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Manufacturing Leaving Australia?
Power outages and price increases a factor
It’s winter in Australia and unfortunately it looks like power outages and unusually cold weather are making things tough. The electricity shortages are also affecting Australian manufacturing.
While there is no exodus, there are at least a few companies that are considering moving their production overseas.
Two industry leaders that seem serious about this are Brickworks and Boral. The first is the largest brickmaker in the country and the second manufactures materials for the construction industry.
Santos is an Australian energy company that provides gas to Brickworks. Santos is currently under contract to provide the brickmaker with gas priced at A$10 per gigajoule. However, once the contract expires, if currently inflationary trends continue, the price will go up. Currently, market rates are at A$40 per gigajoule.
Brickworks’ American plants only pay US$3 per gigajoule, which is about A$7.
If the Australian rates don’t go down by the time Brickworks needs to renew its contracts, then the company would have no choice but to shut down its Australian plants and move production overseas, according to managing director Lindsay Partridge.
