FEDERAL Opposition Leader Tony Abbott (pictured) has visited a drilling and earthmoving equipment manufacturer in Yatala as part of his national anti-carbon tax tour.
Abbott used the visit to Digga Australia to reiterate the Coalition’s opposition to the Gillard Government’s proposed carbon tax.
“The carbon tax is going to make it very difficult for a business like this to continue in its current form. If we want manufacturing like this to continue, we’ve got to drop the tax,” he says.
“If the carbon tax goes ahead, this kind of equipment won’t be manufactured here – it will be manufactured in China under worse environmental conditions and with much greater emissions.”
Abbott says the negative effect of mining companies luring factory workers into high-paying jobs is partly offset by the higher demand for engineering parts.
“People can go and drive a truck for $120,000 plus in the mining industry – and it’s very hard to earn anything like that in standard manufacturing operations,” he says.
“On the other hand, there is a lot of manufacturing in this country, which is riding on the back of the mining industry. I’ve seen quite a lot of sophisticated manufacturing because of the market the mining industry is providing.”
Digga CEO Suzie Wright says revenue and profit has dropped in the past three years. The company acquired Universal Augers Australia (UAA) in mid-2010 and the Kanga brand in 2009 for an undisclosed amount.
“Our profit has dropped by 45 per cent in the last three years. Revenue decreased from $46 million to $38 million since 2010,” she says.
Wright says the high Australian dollar has contributed to the race to source cheaper parts from overseas.
“Heat treatment and laser-cutting use huge amounts of energy. If power prices rise, components will become too expensive to make,” she says.
“Ideally we want manufacturing to happen here; I want my kids to have a future here, but the way it seems we’re all going to be importers.”
Digga is currently buying castings and engines from abroad due to labour costs involved with local manufacturing and the lack of Australian-made parts.
The company views 2012 as one of consolidation.
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