The push for regional industry

When the current federal government assumed power, it countered the coalition’s Modern Manufacturing Strategy with a $15 billion National Reconstruction Fund (NRF), the Regional Precincts and Partnerships and $135.5 million Supporting Australian Industry programs, all with the goal to stimulate local industry and regional economic growth.

In his article for Food & Drink Business late last year, federal industry minister Ed Husic said, “The Albanese Government fully understands the value of the food and beverage sector, its importance to regional communities and the challenges it is facing. We want to work closely with the sector to ensure it meets its challenges, remains healthy and continues to grow.”

And it didn’t waste time, announcing more than $30 million for three food manufacturing projects in regional areas in its first budget, including $17.1 million for a pilot Food Manufacturing Innovation Hub on the Central Coast of New South Wales.

Figures provided by the federal department of Industry, Science, and Resources show Australia’s food and beverage manufacturing sector employs around 233,000 people, making it the largest manufacturing employer, representing 27 per cent of all manufacturing jobs. It contributed roughly $29 billion to the FY22 economy.

Regional areas account for 40.2 per cent of the sector’s output. Small and medium-sized enterprises dominate the sector, with 99 per cent of businesses employing less than 200 people.

But grants and words only go so far in making a regional centre more viable that the outskirts of a capital city.

Regional precinct push

In March last year, the NFF launched its $1.4 billion Regional Development Precincts project. The proposal identified 20 regional centres suitable for plans to encourage more businesses to relocate from metropolitan centres.

NFF president Fiona Simson said it wasn’t about turning regional towns into metropolitan city replicas.

“The goal is for Australians and Australian business to be no more than 90 minutes from the services they need to thrive personally and financially, and that businesses have access to infrastructure that can get people and goods around the country and around the world,” she says.

“The Special Activation Precincts program in New South Wales is a great example of this. The challenge is connecting state programs up with federal funding – rather than each tier of government choosing different priorities,” she says. 

Simson says the federal Regional Precincts and Partnerships Program takes the place-based model advocated by NFF, but needs “significantly more investment to be transformational”.

Andrew Leakey is the managing director of Mars Wrigley, part of the Mars company, and based in Ballarat, Victoria. He is a passionate advocate for regional business.

He says the idea of precincts like the NFF proposal or hubs like the pilot Central Coast project and Turbine precinct under construction on Queensland’s Sunshine Coast, can reduce costs, increase efficiencies, and reduce impact on the environment.

“There’s a huge amount of people that are working in those areas that are working in isolation. If we can bring them together and make sure the infrastructure is there to support it, then absolutely. It’s getting harder for individuals to stand alone, so looking at how you can level the playing field on non-competitive costs makes sense,” Leakey says.

The chair of Bega, Barry Irvin, grew up in the Bega Valley on the New South Wales South Coast and his family history there goes back more than 100 years. He returned to the town and to Bega in the early 1990s, becoming chair in 2000.

Irvin says collaboration comes naturally for regional businesses, citing Bega’s involvment in a 10-year project to accelerate circularity in the Bega Valley Shire as an example.

Irvin says, “I tend to talk a lot about the fact that we are really happy to be collaborative and I have always thought big brothers and big sisters were important as you’re trying to grow. Having the attitude that knowledge comes from everywhere is always something we’ve carried in our culture.

“But I really observe it when we try and initiate something like the circularity project, because we’re happy to share our knowledge and even happier to share our resources. You see, in the end, all that knowledge, capability, innovation, thought, and problem solving coming back to you way quicker than if you were trying to do it alone.

“I would argue that when you talk about regions and regional development with companies that have regional origins, if they have maintained their culture and their history, they tend to be more communal and more collaborative because they have had to do a lot of things for themselves.”

Stability and skills

SPC is based in Shepparton, Victoria, in a region known as the Goulburn Valley. It has been there for more than 100 years and three and a half years ago returned to private ownership.

The company has an integral connection to the farmers that supply fruit and tomatoes to the canning business, weathering the climactic disasters with them, and being their voice in the corridors of government where they might otherwise be drowned out.

The farms and produce are obviously critical to operations, but there is more to SPC and that’s where CEO Robert Giles talks plainly.

“We need people. Supporting regional food manufacturers means bringing back the processing skills that have moved offshore in the last decade or more,” he says.

“We saw in the pandemic that we needed companies that could produce processed foods. You only have to think of what’s happening with the recent flooding; people running to get canned fruit, baked beans, and tomatoes because fresh food gets cut off first, and then the frozen. Shelf stable products are the last ones standing and we need it to be available.”

With Bega’s population around 5500, Irvin says having a scaled business is valuable.

“The issue for me, as someone who grew up in the region, was that if you wanted a career outside the traditional agricultural sphere, you either joined a government department or a bank, because you knew you would ultimately be transferred somewhere else.

“There was very little opportunity to live in the region and develop a career without having to go somewhere else.

“As we’ve grown the company, it is lovely to see young people joining, some straight out of high school, after their degree or other study. They join us and enjoy the opportunity to pursue a career, whether it is administrative, in automation or robotics, engineering or sales, in their home region. Or indeed, they’ve moved to a region to pursue that.

“There’s nothing wrong with wanting to move away, but it is also nice for there to be options for those who are ambitious but would prefer to pursue their career closer to home. That’s the value of a scaled business in the country,” Irvin says.

Leakey says regional employment shouldn’t all be left to governments to solve.

“If you run a business and you’re heavily involved in your local community, then you need to be proactive and face into that as much as you look to the government,” he says.

“We don’t just need fruit pickers in regional parts of the country. We need technologists, we need people across the science tech type environment and engineering. The days of it appearing easy to make a Mars Bar are gone, I can assure you it is a highly technical process.

“I’m an engineer by background and when I go into the factory now, I’m blown away by the level of technology an operator on the line has to interact with every day.”

Mars Wrigley associates (Mars calls employees ‘associates’) are heavily involved in courses being run by Federation University and the local TAFEs. It has restarted its graduate program and is looking at skilled migration to fill roles quickly.

Leakey questions how a traditional apprenticeship model could be revived and attract people to regional areas to complete them.

“There has to be a hook for employers to take someone on, invest in this person, and accept they may not stay at the end. It was quite traditional for engineering fields but hasn’t been fully explored with STEM industries,” Leakey says.

Giles says SPC has forged close ties with GOTAFE, the largest vocational education provider in regional Victoria, and universities.

All in the location

Irvin says, “If we think about manufacturing in the regions, you build the infrastructure near the resource.

“I don’t feel there’s that many limitations for companies, but there is no question on the fact, appropriate infrastructure that makes it make sense is the key. For us that meant if we are making cheese, we need to be near the cows.”

Irvin adds it is then about taking one step further than the core commodity.

“It’s thinking about developing the infrastructure that would allow the value add to occur regionally and then thinking about how that product can be efficiently transported to its end consumer wherever they might be,” he says

Giles says SPC has a “symbiotic relationship” with growers, and that some producers grow solely for SPC.

“Being located close to farmers is also a major factor for the company. We have worked hard to restore the relationship with farmers since SPC returned to private ownership. We have worked to rebuild trust,” he says.

The proximity also means when there is a crisis for farmers – there were three major weather events last year – SPC can support them with its voice to the government.

But there is also its presence in the community.

“Supporting the community is one of our core values, which reflects how iconic the company is in the region.

“It doesn’t matter who I speak to, they all have an SPC story. It is amazing how many people I come across who have an SPC connection,” Giles says.

Leakey echoes this sentiment.

“McCains is the other big manufacturer in Ballarat and the two of us are heavily involved in the community, whether it’s footy clubs or the City of Ballarat. We have a real focus on where our associates live and work, and what is needed to make it an attractive and viable place to live.”

Regional food and beverage manufacturing is in the spotlight. There are grants for assistance and existing companies willing the share their knowledge. It might be time to head east, west, north, or south. 

This article first appeared in the February-March 2023 edition of Food & Drink Business magazine.