Australian institutions are losing confidence in the ability of chief executives and boards to deliver returns on expansion and modernisation programs. The institutions want their money back via dividends and buybacks.
This is a suicidal and short-term strategy which is against the interests of long-term superannuation members. But I can sympathise with the institutions. Instead of being visionaries, Australian chief executives are starting to become a race of moaners rather than adapters. We are looking at Canberra to solve our problems and unfortunately that’s not going to happen.
Obviously the dollar is a problem. I suspect it will fall, which will help some companies and hit others. But I suspect that the moaners will not change their habits.
If you hold shares in a company that is moaning all the time then maybe you need to sell because it will affect returns. And if you are employed by such a company then you should leave, if, of course, you can find another job.
Right now retailers are being differentiated by those who are taking action to adapt and those that are still moaning. Woolworths achieved its success because it introduced what were world best retail practices. Coles, two or three decades later, is doing the same thing, although the practices are different.
Other retailers, albeit outside supermarkets, are waking up that they must adapt. It's not just cost cutting but looking at the whole business model. The process is not easy and I understand why CEOs moan.
Manufacturing is exactly the same. As in retailing every situation is different. I am going to show what must be done with a story that should inspire the nation.
This was a manufacturing company that had every reason to moan. The high dollar was affecting its exports and the Chinese had copied its products and were undercutting Australian prices in Asia and Africa. The position looked absolutely hopeless.
But instead of moaning, Codan took action and showed that Australian technology and know how (plus Malaysian manufacturing) completely undercut the Chinese, who are now seeking to buy from Australia. Jackson Hewett describes the inspiring story of the Adelaide based Codan in the video above.
You may say that’s not Australian manufacturing because they went to Malaysia. Yes they did – but Codan kept the key value generation right here in Australia.
Australia is full if these stories and they extend from manufacturing to services. The Australian public hospital that has reduced costs and improved services is another example of what is ahead if you stop moaning and get on with the job (Giving health a tech check-up, May 10).
If we can get other hospitals, both public and private, to think about the best ways of doing things our state and federal government budgets will be transformed and customer service will be vastly improved.
We don’t have to send all the activities to the US, India and/or China, as some of the lazy moaning CEOs want to do.
So back to institutions. Don’t turn off the investment tap. It will kill these companies because they must invest. Cash flow enterprises have a one way ticket to death. Instead, set up a private moaning index and tell CEOs to leave the job if they can’t stand the heat.