12 December 2017

Is Australia’s red meat processing industry at crisis point?

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Is Australia’s red meat processing industry at crisis point?

Image of cows in field for meat processing article

By Tom Chirnside, Senior Director, Growth Capital

Meat processors around the country are struggling with sky-high input costs especially in respect to energy and increase to production costs. Add the pressures of a strong Australian dollar, competition from lower cost producers overseas and flooding the market, and an unstable political environment, and you’re headed for disaster.

Abattoirs at Cobram and Gunbower in Victoria; Cootamundra, Deniliquin and Goulburn in NSW; Ipswich, Queensland; Esperance, Western Australia; and Longford, Tasmania have all become recent casualties as a result.

Admittedly, we don’t know all the ins and outs of these shut downs. After all, there’s never one simple reason why a business faces significant challenges. What we do know is that these closures have left thousands out of work in regional communities where the knock-on effects can be widespread.

There’s no question that food and meat factory owners and managers have a duty to themselves, their employees and their local communities to do everything they can to maintain a viable and productive business that benefits the community.

Unfortunately, many continue to limit their growth prospects and their future by persevering with out-dated technology and infrastructure.

The October 2017 edition of the Australian Equipment Demand Index (the Index) found that 22.4 per cent of businesses are working with out-of-date and unproductive assets. That’s double the proportion in December 2016.

If businesses know that using out-dated technology and infrastructure can have adverse effects on their operations, why are they still doing it?

Owning assets and infrastructure is costly and upgrading may seem out of reach, especially if you’re already senior debt is at capacity, but there are other ways forward: growth capital.

Currently, only a small number of businesses use alternative funds to run and grow their operations, however that proportion is on the rise as more and more people realise you can’t expect to get a different result by doing things the same old way.

The writing is on the wall. Traditional ways of funding are no longer working, alternatives are needed.

At Maia Financial, we’ve worked with other companies, including meat processing, that have been in either the same or similar situations to those you’re facing. We can show you how we’ve helped them, using alternative, flexible funding, to overcome the challenges and build stronger, more successful organisations.

What’s more, we’re local. We’re based in Melbourne and we know how businesses work in Australia. When your future growth is at stake, you need partners you can rely on.

We’re open and transparent and I’m certainly not interested in speaking to you about a financial product that isn’t going to help you or your business, that’s not how we operate.

Protect your business, your workers, your local economy, and our national reputation by ensuring your infrastructure is up to date.

Don’t get to a point where your infrastructure is beginning to impact on your overall operations to ability to be commercially relevant. Stabilise your business now so you can prosper in the future.

The only question is, when are you going to join the rest of Australian businesses and grow?

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