COVID crisis exposes need for policy rethink: APV

THE crippling coronavirus pandemic provides an opportunity for industries and the federal government to turn their attention back to domestic manufacturing and fostering high-value supply chains that will play a pivotal role in helping build economic strength for future generations, according to APV managing director Harry Hickling.

Speaking to GoAuto, the head of the Melbourne-based specialist automotive, defence and industrial restraint manufacturer said the COVID-19 pandemic was “highlighting more than ever the importance of strong supply chains and exposing every weakness built into the sourcing decisions made by business”.

“This is rapidly posing continuity risks for business and whole industries around the globe,” Mr Hickling said.

“We can see many businesses around the world with production lines stopped or now idling due to these COVID-19 supply chain disruptions.

“And equally sad, businesses that have ignored the potential value of leveraging off the greater capability and strengths of suppliers with deep capability.”

Mr Hickling said the fundamental problem was that international purchasing decisions tend to boil down a preference for “superficial commodity product” with the lowest price rather than sourcing from a strategic supplier “which will lead to higher-value outcomes”.

“At APV we seek out customers who recognise the strength of strategic sourcing and want to leverage off our capabilities, not just the purchase of a seatbelt, albeit a safety critical item,” he said.

“It is these collaborative relationships that Australia must now embrace to foster high-value export-facing manufacturing industries.”

To help achieve this, Mr Hickling wants the federal government to expand the policy and regulatory framework created for the defence industry to the broader manufacturing export sector.

This would particularly aid Australian small-to-medium enterprises working on hi-tech, cutting-edge products, supporting them in areas such as export grants, market intelligence, trade missions, business improvement programs, IP protection and local contracts.

It will also enable these SMEs to ensure their own overseas supplier base, where there is no local alternative, is strong enough to withstand crises such as the COVID-19 pandemic.

Mr Hickling pointed to the fact that over the past month two of APV’s suppliers in Malaysia had won exemptions from industry lockdowns to support limited production of components for export to Australia, while another in Taiwan stepped in when one of APV’s longest-running suppliers in New Zealand was permanently closed by its parent company.

“It is this collaboration with strong supply chains that underpins our success as an export-facing business within the automotive, defence, industrial and transport industries,” he said.

“Strong supply chains are indeed fundamental to world-class business operations.

“The opportunity now exists for the Australian government and industry to fall back in love with Australian manufacturing, establish collaborative arrangements and build high-value-added Australian manufacturing industries.

“These will be the industries that will rapidly revitalise the Australian economy and build bright and exciting opportunities for future generations of young Australians.”

Mr Hickling also emphasised that substituting imports with locally made products was an integral part of strengthening supply chains, and sees larger enterprises (Tier 1/primes) changing the way they do business in collaboration with government.

“We now have a truly unique opportunity to strengthen Australian supply chains during the post-pandemic economic recovery by refocusing government industry programs to establish collaborative arrangements with strategic industry players to strengthen our supply chains, evaluate import substitution opportunities and build strong local industry capability,” he said.

“Under this model, Australian industry would have opportunity to diversify and build new capabilities within strategic supply chain development initiatives, just as we have seen many businesses take on the challenge of making medical PPE.

“Making industry primes and major industrial players accountable and responsible for the outcomes, in collaboration with government and supported by industry programs, Australia will generate an exciting and sustainable high-value industrial base.

“Just imagine the power of the government standing with industry to drive a hard-hitting industrialisation program built upon our existing high-value engineering and manufacturing industries!”