While many Australian businesses look offshore — particularly to China — to slash manufacturing costs, Perth-based Avid EPG Group says its sales soared by 30 per cent simply by returning its production to Australia.
The electrical contracting business’s BDM, Aaron Teo, told My Business that Avid previously had assembly and manufacturing of its products done in China. However, it decided several years ago to repatriate these operations — and has actually seen profitability rise as a result.
“We made the shift about four years ago to local assembly, but only in the last year have we really focused in on it,” Mr Teo said.
“[As a result], we have enjoyed around a 30 per cent increase in sales and productivity than previous[ly].”
According to Mr Teo, the benefits of the strategy shift made it a no-brainer for the business. He said that the higher labour costs of local production have been offset by savings achieved in superior quality control throughout the manufacturing and assembly process.
“It allows for both improved internal quality control and the ability for clients to be involved in the approving process,” he said.
“We have more control around staff training locally, thus lowering quality control of fixing issues occurred by the China factory previously.”
Mr Teo also said that Avid now enjoys improved project visibilities and quality awareness, plus it no longer has to send staff overseas to monitor overseas factories — another cost saving for the business.
Other financial savings have come from being able to have customers more involved in the design process, reducing reliance on drafting and engineering inputs.
Avid is also able to supply customers more quickly, by reducing order times by up to 10 weeks, he said, and better integrating support staff with manufacturing to speed up the resolution of any customer concerns.
The change has seen Avid roughly double its Australian workforce since the strategy was first implemented, from “just over 20” to more than 40 now.
‘Think global, act local’
Mr Teo said that the 13-year-old business has adopted a “think global, act local” approach.
“Avid EPG Group is very much part of the global economy and has partnerships with some of the world’s leading electrical manufacturing companies,” he said.
“But as a business based in Perth, we also have a responsibility to the local Western Australian economy. Where possible, we design, engineer and assemble our own high and low-voltage equipment rather than simply buying finished products directly from overseas.”
Major clients include many of Australia’s mining, oil and gas projects, as well as government and defence clients.
Mr Teo encouraged other Australian businesses to weigh up the benefits of local production.
“There’s no reason why Australian companies can’t have one eye on the global market and another in our own backyard,” he said.
“Australian manufacturing has had its setbacks, but there’s still a lot of life left in it.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Business lessons from the All Blacks
By Steve Stanley
Ask the Experts: Business assets and liability after separation
By Anneka Frayne
Anxiety in the workplace
By Staff Reporter