Mattress maker Koala heads for China despite budget focus

The company, which markets itself as an ethical and sustainable bedding alternative, will shift production offshore.

Koala founders Danny Milham and Mitch Taylor.

Furniture retailer Koala, a major local success story now valued at about $500m, will move production of mattresses to China despite manufacturing becoming a focus in last week’s federal budget.

The company, which targets younger consumers through social media campaigns as an ethical and sustainable bedding alternative, confirmed it would “consolidate manufacturing in more strategically supportive locations” and “cease production of mattresses in Australia”.

Industry Minister Karen Andrews on Sunday urged consumers to buy locally made products to support local jobs after the COVID-19 pandemic, and said there were other mattress brands which manufactured in Australia.

“We have seen through COVID-19 a huge groundswell in support for Australian made products, with many businesses looking to capitalise on that interest from consumers,” Ms Andrews said. “It’s ultimately up to consumers to decide what they purchase and I’d encourage those who want to buy Australian made like me, to do their research to ensure they’re supporting Aussie jobs.

Danny Milham and his brand mascot outside a Koala store.

Koala, which has expanded since being founded in 2015 from mattresses to products including bed bases and lounges, deregistered itself from using the Australian Made trademark last year.

“The decision to cease production of mattresses in Australia will provide significant innovation and quality improvements to help drive our continued growth across Asia-Pacific,” a company spokeswoman said. “We use a combination of offshore and onshore manufacturing for a number of the products in our range.”

Koala, which counts among investors Australia cricketer Steve Smith, said it would continue to design products locally and its most recent expansion would create 120 jobs by the end of 2021.

But Labor’s employment spokesman Brendan O’Connor said the government was still not doing enough to keep manufacturing from leaving the country.

“After seven years of neglect, it has taken a global pandemic for the Morrison government to start talking about Australian manufacturing,” Mr O’Connor said.

“The damage has already been done and companies are struggling to stay operating in Australia as is the case with Koala.”

Harvey Norman executive chairman Gerry Harvey says the move goes against Koala’s locally made image implied by its name. Picture: Luke Marsden

Of the company’s 13 products, 11 are manufactured overseas. Nine of those are made in China, while two others in Europe.

The decision to move mattress manufacturing overseas leaves just one product — a work-from-home desk — as the sole item the company makes in Australia.

Harvey Norman executive chairman Gerry Harvey on Sunday criticised Koala’s move, and said the company’s name implied the product was made locally.

“The marketing is dishonest … they are pretending they are Australian,” Mr Harvey said.

Mr Harvey said his store predominantly sold made-in-Australia bedding, supporting local companies such as Sealy, SleepMaker and AH Beard.

Australian Made chief executive Ben Lazzaro said “the ‘made in Australia’ claim has never been more powerful than right now”.

“It tells consumers that the products that carry the claim are made to some of the highest manufacturing and safety standards in the world, with inputs often sourced from Australia’s clean green environment,” he said.

“It also makes a compelling statement about generating local jobs and economic activity.”