Posted on 09/09/2015 11:37:35 AM PDT by thackney
Ride-on lawn mower manufacturer Cox Industries might only employ 60 people today from 160 a decade ago, and has suffered three break-even years because it hasn’t rained enough, but co-owner Ken McColl says the Australian economy still can’t afford businesses like his to disappear.
“We have 400 separate suppliers, almost all of them local small businesses,” McColl tells BRW from Cox’s 20,000 sqm factory headquarters at Acacia Ridge, Queensland.
“From the makers of a specialist washer, to the electricians and plumbers and maintenance people here at the factory. I’m not even counting our bank, insurer or sandwich shop around the corner. People need to think about that when they’re comparing a Cox mower to an import.”
Founded in 1954 by inventor Owen Cox, the mower brand might have “cleared half of Australia” but it’s outsold here now by American-made imports, with John Deere, Husqvarna and MTD considered by McColl his three main competitors.
“We’re at a disadvantage of scale. They’re all mass-produced where a solid year for us is selling 5000 units,” says McColl.
However retaining manufacturing in Australia allows Cox, whose 20-odd models are each updated every five years, to test and build to local conditions.
“We’re going to be $500 to $800 more expensive than an import of comparable size and horsepower, so someone moving on to their lifestyle acreage for the first time might not look at us,” McColl says.
“What we rely on is them coming back to the dealer two years later, realising they need something that can cut those tough native grasses, that isn’t worried by rocks and stones and tree stumps, and will last forever. Our spare parts business still gets calls from people wanting replacement parts for our 1970s models.”
That Cox is still vaguely competitive on price is down to a decision by McColl in 2005 to invest in robotics.
“We used to have 60 manual welders in here, blokes with the mask on and the welding torch. Today we’ve got one, who welds on our experimental stuff and does odd jobs.”
The reason is that McColl progressively imported three robotic welders, costing around $150,000 each.
“There’s added costs like the jig, where you assemble all the component parts for the robot to come along and weld. One where we do chassies might be $60,000. But on our roboticised applications we now need one person for every nine that we used to, so they paid for themselves very quickly.”
Rapid prototyping enabled by the latest CAD machines and 3D printers at Cox’s engineering department have also boosted efficiency.
Another factor that’s brightened the outlook for Cox, which turned over $15 million in 2014/15, is the Australian dollar’s rapid fall.
“No engines get made in Australia, so we have to import Briggs & Strattons from the US and $1.10 was good for that. But what 70 cents does to our competition’s retail price helps us a lot more,” McColl says.
That’s because even a structurally lower currency is unlikely to turn Cox into an exporter.
“You can only fit 12 mowers into a shipping container, and to get that to the northern hemisphere out of an Australian port you’re looking at $2000-$3000,” he says.
“Proportionally it’s a huge cost. The importers seem to be able to do it a lot more efficiently in to an Australian port, of course.”
Another cause for optimism is increased rainfall across Australia, after three relatively dry seasons. McColl reports ride-on mower sales always spike after extended periods of rainfall, and the company’s marketing trumpets its mowers’ ability to “cut long wet grass at a single pass”.
>> “someone moving on to their lifestyle acreage”
They have that in Australia too, I see.
When my company bid on an Australian navy specification it stated explicitly that we could not use Australian flagged merchant ships, Australian owned transport and we’d have to price bringing technicians and personnel to unpack, test and install. We protested that the latter would add huge costs. The reason, it turned out, was the Australian navy was so plagued with labor issues that they didn’t want any Australian anybody involved until the navy took ownership. I’d imagine they’re like England before Margaret Thatcher broke the unions.
Minimum wage in Australia is $640 a week.
That trend has been reducing China's labor cost advantage, making it more profitable to have an automated factory here than a coolie factory in China.
The average salary of an experienced welder is about $60,000 a year.
Multiply $60,000 by 60 and you have : $3.6 Million a year in wages.
Three $150,000 robots is just $450,000 !!
Of course you have to consider parts and maintenance. But when balanced against payroll taxes, medical and sick leave benefits, there really is no contest.
I am of course, assuming that the $150,000 price per robot is accurate.
As long as the commissars here don't tax more than the commissars in China.
That and regulation still a big determinant.
Continue to put people out of work for automation and pretty soon nobody has a job to buy your crap. Hmm.... Not everyone can write software or be a doctor.
I could use a little bit of that myself.
Yes but I hope robots put illegals out of work first.
Not everyone can write software or be a doctor, which is why those positions can demand higher than average pay. But automation does not necessarily create unemployment. Wage laws and regulations that price labor out of the market are what create unemployment.
There is literally no end to the things people want done, the issue is always - at what price?
Many decades in that claim have shown to be false. We don't stop working, we go on to more productive work.
Won’t happen. American lives don’t matter.
So how are you going to stop it?
Yeah today because robots are rudimentary compared to where they will be in 10-20 years and then will put 80% of the workforce out of business. Once they become truly bipedal or mobile with some AI they will replace most of everyone.
The problem comes when the skill level it takes just to have a job keeps rising. What are you going to do with all of those, who frankly won’t be qualified to do much more than basic manual labor?
10-20 years? all the Senators voted for the Corker bill so then Iran will be able to nuke the USA into a glass parking lot, We have 5 years max.
Look for the union label? ;/
I try my best to buy American I guess we need to get labels stating robot made?
Unemployment numbers withstanding, right?
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