WORD COUNT: 575.

IDEA: I came across the article on Rudd’s comments and combined it with the recent
Pacific Brands events. This creates an article with real interest for readers and also
fulfils the State/Federal government round.

PacBrands
Anthony Read
13 March 2009

CAPTION: Pacific Brands struggles against the will of Parliament House this
week. (Photo by Kane Gloury and Anthony Read).

Prime Minister Kevin Rudd has been branded as “whistling dixie” over threats made
towards Pacific Brands recently. Rudd threatened to take back federal grants given to
the textile company over its dismissal of 1,850 jobs.

Director of Consultants to Management, Richard Laney, said that the personnel cuts
at Pacific Brands would not directly affect the grants being retracted.

“Firing of personnel has nothing to do with the grants,” Mr Laney said. “If the
manufacturing was kept in Australia, and the plant equipment is kept here up to June
this year, then they would have been safe from these threats.”

Mr Laney said that taking the money back from Pacific Brands would be relatively
easy.

“The federal grants were given through the Strategic Investment Program Scheme,”
Mr Laney said. “The SIP Scheme grants money to companies for buying and using
equipment for ‘eligible activities’ carried out on Australian soil.”

“The fact that they’ve stopped most of their eligible activities means taking the money
back for the 2007-2008 period will be easy.”

Oliver Footwear CEO, Phillip Hughes, agreed with Rudd’s comments.

“If the rules of the program allow the government to take back the money, then so be
it,” Mr Hughes said, “but it does appear like a political response.”

“The government have to be seen to be doing something.”

Mr Hughes said the declining tariffs surrounding the textiles industry are partly the
cause of many manufacturers importing products.

“In our case, footwear is now subject to a 10% tariff. This is scheduled to decrease to
5% in 2010,” Mr Hughes said, “and I believe it is unlikely to reverse.”
“We must also remember that factory jobs are no longer desirable. This is a ‘benefit’
of the previous government focus on higher education to the exclusion of any trades
or manual work.”

Mr Hughes noted that the industry cannot survive with government subsidies, and that
we should look to our Asian counterparts for guidance.

“It is interesting that with all the doom and gloom most Western leaders have told
people to spend their way out of trouble, whereas the Chinese government told their
people to work harder.”

Pacific Brands caused controversy earlier this month when they sacked 1,850
Australian jobs. The situation was worsened by the news that the CEO, Sue Morphet
(Sue Morphet), was awarded a 170% pay raise.

Mr Laney said the two news stories, when published side-by-side, cast a bad light on
the company.

“In my opinion, Pacific Brands didn’t handle the deal too well,” Mr Laney said.

“It was an absolutely horrible piece of public relations work, if you ask me.”

But Mr Hughes disagrees, saying that the pay rise was warranted.

“The press on Ms Morphet is a beat up,” Mr Hughes said. “She only recently acquired
the CEO chair and this would have an expectation of a salary increase for increased
responsibility.”

Moving manufacturing offshore has happened many times before, Mr Laney said,

“It has happened before, many times. This is not the first example of this ‘outrage’
happening,” Mr Laney said.

“But it won’t happen many more times. Manufacturing by hand is a thing of the past.”

A recent example is Blundstone dismantling its Tasmanian production elements in

December 2007.

“There was an amazing amount of grandstanding over that situation,” Mr Hughes

said.

“Ultimately, I do not believe the mainstream consumers really care a great deal when
they actually come to purchasing items.”

Pacific Brands was contacted but declined to comment.