Why The Batteries Have Gone Flat
Sydney Morning Herald
Monday October 20, 1986
When Senator Button opened the re-conditioned Besco Batteries plant last year - and dedicated a plaque to commemorate up to $10 million of new technology - no-one expected the bottom to fall out.
But according to industry sources, Peko Wallsend Ltd's sudden decision to close the factory gates of its Sydney subsidiary and sack all 500 workers has a lot to do with corporate strategy.
Despite the effects of devaluation and tariffs to offset imports, as well as huge capital investment, Besco showed a profit before tax and charges of less than 4 per cent over the five years it operated.
Several critics speculate that Peko Wallsend is using brinkmanship to pressure the Government to reduce tariffs on imported batteries by closing down local operations. The company could then import the shortfall itself at lower prices and higher profits.
Peko Wallsend is also rumoured to have refused offers for Besco by Repco-Century and Hawker-Siddeley. Past experience and company estimates proved it was more profitable to dismantle the company and sell off assets rather than sell it as a going concern at a discount.
The 500 employees at Besco produced 3,000 car and telephone system batteries a day to remain competitive against cheaper imports from Korea and Taiwan where 4,000 units can be produced in one company shift.
Besco was the biggest battery company in NSW - the only other is the Dunlop subsidiary Chloride Batteries at Padstow with 120 employees.
Several critics blame Besco's collapse on poor management at a marketing level while production was efficient compared with other battery operations. They argue that Besco should have concentrated more on selling batteries to other companies such as K-Mart, Motorcraft or Repco-Century which could use familiar labels for retail sales.
When Besco batteries spent up to $10 million a year ago to update to a highly efficient plant, expansion was in the wind.
But car battery production has been a flagging local industry for several years.
Repco bought Century Batteries at Mascot in 1983 and spent about $1 million to update old machinery before closing it down the following year amid financial difficulties. The machinery at Century was so outdated that scrap lead was poured from hand ladles.
The NSW director of the Metal Trades Industry Association (of which Besco is a member), Mr Doug Wright, said yesterday that a lot of related jobs would be affected by the Besco closure.
But he could see how it was much easier for Australian companies to import small items than produce them themselves.
© 1986 Sydney Morning Herald