Weaker dollar puts polish on Finlayson’s 140-year timber business

IT might have been cheaper to offshore operations when the Aussie dollar soared a few years ago but these guys stood firm. Here’s why not shifting was a profitable move.

Fourth-generation timber millers Skene and Michael Finlayson have had to grapple with currency fluctuations. Pic: Claudia Baxter

FOURTH-generation timber millers Finlayson’s concedes it would have been cheaper to shift operations overseas when the dollar soared above parity to the greenback a few years back.

But with a 140-year heritage in Queensland’s timber industry, and more than 300 local workers relying on a pay check, they always resisted the urge to set up mills in low-cost Asian countries.

That loyalty to local manufacturing is now paying dividends, with the dollar’s 30 per cent slump over the past three years proving a boon for their exports of timbers used to make furniture.

Australian Industry Group (AiG) says the lower dollar means a growing number of Australian manufacturers are now considering bringing their overseas factories back home.

This so-called “reshoring” is not only being driven by a lower dollar but concerns about the lack of control over the manufacturing process at overseas factories.

Finlayson’s director Michael Finlayson said the family-owned company had looked at shifting some of its milling operations overseas, possibly to Vietnam or China.

“But at the end of the day we just could not do it,” Mr Finlayson said. “We have a loyal staff here and last year celebrated 140 years in business.”

Founded in 1875 at Brookfield, Finlayson’s now has mills in the Brisbane and Mary Valleys along with trade distribution and production centres. Finlayson’s employs 320 full time employees, 88 of whom have been with the company for more than a decade.

Mr Finlayson said the company continued exporting to the US, Japan and China even as the soaring dollar a few years ago made it less competitive in those markets.

“We could not pull out of those markets because we had invested a lot in building them up,” he said. “We just reduced the volume.”

DOLLAR DECLINE

That has changed dramatically in the last year as the Australian dollar declined. “When the dollar was above parity we would have only been sending five to 10 shipping containers overseas a month,” Mr Finlayson said. “That has now grown to 30-40 containers a month.”

Mr Finlayson said the company realised the dollar could strengthen again and was prepared for that eventuality.

“We have exported when the dollar was in the low 60s and when it was up around $1.10,” he said. “The fact that it is now around 70 cents is wonderful.”

Adina Watches general manager Grant Menzies said the company’s decision to keep its assembly works in Brisbane for the past 40 years was fortitudinous given the dollar’s slide, but was based more on the need to maintain quality.

“We were always concerned about quality if we assembled our watches overseas,” Mr Menzies said. He said the lower dollar was now helping to boost its fledgling export business.

Adina recently set up a website in the US and was looking at exporting to China. “There is a lot of interest in Australian luxury goods such as honey and wine and watches fit in nicely with that,” Mr Menzies said.

Going for Growth is a Courier-Mail series, presented in partnership with NAB, championing Australian business success stories