Renowned for its manufacturing and food industries, Victoria is proving a healthy contributor to Australian exports thanks to the range of assistance available to SME exporters. Rebecca Spicer reports.
While SMEs in Victoria are performing well in export markets, there are plans to boost their success in the next few years with assistance focused on that sector.
According to Austrade-Sensis research, around 13 percent of Victorian SMEs export. That is around the national average, says Austrade’s chief economist, Tim Harcourt. “And although Victoria is not as big an exporter as mining states like Queensland and Western Australia, the state still has 10,000 exporters, which is second only to NSW,” he says.
Victoria’s main export destinations are New Zealand, US, China, Japan and Saudi Arabia, and while it accommodates around 23 percent of Australia’s population, Victoria does about 36 percent of the country’s manufacturing according to Andre Haermeyer, Victorian Minister for manufacturing and export. And so it’s often deemed the ‘manufacturing hub’ of Australia.
Victoria’s strategic advantages lie in its infrastructure to support businesses, particularly exporters. “We have the largest container port in Australia. We have very good road and rail networks between ports, major manufacturing precincts, airport, distribution and transport hubs—all of that is very well integrated so there’s excellent infrastructure here,” says Haermeyer.
Victoria exported more than $18.5 billion in merchandise last financial year, and while this figure is steadily growing some industries are flourishing but others could do with a boost.
Victorians often refer to their state as the ‘food bowl’ of Australia, and that’s reflected in the state’s well performing exports such as food and wine, and certain agribusiness sectors such as dairy, olive oil, and grain-related products.
The services sector is also taking off, and at a value of more than $8 billion, Victoria is exporting the second largest amount of service exports in the country behind NSW. “We’re doing very well in the export of services, particularly in the Middle East, and increasingly in China for educational services, and building and planning services,” says Haermeyer.
Tourism will continue to offer a significant contribution, particularly following the exposure gained from Melbourne hosting the Commonwealth Games, and Harcourt believes Victoria is particularly strong in professional services such as architecture, multimedia, environmental, technology and event management.
Despite the strength of Victoria’s manufacturing sector, it was revealed at last year’s National Manufacturing Summit, held in December, that Victoria’s elaborately transformed manufactures (ETMs), such as clothing, motor vehicles, machinery and paint, are in a state of decline. “That was one of the issues of concern because ETMs are what we had identified as the future of Australian manufacturing in terms of the engineering side of things,” says Haermeyer.
“As a nation I think we’ve taken the foot off the accelerator as far as innovation and R&D is concerned, and so our ETMs have fallen nationally.
“Here in Victoria we’ve tapered off and gone into a modest decline and I think we need to turn that around. This is the higher value-added end of the market we need to be operating at if we’re going to be competing in a global economy, because we can’t compete with China’s low labour costs and high volume product,” he adds.
Patricia Griffiths, international trade manager for the Victorian Employers’ Chamber of Commerce and Industry (VECCI) believes that while some industries, such as textiles and the automotive industry, may struggle in terms of exports, success comes down to business competitiveness. “Sometimes it’s hard for us in those manufacturing areas to compete with China or India, but that’s not to say we don’t have some viable manufacturers in those sectors,” she explains.
Haermeyer agrees: “We’re not going to be producing the cheap T-shirts that are on-sale at Kmart but we have a fashion industry and, although still small, it is blossoming and making its presence felt. There are enormous opportunities here in niche manufacturing, not just in TCF [textiles, clothing and footwear], but across the board.”
And despite the downbeat talk about the automotive industry, he believes in some areas it’s doing extremely well. “That’s not to say there aren’t challenges ahead, but we’re probably exporting more cars and automotive products than ever.”
Export Assistance
SMEs are making an increasing contribution to Victorian exports and Griffiths believes the assistance in place for exporters is really focused on this sector. “And I think it’s important that we do encourage those companies to start thinking more globally than what they’ve probably done in the past.”
“The challenge is to make sure we’re supporting them in terms of enabling them to really develop their ideas and commercialise them,” says Haermeyer. “Exporting is a dangerous thing if you don’t know what you’re doing, but it can be highly rewarding once you’ve broken the ground.”
The Federal government, through Austrade, and the Victorian government, through the Department of Innovation, Industry and Regional Development (DIIRD) deliver a range of programs and grants to assist Victorian businesses to start in exporting or to continue growing their export business.
The key export initiative of the Victorian government is its Opening Doors to Export plan, which commits $11 million in export programs, networks, grants, trade fairs and missions. “Most of the time these sorts of activities generate far more export income than we would imagine from the investment we make for the business to do that,” says Haermeyer.
Doug Phillips, co-director of Spotters Shades, has been manufacturing sunglasses in Victoria for 15 years. While he saw the potential in exporting, it wasn’t until six years ago that the company grew globally—when Spotters began tapping into resources offered by the Victorian government. “We realised early on that the financial investment involved and the difficulty of establishing contacts in other countries meant we needed to look for some form of assistance.”
That assistance came in late 2003, when Phillips travelled to the US and Canada with the help of a First Step Exporter grant from the Victorian government, to research the North American market, meet agents and attend a major Canadian trade show. “We were able to appoint a wholesale distributor in Canada as a result of that trip, and direct exports to the North American market have increased by over 130 percent,” he says.
In early 2004, the company received a Grow Your Business grant to develop a business development plan on export and marketing, which helped the directors identify the Middle East as a potentially successful export region.
Various organisations and industry associations, such as VECCI, assist the Victorian government to deliver its programs. A full outline of the government’s export plan, assistance programs and initiatives can be downloaded from the Business Victoria website.
Austrade’s Victoria-based office also provides a range of services to assist businesses expand internationally. SMEs may be e
ligible for assistance through Austrade’s New Exporter Development Program, which provides a wide range of services at no cost, such as export coaching through a network of 22 export advisers across Victoria.
Support for established exporters is available from the Client Services Industry Group. Representatives of four teams are located in Austrade’s Melbourne office, including food and beverage, auto and advanced manufacturing, ICT, and health, biotechnology and well-being.
SMEs may also qualify for financial assistance through Austrade’s Export Market Development Grants (EMDG) scheme. Last year, 830 Victoria-based firms received grants totalling $31.1 million, generating $810.4 million in export revenue.
Phillips continues to use the EMDG program, meeting monthly with an Austrade representative to work on Spotters’ export marketing plan. “He sets objectives for us to achieve, I outline where I’m going and what I’m doing and he does all the paperwork and maps it all out for me. At the end of the month, he checks whether I’m on track,” Phillips explains. He also has advice for other businesses: “Listen to Austrade’s advice and pursue it. It’s a huge market and it’s completely different than you would ever expect.”
The Victorian government and Austrade also have an aggressive program in place for businesses to leverage the success of the Commonwealth Games. Business Club Australia: Melbourne 2006 is the official program creating international business opportunities through the Games. It provides members with access to a series of business events in key Commonwealth countries as well as a range of online services.
Griffiths believes the success of the program will come down to how much businesses put into the exercise. “Organisations like VECCI, Austrade, and the Victorian government can put a lot of effort into trying to bring companies together. But in the end, it’s how much time and effort the businesses are prepared to put into it as well.”
According to Haermeyer, the export strategy for the Victorian government is not only to increase the state’s number of exporters, but to also increase the value and volume of its exports to $30 billion by 2010. “The world is a global marketplace and if we’re not out there going after their markets, they’ll be over here coming after ours,” he says.
Key Victorian Contacts
Victorian Department of Innovation, Industry and Regional Development (DIIRD)—www.diird.vic.gov.au
Business Victoria—www.business.vic.gov.au
Export Vic website—www.export.vic.gov.au
Victorian Business Line—phone 132 215
Victorian Small Business Commissioner—www.sbc.vic.gov.au
Victorian Employers’ Chamber of Commerce and Industry—www.vecci.org.au
Austrade—phone 132 878 or visit www.austrade.gov.au
Business Club Australia: Melbourne 2006—phone 1300 361 436 or visit www.businessclubaustralia.com.au
Port of Melbourne—www.portofmelbourne.com
