Default to China a manufacturing misconception

Sevaan Group, a company proving it is possible to prosper and expand by focusing investment on local industry positives rather than the inherent risks in outsourcing to China, is not so much taking a heavy stand against the circumstances but merely being successful right in the middle of this so-called 'China misconception'.

CEO of the company Tony Panrucker asks Australian manufacturers and clients of manufacturers to consider one simple question: "What are the benefits really of sourcing manufacture in China?"

"The inherent risks are so profound it is somewhat confusing why so many companies in Australia blindly accept outsourcing to Chinese manufacturers as some sort of destiny - almost as a default culture.

"Under the circumstances, the term 'culture' is somewhat of a misnomer. What we are really dealing with is a blindly habitual belief that China is the only way to go because dealing with Australian design and engineering companies is way too expensive," he said.

Locally manufactured components offer cost and time advantages to the mining sector.

"But in reality, how many of us have really looked around locally to find a suitable solution? The answer to this is probably 'very very few'; but the ones that have found the right supplier domestically can attest to the various details which actually make China an unattractive risk for the manufacturing supply chain."

Panrucker says that when companies are dealing with orders from China that involve bulk supply, what in effect is happening is that the Australian client is absorbing weeks of lead time even on a perfect run. And then when problems arise it could actually add months to the order and damage an entire supply chain and contractual arrangement.

"With a little bit of strategic thought and proper business analysis, in almost all cases orders can be facilitated locally," he maintains. "Even though the unit price might be a little bit higher, speed of delivery is incomparable, standards to which we manufacture are far superior and constant, and the potential for delay in delivery is almost non-existent."

Panrucker believes that while China is making many gains in quality standards, it still has a way to go to be comparable in quality to local manufacturing.

"Plus, the journey orders have to make by road and sea add time and complexity to an order - yet strangely, very few quantify these risks in advance, which is exactly what they should be doing to accurately understand that true cost of their outsourced orders," he said.

In the last two years, Sevaan Group has managed to bring back to Australia various orders which had been outsourced to China by many of our industries including mining and construction, railways, public works, the defence industry and general engineering.

Sevaan Group has expanded nationally and internationally with clever high-tech engineering equipment on its production floor, expert personnel and the recent establishment of its own grit blasting plant and upgraded powder-coating facility in Sydney.

Its board of directors are longstanding and experienced personnel from private industry in manufacturing.