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Mitchell Shire Council Response to Inquiry Into Manufacturing Page No 1

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Mitchell Shire Council Response to Inquiry Into Manufacturing Page No 1 RESPONSE TO INQUIRY INTO MANUFACTURING IN VICTORIA Economic Development and Infrastructure Committee Introduction As reported currently and based on ABN registrations, the Mitchell Shire is home to approximately 240 manufacturing businesses. This has grown from 184 in 2001. In addition, the numbers of our resident workers employed in manufacturing also continues to grow. (See Table 1) The main manufacturing industries include food manufacturing, paper and paper products manufacturing, machinery and equipment manufacturing. Table 1 Manufacturing and employee growth in Mitchell 1991 - 2006 Year Number of No. residents % change from manufacturing employed in previous businesses manufacturing census or period 1991 N/A 1476 N/A 1996 N/A 1588 8 2001 184 1822 15 2006 200 (est) 1917 6 2009 240 Over 2000 5 (est) (est) Source: ABS Census and Australian Business Register counts So Mitchell Shire is growing in importance as a location for manufacturing business but also as an employer of our residents and a home for manufacturing employees. Council is recognising this development by creating new structure plans for its growing areas at the south of the Shire, incorporating new zones for manufacturing (Industrial 1 and 3). A growing number of residents also now choose to live in Mitchell and travel to the larger manufacturing areas to the south of the municipality for work. As this area expands in population (see Figure 1) Council is mindful that more residents will want to work as close as possible to home. Hence manufacturing is viewed as an important element of this local economy in future. Mitchell Shire Council response to Inquiry into manufacturing Page No 1 . Figure 1 Population and projections – Mitchell Shire Regional context and recent research Mitchell Shire abuts the northern Melbourne metropolitan area along the rapidly growing Hume Corridor. It is currently Victoria’s fourth fastest growing regional municipality. (See Figure 2 and Figure 3) The Shire is essentially split into two distinct economic zones. Mitchell’s southern major townships (Beveridge, Wallan and Kilmore), are increasingly urban in nature and this strong residential growth is predicted to continue. The completion of the Craigieburn Bypass has enhanced access to Melbourne, increasing its potential for on- going growth. To the north, the shire comprises a stable agriculturally based population (Seymour and Tallarook). The township of Seymour is the largest of the five main townships within the Shire, with a population of approximately 6,500 people. However, it is predicted that Seymour will be overtaken by Wallan in the south of the Shire within the next few years As outlined above, in order to prepare for this growth Mitchell Council has embarked on structure planning exercises for Kilmore, Wallan and Wandong in the Shire’s south. Mitchell Shire Council response to Inquiry into manufacturing Page No 2 Figure 2 Mitchell Shire location Figure 3 Mitchell Shire - regional context Mitchell Shire Council response to Inquiry into manufacturing Page No 3 In a 2006 report commissioned by Council to assess future demand in the Shire for industrial land the researchers found that in relation to the industrial sector:1 Future opportunities are supported by: Excellent transport linkages and infrastructure Population and labour force growth in the southern parts of the Shire Existence of established industrial locations in Seymour, Kilmore and Broadford Skilled labour force Access to primary products such as timber, beef, wool, etc Future growth opportunities include: Growth in service industry based on population growth and housing construction Transport and distribution industries Value adding to agricultural sector Attraction of large industries – providing appropriate sites are available Further, this report states: There are significant opportunities in Mitchell for both industrial and commercial sectors associated with strong population and labour force growth, its location along the Hume Highway, as well as its proximity to primary produce markets and metropolitan Melbourne. However, for these opportunities to be realised there has to be a suitable supply of appropriately zoned land which is serviced, affordable and available. Since this report was finalised in 2006 there have been additional developments which puts this statement into perspective. These include: • Outer Metropolitan Ring Road has been designated by government • Melbourne Markets move to Epping announced • The Urban Growth Boundary has been extended • The Intermodal Freight Terminal has been proposed at Beveridge in the Shire’s south. These developments will ensure demand for industrial land and growth in manufacturing industry in the region will continue to grow. 1 Industrial and Commercial Land Demand and Supply Assessment, Mitchell Shire, Essential Economics 2006 Mitchell Shire Council response to Inquiry into manufacturing Page No 4 RESPONSE 1. Explore the necessary criteria used by businesses to transfer offshore manufacturing to Victoria. In our experience manufacturing businesses usually locate to a region based on comparative advantage either natural, offered or created in that region. Also clustering of like industries in a region appears to be another factor in locational decisions by “footloose” manufacturing industry. Global manufacturing industry seeks those regions that provide these advantages so that strategic location advantages are leveraged and maximised. Much research supports these claims and anecdotal experience in Mitchell Shire and surrounding municipalities reflects this as well. Manufacturing business locational decisions are based on a variety of criteria. These include; • Cost effective transport connections • Serviced land availability and price • Access to markets • Access to services • Availability of labour • Availability of raw materials and other factors of production eg power • Local support (eg government both state and local) Evidence suggests the first two of these criteria are the most important in decision making overall but the other factors all combine to provide the decision matrix. Each manufacturing business will place a different emphasis or weighting on these factors and governments need to be aware of this when negotiating site requirements. For example Council recently had an enquiry from a manufacturing business requiring larger than normal amounts of water and power. This criteria was possibly the number one for that particular business but all the others remained important. Many manufacturing businesses have also established in Mitchell so as to be close to their markets and other manufacturers. Neighbouring big manufacturing businesses such as Nestlé, Ford, CSL, Honda, Lanes and Fairfax (Hume City) all provide opportunity for suppliers that can produce specialised manufacturing inputs at cost effective prices close to their business. 2. Identify and report on the factors which influence businesses in determining whether to manufacture in Australia or overseas including the consideration of: a. the retention of intellectual property rights b. maintaining consistent quality standards in line with both federal and state laws; c. probity matters; d. assistance and incentives provided by governments; and Mitchell Shire Council response to Inquiry into manufacturing Page No 5 e. the impact that the global deterioration in economic conditions in recent months will have on future decisions regarding manufacturing locations. Our experience suggests these factors only have a minor impact overall on decisions regarding location to establish manufacturing business. There may be circumstances when these factors are important but in the majority of cases and as outlined above, larger manufacturing businesses locate to Mitchell (and other regions ) based on transport access, availability of competitively priced and well serviced land, availability of factors of production such as raw materials (eg Ralphs Abattoirs in Seymour), labour, utility costs and the like. Most of the standards and rights issues are expected to be well managed in advanced industrial economies such as Australia. Governments of course can influence decisions by offering incentives to overcome some of the locational advantages (or disadvantages) as outlined above and Council supports state and federal governments in doing so when strong strategic reasoning is applied for this use of public funds. If strategic reasoning is not provided the public quite rightly should question this spending. In a local government context support is provided to manufacturers by way of strategic advice and at times “fast tracked assistance” through approvals processes where employment outcomes benefit a municipality. Mitchell is no different to most regional municipalities in this regard. Large employers will usually have priority over smaller ones. Marketing of a region also often focuses on housing stock quality, services and facilities (eg private schools) offered to managers and employees that may be re- locating to the region. Some research suggests locational decisions are based on these factors as well.2 In regard the economic downturn this is viewed as a business cycle event that will not impact the Shire of Mitchell in the longer term. Conclusions: Those regions that provide all the above factors will continue to attract global manufacturing businesses to their municipalities. With the two major factors being transport and quality affordable industrial land. Mitchell Shire Council requests or recommends that state government continues to support its efforts to structure plan effectively its growing townships at the south of the municipality and continues to fund and promote effective transport connections such as the Outer Metropolitan Ring Road. These developments along with the other initiatives outlined above will continue to attract manufacturing business to the region and provide for well balanced and thriving regional economies and communities. 2 The State of the Regions (SOR) Report NIEIR Mitchell Shire Council response to Inquiry into manufacturing Page No 6 .
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