Five Things Every Australian Manufacturer Should Know

By Rebecca Hegarty

‘It was the best of times, it was the worst of times’ – this iconic opening to Charles Dickens’ A Tales of Two Cities, resonates even more poignantly for Australian manufacturers in the ‘Age of COVID-19’. The current climate has both tested manufacturers and forced manufacturers to become resilient, creative and forward thinking. This is particularly so, given any inevitable reduction in Government stimulus packages and assistance. So, whether you are an established manufacturer or a fledging one, what are five key things every manufacturer should know?

  1. Research and Innovation – There are grants and project funding available to encourage innovation, research and development in the products manufacturers supply and their manufacturing processes. The key is to find the right one for you and your stage of development. It is also imperative to watch for deadlines of when applications close as it takes a bit of thought to make an application. So regularly keep an eye on Government websites dealing with grants and funding, as only a small proportion of manufacturers are aware of this valuable source of support. A useful website is: business.gov.au/grants-and-programs
  2. The Personal Property Securities Act 2009 (Cth) (PPSA) – if you supply goods under retention of title terms, you also have the ability to protect your position as a creditor until you are paid for your goods. Businesses still struggle to understand how the PPSA works and how to register on the PPS Register. The real time at which you may appreciate the value of using the PPSA is when a customer becomes insolvent or when that customer provides security on the goods you have just supplied to another creditor or financier. However by that stage it may be too late. With the PPSA, it’s all about priority – so it’s important to have an understanding of the PPSA and how it can work for you.
  3. Cash is King – Are you using cashflow forecasts in your business? Forecasting is important to manage what may be on the horizon. Equally as important is managing your receivables because cash is the lifeblood of your business.  Focus on what aspects of your manufacturing business brings in the most cash and consider other products you may be able to manufacture that may provide a new cashflow source.  Consider your major expenses and whether all of these are necessary. It is also important to stay close to your key stakeholders, whether they are your bankers, suppliers or customers.
  4. It’s all in the fine print Do your contractual terms provide you with sufficient protection and flexibility against liability and the ups and downs of delays caused by COVID-19? Have you had to use your ‘force majeure clause’ at any stage, and more importantly, do you even have one in your contract? If you have not reviewed your terms and conditions or contracts generally, you should do so without delay.
  5. Manufacturers Liability- what’s my potential exposure? – As a manufacturer, understanding your potential liability for the products you supply is important. Product liability arises under the common law and statute. Someone who has suffered loss and damage or suffered injury from a product you manufactured may bring a claim against you as the manufacturer. This could be a negligence claim, a claim under contract or under the Competition & Consumer Act 2010 and its Schedule 2, the Australian Consumer Law. Even if you import products, and the overseas manufacturer has no presence in Australia, you may be deemed to be the manufacturer for the purpose of liability. Further, a consumer may make a claim for a defective product against you as the manufacturer even though they did not directly purchase the product from you. How you deal with product safety issues, complaints and claims is important, including how you document any issues arising. Have you considered appropriate training for your staff on this issue? It is an important area to understand.

 The Best Laid Plans

 Running a successful manufacturing business generally, and in challenging times, depends on knowledge of what assistance is on offer, planning in advance, having robust policies and procedures in place and being able to demonstrate implementation of those plans in a practical sense.  Equally important is to surround yourself with the right people (staff, consultants, advisers) to help you navigate the key areas of your business.

Rebecca Hegarty is on the Board of the Cumberland Business Chamber and is a Principal Lawyer at Coleman Greig Lawyers.