The statistics also show the winners in the battle. The five electorates that gained the most jobs in mining are - no surprises here - all in Western Australia. And the figures show the centre of the mining jobs boom is the mining town of Newman - built by a forerunner of BHP in the 1960s, with a population of 7000 and about 460 kilometres south of Port Hedland. "We like to think we're a town with a mine attached, not a mine with a town attached," East Pilbara Shire's president, Lynne Craigie, says. In a way, we have all heard the story: manufacturers besieged by a high Australian dollar and cheap imports from China are doing badly. Miners bring driven by China's demands are doing extremely well. What possibly hasn't been heard so loudly, although it is increasingly entering public debate as Australia Page 1 of 4 2012 Factiva, Inc. All rights reserved.

considers the future of the car industry, is what happens if the trends continue? What happens if manufacturing jobs in outer-suburban areas of Australia's two biggest cities keep declining? What happens if mining keeps on growing? Who wins and who loses then? "They (manufacturers) are going down the drain. All the big places are gone. There used to be a lot of heavy industry. I think eventually everything will come from China or Korea. I don't think I need to worry about it any more, but for the younger people it's going to be hard." Jack Martens, 83, a boilermaker with L&A Pressure Welding, Revesby, who returned to work from retirement. It is a sobering experience to visit the industrial estates of south-western Sydney. The Herald hears more than once factories are only surviving because they own their land rather than having to pay rent. Such a position is a business no-no. It means the factories are not surviving on an economic basis, but only surviving to keep the business going and the staff employed. In a word: unsustainable. Stuart Williamson and his oldest son, Charles, are trying to buck the trend at Williamson Tool & Engineering, founded in 1936, even as they see some of their biggest customers disappear off the face of the earth. TRW, Kirby Engineering, Lysaght - all these large companies have been closed or bought out and operations in south-western Sydney have wound down. China looms large as the source of heavy machinery manufacturing and metal fabrication, replacing work once done in Australia. Charles Williamson, newly shorn from surgery for a brain tumour, estimates that between 2006 and 2009, about 40 per cent of his workshop was devoted to supplying the mining boom. But this has dwindled to about 20 per cent and he is pedalling fast to find new customers. Making bulbs for the keels of maxi-yachts filled part of the gap - three of five of Wild Oats' wins in the Sydney-to-Hobart were with bulbs machined in the Williamsons' workshop. Walking through the neat, surprisingly soundless workshop - machines turn and effortlessly peel off shining coils of metal - is a reminder of the heavy industry that is making many Australians rich. One large, shining ring of stainless steel more than a metre wide is the swivelling base used by massive excavators. Another two-metre-long shaft sitting on the floor like a giant's nail file is the axle used by rotating bucket loaders as they move mountains of coal. Charles Williamson's business recipe is simple and, to date, effective: buying bigger and better machinery, entrenching his business as the can-do manufacturer of large, complex jobs. On the machines recently was a new, lightweight composite material, as big and deep as a large-sized dining table. The material was machined into a key component of a single-man submarine. In the back of Williamson's shed, a five-metre by four-metre hole has been dug to accommodate a new machine bought for $700,000. There are further plans for another machine out the back. "It's more than $1.5 million. I haven't told Dad yet; he will go bananas," Charles says. Machinists can make about $80,000 a year. The average miners' salary is put at around $120,000. "If you can encourage people to come here, that's great. Just tell them they need to make accommodation arrangements before they come." Lynne Craigie, shire president, East Pilbara Shire. As president of East Pilbara Shire - which makes something from nothingness by describing itself as "the world's largest shire" - Lynne Craigie is readying Newman for its population to double to about 15,000. It is a far cry from the town of 3000 or so that Craigie first moved to in 1998, when houses lay vacant in a state of suspended animation between two mining booms: the '60s and the noughties. The figures analysed by the Herald show the postcode of Newman put on more than 2300 mining jobs in the past four years, making it the postcode with the biggest number of additional mining jobs nationally. Durack, the federal electorate holding Newman and the bulk of north-west Australia and its multi-billiondollar resource projects, added almost 8500 mining jobs, the greatest increase of any electorate. (The other booming postcodes for mining jobs growth track closely against the country's big mine and resource project developments: Kalgoorlie and Karratha in Western Australia, Olympic Dam in South Australia and Moranbah in Queensland make up the rest of the top five). By all accounts, Newman has a boom-town feel. There are three hotels in town but two are permanently Page 2 of 4 2012 Factiva, Inc. All rights reserved.

booked by mining companies for their workers. Accommodation is so stretched that when rains flood out roads to nearby work camps, the fly-in, fly-out workers are encouraged to stay in Perth. Rents for a modest three-bedroom house with one bathroom in Newman run to between $1200 and $1800 a week; Craigie tells of one four-bedroom, four-bathroom house that recently rented for $3500 a week. Three-bedroom homes in Sydney's leafy north shore struggle to rent for $1000 a week. Rents for commercial real estate in Newman run at Sydney central business district prices of $550 a square metre. The source of these gains for Newman is the iron ore-rich haematite that has lured the three big mining companies, BHP Billiton, Rio Tinto and Fortescue, into the area. In turn, the mining companies' work camps need supplies from mining services companies such as consultants and engineers, who snap up office space at what sound like exorbitant rents. "Most people are not fazed at all. They are coming to these towns because they have got mining booms going on," Serge Doumergue, manager of commercial real estate for Port Hedland First National, says. That's not exactly the way the president of Newman Chamber of Commerce, Barbara O'Driscoll, sees it, in a tangible illustration that the mining boom doesn't reach even those sitting closest to it. "Even though things are booming, as we are being told and as we hear, you will find small-business retail is doing it tough," O'Driscoll says. She points to a woman's maternity shop that simply couldn't stay in business at the rents charged, and a popular local Chinese restaurant that has gradually given up its seating area to cut the cost of its rent. It was the only stand-alone restaurant in town. "You have got to have $2 million in your pocket," O'Driscoll says. "If you had a spare $2 million, I think there's a lot nicer places." "What do I do to survive? I'm trying everything I can and I'm doing everything I can to keep these people. You will never, ever, get another company to start." Louis Chouaifaity, owner, L&A Pressure Welding, Revesby. Craig Kelly carries himself with a heavy deliberateness that telegraphs the joint-weary present of his Southern Districts rugby union past. Kelly is friendly as he leans forward into conversations with Jerry Karamitsos, the proprietor of the Revesby Cantina. Karamitsos gives his local member a quick rundown on business - the first three weeks are down about 30 per cent on the same time last year - and h e expresses the fervent hope the decline in business from the estate's workers is only temporary. "The last three weeks I'm paying money from my pocket," Karamitsos says. The winner of what was one of the country's most marginal electorates in 2010, Kelly is a first-timer Liberal MP who has seen first hand the downturn in Australian manufacturing. "My parents had a small business that made lampshades. It developed a little niche export market," he says. "[The business used] wood turners, metal spinners, guys working in ceramics, guys working in metal castings." All gone now - including the manufacturing side of Kelly's family business. Kelly airs concerns at the loss of skills when manufacturers shut up shop. "You can close it down like you can turn a tap off, but you can't start these things up overnight," he says. Kelly is also a realist about the difficulties facing manufacturers. "It's very easy to say, 'move into niche markets, go into more high-skill manufacturing'; every other country in the Western world is trying to do that right now," he says. Brett Ford has been in his family's furniture business, Bindi, for the past 35 years, starting as a 15-yearold cabinet maker. He works alongside his brother, Matt, and his sister, Karen. Last year Bindi won the furniture contract to fit out the 170-room The Darling hotel at Sydney's casino, The Star, crafting custom furniture with enough volume to keep prices down and win the tender. Importantly, the builders of the hotel explicitly required a high percentage of Australian content. It was a shining achievement for the company and the latest pay-off for its strategy of targeting high-end business as domestic furniture becomes increasingly dominated by cheap imports. "We have been pushed into that high end of the market," Matt Ford says. "All of the low end is imported. The prices are ridiculous; for us to buy the timber for the chair is more than the entire finished product from China." Page 3 of 4 2012 Factiva, Inc. All rights reserved.

The fate of furniture manufacturing is seen in the industrial estates of Moorebank, Revesby and Chipping Norton, which were once a hive of furniture manufacturers. Those with a thirst for nostalgia can find the State Library's photographs of the once Moorebank-based Chiswell company's collection for the 1958 Furniture Guild Exhibition - the very image of late-'50s cool. The company later went broke, although the name is still in use today. A Herald analysis of the 58 companies from the three suburbs listed in the 2003 Furnishing Industry [industrial] Award shows fewer than 15 can be found in the white pages today. Most of the remaining companies are tiny. It is not pleasant to hear Brett Ford's analysis after touring the company's workshop: "I think manufacturing is a dying trade." "You see a social and economic decline." Tim Ayres, NSW secretary, Australian Manufacturing Workers Union. The Australian chief economist with global bank HSBC, Paul Bloxham, is unfazed by what he sees as an inevitable shift in the Australian economy. He points out manufacturing as a contributor to gross domestic product has fallen from about 30 per cent in the '50s to 7 per cent now. He sees little point in governments propping up industries that have no inherent advantage against cheaper imports from overseas manufacturers. And he says that while there are dangers in Australia's current obsession with exporting resources to China - particularly by placing our eggs in one basket - there is little evidence industries such as manufacturing are suffering permanent damage. "Allocation and choices and which areas of the economy that are going to be most profitable down the track should be left mostly to the market," Bloxham says. "History shows government is not particularly good at picking winners and it's very hard to know which industry will be in demand in the future." If there is to be government intervention, Bloxham sees the biggest bang for Australia's buck being the creation of a sovereign wealth fund to increase national savings while Australia enjoys one-off benefits from high commodity prices. The Australian Manufacturing Workers Union has a starkly different view and, last November, put nine recommendations to a NSW government industry taskforce on manufacturing. Chief among the recommendations are government support for various "Buy Australian" policies that improve the chances of Australian manufacturing firms competing for government and private-sector projects. In the submission Tim Ayres, the state secretary of the AMWU, puts the case that manufacturing is a vital building block of the Australian economy, employing one million people. "The state government needs to have a plan for manufacturing in Sydney," Ayres says. Without it, he predicts a malaise that will hurt the outer suburban belts of Sydney and Melbourne, and eventually the cities themselves. Louis Chouaifaity is the owner of L&A Pressure Welding, a cavernous shed in Revesby full of clangings and whinings as his 45 staff build tanks for the oil and gas industries. He established the business in 1981. Chouaifaity wants new conditions to be put into in the multi-billion-dollar contracts that are carving up the Australian resources industries. Or else. "You will never ever get another company to start and try to survive ... you lose your skills. You lose manufacturing," he says. Document SMHH000020120210e82b0003p

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