Themes of 2013

A couple of stories setting the tone into 2014.  First to the layoffs at tinned fruit company SPC, killed by the high Aussie dollar and competition from China - much like the rest of Australia's non-resources economy, but also involving inefficient workplaces, stifling regulation and political interference:

FEDERAL cabinet has demanded new assurances from Coca-Cola Amatil to justify taxpayer aid for its fruit processing division in another sign of Tony Abbott's hard line on industry assistance.... 

....Cabinet remains broadly reluctant to give the company the cash it seeks and there is "no sense of urgency" to completing the deal, The Australian was told after yesterday revealing the deep concerns about the company's request for public funds (here)

....

...Over the next three years, Simplot will revamp Devonport and upgrade Echuca so that both plants are also efficient. Simplot managers and workers must also adopt the most flexible practices to make this work....So why wouldn't Coles and Woolworths do this for SPC? The simple problem is that the management and workers at SPC are not up to it, and their management and work practices belong to a totally different era. Worse still, SPC makes canned fruit, which consumers no longer want.

A substantial investment is therefore required in a new plant to package fruit in the way supermarket customers want to buy it....The government has appointed some excellent people to look at the SPC problem, but the panel includes Greg Combet. While the deep-seated problems at SPC are not Combet's fault, he played a role in the ALP industrial relations legislation that compounded SPC's problems. (here)

The other news item for which there may be more happening is the overvalued Aussie banks and the question of how much they will need in reserves going forward.  This week, suggesting likely future difficulties, the regulator APRA required the banks to increase their capital reserves.  This was mostly to do with implementation of Basel Committee on Banking Supervision requirements and may not be enough in the event of a sharp downturn:

"It'll be a relief," said Ric Spooner, a Sydney-based trader at broker CMC Markets. "And the actual buffer increase was probably at the lower end of expectations."(here)

Everything is not alright - Australian businesses

So the Chinese economic miracle has come to Australia?  In the form of the mining boom and... the real economy bust... or was that fair competition:

STRUGGLING Australian fruit processor SPC Ardmona has urgently appealed to the Coalition government to give it $25 million promised by Kevin Rudd four weeks ago or risk watching the company go broke. 

SPCA chief executive Peter Kelly said that it was already "five minutes to midnight" and that the Shepparton-based business, despite being owned by giant Coca-Cola Amatil, could not keep going much longer. 

He said SPC, as one of the largest food processing businesses in Australia, had a much brighter future than the moribund Australian car industry and needed much less government assistance. But Mr Kelly bluntly warned yesterday that time was running out. 

"The pain is wearing thin; if this business wasn't owned by CCA we would be shut already," a defiant Mr Kelly said.
"Without ($25m from government) we are in trouble; and that's not just a problem for SPC but for our people, the town, the region and the nation."(here)

One interesting point from the article is the political aspect - who survives depends on who has political connections.  An interesting game indeed!