Three of Australia’s cable manufacturers have teamed up to support the local industry and stop the dumping of certain electric cables exported from China. This has inadvertently led to the creation of a national cablemakers association.

Australians love a bit of friendly competition. Whether it’s in the sporting arena or on reality television, we seem to thrive on it.

Things are no different in the business world, where locally-made products compete for attention against those manufactured on international turf. As long as it’s a level playing field, then we’re happy.

Unfortunately this has not been the case for Australian cable manufacturers. As it turns out, local companies have suffered material injury caused by electric cables that were exported to Australia at ‘dumped’ prices.

It was for this reason that three manufacturers – Prysmian, Olex Cables and Advance Cables – banded together to lodge an application to Australian Customs and Border Protection, requesting that a dumping duty notice be published in respect to electric cables exported from China.

The nine electric cables in the spotlight are suitable for connection to mains power supply and are commonly used in domestic and commercial applications.

In the submission, the companies claimed that the local cable manufacturing sector had been facing unfair trading practices for a considerable amount of time, due to cheap imports from China. While this activity commenced in 2005, the period where the impact was considered to be the most significant was from 2007-08.

The dumping of these cables led to a loss of sales, reduced market share, price undercutting, staff retrenchments and an inability to raise capital for all three companies across the board.

“Over recent years, there is no question that the local cable manufacturing industry has suffered greatly at the hands of imported cable,” Prysmian chief executive Llyr Roberts says.

“We produced a detailed submission as three individual companies, and asked a third-party individual to bring all of the information together into one overall, coherent submission to present to Customs.

“What we’re looking for is a level playing field. We certainly feel that some of the pricing that we’ve seen from imported cable over the last few years has strongly suggested a dumping action; hence the desire to put that forward into a formal submission. We will also review imports from other countries, in particular the Philippines and Thailand, and take action accordingly.”

So how did the three companies prove that the cables were in fact dumped into the local market?

According to Olex Cables managing director Graeme Moncrieff, it involved extensive research and a comparison of the manufacturing costs in both China and Australia. Customs required the companies to prove that the products were dumped; that this action had caused damage to their business; and that both factors were linked.

“We had to go through our books and separate out the impact of the dumping on our business, as opposed to other factors such as the impact of the global financial crisis,” he explains.

“We then spoke to a number of customers who wanted to do business with us and they showed us the price of our competitors. We found out that the Chinese prices were lower than our cost price, let alone our selling price. None of our sister companies around the world could get anywhere near these prices either.

“This helped to prove the products were effectively dumped; and as a result our volumes had declined and we had taken some severe cost reductions, largely around letting go of Australian employees.”

In September, Customs initiated a formal investigation into the matter. It will continue to investigate the allegations made in the initial application and, in the event that Customs finds the case proved, it will impose a dumping duty on all future imports from China for the next five years.

“Considering that the applicants appear to represent about 65% of the Australian industry by volume, it is reasonable to conclude that the alleged dumping has caused material injury to the Australian industry producing like goods,” Customs writes in a public report on the issue.

“There appear to be reasonable grounds for the publication of a dumping duty notice in respect of the goods the subject of the application exported from China.”

Advance Cables general manager David Jenkins explains that as China falls under a ‘developing country’ status, it only pays 4% duty on exported products as opposed to 5%.

“Looking at the facts, there was no way the Chinese could be making the cables and selling them for the prices that we were seeing in the market – in some cases the difference in price was as large as 57%. The market is diminishing for Australian manufacturers and it is also creating a false benchmark price to the electrical contractor,” he explains.

“The application for a dumping duty notice is about protecting the industry. Local cable manufacturers ensure that a good quality product that meets the relevant Australian Standard is going out to the end user.”

Electricians should know this better than anyone, given that safety and their reputation depends solely on the products they install. After all, they’re the ones who may have to foot the bill and the blame if something goes wrong.

“The onus is on the electrical contractor to make sure that the cable installed in the wall complies with the relevant Standards,” David says.

“As a cable manufacturer we type-test our cables, and we do routine inspections throughout the manufacturing process, but we don’t know if the product coming in from overseas complies or not.”

While the Customs application focuses on the impact of dumped cables on the local market rather than the quality of the products coming in, the fact that there was no authority to effectively police the quality of imports and ensure the long-term integrity of those cables meant that more needed to be done.

It was this very issue that prompted Prysmian, Olex Cables and Advance Cables to create the Australian Cablemakers Association (ACA) in order to support and grow the local cable manufacturing industry, as well as promote safety in the community. Currently it consists of the three founding members, but other manufacturers will also be invited to join.

“As of this year, the ACA will visit the standards and specifications, as well as the health and safety issues related to the local cabling industry,” Llyr says.

“Where practical, it will ensure that all cables installed in Australia meet the relevant Standard in respect to performance and also health and safety. We’re here to protect the longevity of the local manufacturing industry in Australia.”

The ACA will represent local cable manufacturers in interactions with governments, government authorities, supplier and customer associations and other industry bodies such as Australian Industry Group (AIG), NECA and the ECA. It will also act as a lobby group for the support and installation of Australian manufactured cable.

While the dumping duty application pre-dated the creation of the ACA, Graeme says that it will continue as an ongoing agenda item.

“The ACA was created to give us a voice in the industry. We started with the dumping issue and then realised that it would be easier to have one organisation that represented the Australian cable manufacturers and gave us an outlet to deal with industry issues,” he says.

“There were other factors impacting the industry and a lot of our customers wanted to talk to an industry association. The ACA allows us to act as a formal body for the industry and provide a local point of contact.”

In the safety arena, the ACA will launch the Approved Cables Initiative (ACI) to promote safety standards. This will be achieved by arranging independent performance testing of Australian and foreign manufactured cables, and enforcing and upholding Australian cable specifications and standards.

In the meantime, all three manufacturers agree that it is in the best interests of the industry for Customs to pass the dumping notice.

“At the end of the day, if the dumping continues there won’t be a domestic cable manufacturing industry. And if there is no domestic industry, the contractor will have to take what they can get,” David says.  

To view the full report from Australian Customs and Border Protection Service go to www.customs.gov.au and search for Consideration Report No. 178.