Lessons from SPC


Once the dust has settled, political mud-slinging completed, recriminations done, and blame been allocated over yesterdays decision by the Government not to support SPC Ardmona to the tune of $25 million, which would have triggered another $25 mill from the Victorian government, perhaps we can learn something.

Little of this will be of much value to those workers who will have their lives badly disrupted, but the rest of us had better learn, or it will just be repeated, again and again. SPC has little to do with car making, oil refining, mineral or wool processing, but the seeds of destruction of all these industries stem from similar beginnings.

That seed is the productivity of the capital employed in these activities. Australia over a long period has ensured that returns on capital employed in manufacturing in this country are insufficient to be competitive with alternative locations for that investment. This has been starkly highlighted over the last 20 years as supply chains for just about everything have globalised, and investment in everything except mining where we had (note the past tense) genuine competitive advantages has dried up.

It is not the level of wages, power of unions, concentration of retail, high $A, or any other of the myriad of contributing factors on their own. It is the combination of all these factors over the long haul, and our collective failure to see the long term writing on the wall, and respond to it sensibly, in a measured manner that survives political and economic cycles that is to blame.

Were I given that mystical magic wand, able to shape things to come, unfortunately unable to change the past, here is the list I would have, in no particular order:

    1. Remove the duplication, ambiguity, and situational insensitivity from our public decision making processes. Big ask here, as it involves substantial  reform to our the three levels of government, and all their supplicants and rent seekers.
    2.  Inculcate in both management and managed in the private sector a recognition that the short term lasts, well, only a short time, but poor decisions taken to ease the short term discomfort factor will haunt you for the long term. The  longer poor, short term accommodations exist, the harder and more painful they are to unwind, as eventually they will need to be. Lets all grow some backbone!
    3. Have our political leaders recognise that despite many differences in detail, in the end, we are all in the same boat, and we sink or swim together.  It seems that the job of oppositions is to oppose, as articulated by the current PM when opposition leader, and to hell with recognising that not all the best ideas come from your own side of the house. By contrast to the opposition, it seems the job of government is to stay in government, by any means, for its own sake, not for what can be achieved for all of us.
    4. Add some intellectual depth to the public debate. Currently economic and political debate in this country is conducted on the basis of 2 minute, scripted sound bites, superficial and confected “interviews” that skirt difficult questions, which are in any event, unanswered should the interviewer stray, and with a focus on trivial and emotional,  albeit attention grabbing events.
    5. Develop a sense of what the country stands for, just what that means in terms of the allocation of available resources,  and how success is measured. If Australia was a company, it just may resemble a strategic plan supported by the programs, priorities, performance measurement and learning feedback loops that manage the implementation.

A short list with some pretty big “asks” but I remain an optimist, although resigned to being both poor, and a voice in the wilderness.

PS. This article by Robert Gottliebsen subsequent to this post is a very worthwhile addition. If SPC can be saved, and it should be by means other than subsidising the continuance of bad practices if possible, then this is a very useful roadmap and precedent for the necessary changes.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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