JMan what your saying is a common story in WA. A lot of Engineers are crying foul over the 'investment boom' in mining and gas industries. So much work in the design phase of expansion projects has gone off shore.
Do engineers working offshore/online carry the indemnity insurance that a local engineering firm would?
Yep, my way of describing it is incredibly basic and not realistic to how things actually happen, but I stand by it that is is still fundamentally correct.
an example
Product x (could be anything) Purchased direct from an overseas source Costs to you $500 landed at your door. Of that cost, lets say the freight company picking it up from the airport and delivering into your eagerly awaiting hands gets paid $50.
The total benefit to the Australian economy is $50 being circulated but $450 disappearing overseas.
Same exact same Product x purchased from an Australian shop for $700 has a $200 cost from overseas manufacturer (similar to the overseas shop). Which then has to be once landed in Aust:
Import tax
Cleared by customs
Transported ($50 same as other item for simplicity)
Middle man?
Shop
The benefit to the Australian economy is $500 which is then recirculated at each stage for various goods and services they require (hence the passing the coins around analogy).
I had my 25th wedding Anniversary with my beloved up in Broome last week where we spent around $2k all up on the hol which was distributed through a shuttle bus company, a car hire firm, 1 very nice hotel accommodation for 5 days, 5 restaurants, 1 jeweler, 2 supermarkets, 1 general store, 1 sports shop, 1 fishing shop and a petrol station. Subtract the $600 for flights, that's $1400 distributed amongst all these Australian businesses, paying wages, the restaurants buy produce which comes predominately from Australian farmers, all of which pay Tax to the Australian Gov fro the greater community. How much benifit to the Australian community would have been derived from my spending if I had gone to Bali apart from departure tax?
Unfortunately for Australia we don't really produce much apart from holes in the ground, we send iron ore out at $150p/tonne and get back as a car (or whatever) at $20k per 1.5tonne.
Tourism only brings in a small part and with the AUS$ so high it is less than before.
Our manufacturing is dieing the death of a thousand cuts Due to the high Aussie dollar and our high wages (reported on JJJ that the Bangladeshi clothing workers get $60 per month).
I work in sales for an (foreign owned Australian Manufacturing, exporting, wholesaling retailing company who actually exports to SE Asia, Japan and China finished engineering products. We get f-all support from the Gov, we are getting crucified by opposition companies who import because the high $ as well as getting beaten up again in the export market due to the high $.
Our company is also exposed to the effects internet purchasing I use an example of a quote for a small item to one of my customers who told me he could get the item for 1/20th of the price from overseas on his credit card and wanted to know why and it was solely down to customs clearance charges and documentation which a company has to do all ALL overseas purchases, which is ok if you are ordering a lot of stuff where you can amortize it over a large value but on small items it's a killer for local business.
To my mind we all have a responsibility to support the Australian economy as a whole as we are all reliant on it for our livelihood.
I also strongly believe that as a minimum everything coming in should be taxed and charged the same way as the government tax's Import duties, custom's clearances and GST. That way the playing field starts to level out some what.
If in doubt, have a look at the Australian trade deficit figures.
tradingeconomics.com/australia/balance-of-trade
A correction
My maths was wrong on the benefits of locally purchased Product x, forgot to subtract the difference between the two prices which would in theory be spent by the consumer locally which was $200 so Benefit to Aust on the transaction would be $300 circulating not $500
"value adding"
Accounting industry has pushed a lot of work offshore, with varying degrees of success. Fortunately for local accountants, no one fully understands the tax act. Least of all the tax office. Accountants working for Chennai Super Kings, struggle with our laws.
My preference is to buy local at every opportunity.
Putting up a great wall to keep the hoards out will not work. It didn't work for the Chinese Middle Kingdom.
We are a small Nation. Economics is brutal and we need our neighbours more than they need us. That said foreign capital (intellectual and financial) loves Aus because, although our rules are mind bendingly complex, they do apply to all.
It's probably no comfort to those who have lost contracts but we have two points of absolute advantage, being blue skies and fair and open government. The value adding tide will turn eventually. Why?
We will never have to suffer public servants knocking on our door, at 3am, demanding cash under threat of detention.
A couple of late thoughts and an interesting story.
most of our retailers have branched out into sup, and kite as well as the snow gear most of them were already selling. I wonder what percentage of their turnover is windsurfing gear? 25 or 30%? So if your local shop stops selling poley gear it would hurt a bit but they would probably survive. I don't know if our sport would survive without local supply however. Who needs who more?
As for mining in aus at the moment, I'm not sure about Qld and WA but the hunter valley coal industry is on life support at the moment. Some pits are cutting seams below the minimum height of the longwall just to get some coal out of the ground. We currently have no further orders for longwalls for the first time in 12 years.
Now for that interesting story. We've all seen the stampede of corporations to china to cash in on the chinese manufacturing boom, here's a case of one of them getting a little to greedy and getting burnt big time. It was the company I work for, they are a massive American company that does earthmoving and recently mining equipment. I'm not saying who. This company bought an emerging chinese longwall manufacturer. To break into the chinese market, they told us. B.S. we said, to send all our work overseas more like it. Anyway, the chinese company overstated it's assets and value and the American company got burned to the tune of five hundred and eighty million dollars. It was a cockup of biblical proportions and heads rolled at the very highest levels. We lol'd. but don't feel to bad for them, they still posted a profit of 5.6 billion last year.
