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<H1>Imports menace industry</H1>
<P>By Tim Colebatch, Canberra, and Ian Porter<BR>
February 17, 2006</P><IMG SRC="svIMPORTS.jpg" ALIGN="RIGHT" HSPACE=12 WIDTH=244 HEIGHT=274>
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<P>A STUNNING 20 per cent jump in the import bill last month has underlined the intense pressure on Australian goods producers amid continued low growth in domestic demand.</P>
<P>This trend is likely to continue as long as the Australian dollar stays high and companies use offshore suppliers.</P>
<P>The Australian Bureau of Statistics reported that Australians spent $13.4 billion on imports last month, up from $11.2 billion a year earlier, and a third more than the $9.9 billion spent in January 2004.</P>
<P>Soaring oil import costs were a third of the increase. The oil bill jumped 80 per cent from $978 million a year ago to a record $1.77 billion last month.</P>
<P>In the past year, Australia imported almost $18 billion in oil, almost double what it spent two years ago. Offsetting that, Australia's energy exports grew by $14.2 billion in the past two years, easily outpacing the $8.4 billion rise in imports.</P>
<P>The most worrying part of the import surge is that 60 per cent of the import growth for the year was in manufactured goods — cars, computers and industrial machinery, pharmaceuticals, clothing and footwear.</P>
<P>For January alone, manufactured imports totalled $10.3 billion, up 11 per cent on a year ago and 24 per cent on two years ago. At a time when consumer spending has grown little more than 10 per cent, it highlights the inroads that imports are making on domestic manufacturing.</P>
<P>While the acceleration in the growth of imports might be alarming, it was not unexpected, said Australian Industry Group executive Tony Pensabene.</P>
<P>There were several factors behind the surge, he said.</P>
<P>"The high dollar is making Australian manufactured goods less competitive but, on the opposite side, it means imports are coming in much cheaper.</P>
<P>"As you know, the Reserve Bank of Australia has highlighted the fact that, because of the flow of cheap manufactured goods into Australia, it is also keeping inflation pressures down."</P>
<P>Another factor was that Australian companies were bringing in more components for their own production.</P>
<P>The importing of finished goods and parts was also bad news for manufacturing employment in Australia.</P>
<P>ABS statistics showed that 56,000 industrial jobs were lost last year. Ai Group has estimated that another 40,000 will go this year, representing about 4 per cent of the 1 million factory jobs left in Australia.</P>
<P>Australia imported $128 billion of manufactured goods, $60 billion more than 10 years ago. Since then, imports of vehicles have jumped from $8.4 billion to $20 billion, as Australian manufacturers' market share shrank last year to 24 per cent.</P>
<P>Imports of pharmaceuticals jumped 320 per cent to $7.2 billion. Imports of telecom equipment grew from $3.7 billion to $8.9 billion and imports of clothing and footwear are up 126 per cent to $5.2 billion.</P></BODY>
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