Adjust your business model to recognise the changing environment
Owners of manufacturing businesses have faced the great conundrum since globalisation really “kicked in”.

In the ‘good old days’ there was limited capacity for manufacturing in Australia in addition to significant trade barriers (tariffs, customs duties, fixed exchange rates etc) on imported product. In the early 1980’s the reform process began and barriers were gradually reduced. Prior to the new millennium (i.e. 2000 onwards) manufacturers were able to gain orders at reasonable margins subcontracting to larger manufacturers.

Come the new millennium, the larger manufacturers and those sourcing components have had access to the global market and used this opportunity to initially pressure local component manufacturers to compete on prices. Through the use of automation, margins were able to be maintained, however, the customer base for these components were relentless in their pursuit of lower prices and the work shifted off-shore. Some component manufacturers realised that a great way to take control and secure their future was to develop their own product. The challenge was then that this required development and access to new skills, particularly in the areas of sales and marketing. 

These were never skills that small to medium component manufacturers deemed important previously and the manufacturing culture was such that the skills were never valued or developed. The component manufacturers that re-focussed and adjusted their business model prospered in the changed world of manufacturing. However, the majority of the industry refused to recognise the changing environment and resisted change, hoping things would return to the ‘good old days’. Unfortunately, many have closed their businesses, while those really resilient owners are still ‘fighting the good fight’.

At Excel BizGroup, we work with manufacturers to adjust their business model such that it recognises the changing environment and adjusts to ensure growth and prosperity. We introduce key people to the key skills and thinking required to master the new environment and thrive.

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