Buying Australian: why it’s no longer a sign of parochialism
As the Australian made edition of Kanebridge Quarterly magazine hits stands this weekend, we examine the case for purchasing locally made product
As the Australian made edition of Kanebridge Quarterly magazine hits stands this weekend, we examine the case for purchasing locally made product
Mention Australian made products to family and friends and it’s likely everyone will agree it’s a good thing to do.
Polling by Roy Morgan as recently as February this year shows 80 percent of shoppers consider buying Australian made products important, mainly because it supports local jobs and the wider economy. The survey also found that 67 percent of shoppers reported buying Australian-made products ‘often’ or ‘always’.
But while most of us are happy to buy, say, Australian made peanut butter or even skin care products, we’re less inclined to choose a locally crafted table over an imported product, mainly because of the price.
Canberra-based craftsman Rolf Barfoed says COVID changed attitudes to buying local. With many working from home and borders closed to everyone and everything — including many goods manufactured offshore — Australians began to reassess their buying practices, as well as their domestic environments.
“We got quite busy after COVID struck because people were forced to look inwards and instead of going overseas on holiday, they had a bit of money to spend locally,” Barfoed says of his workshop where he manages a team of three. “There were a lot of people working from home and they were looking at their homes more critically.”
Desks and bookshelves were a popular choice, as many looked to properly furnish home offices, while beds and bedside tables also rated highly, providing a sense of sanctuary and comfort during uncertain times.
However, as restrictions lifted and with more people growing concerned about rising cost of living pressures, Barfoed says he has noticed a shift in buying patterns.
“Ever since the threat of recession, things have tightened up and sales have slowed,” he says.
For more stories like this, order your copy of the latest issue of Kanebridge Quarterly magazine here
While some may be put off by the higher costs — a reflection of higher wages being paid to Australian workers — Barfoed says the final price is just the start of the story. He gains most of his work from Sydney and Canberra via word-of-mouth commissions, allowing buyers to connect with their piece of furniture from the start. And some connections are stronger than others.
“In Canberra there is a pool in Manuka and there was a big oak tree over the pool which came down in a storm,” he says. “We had people who had swum in that pool as children who asked if we could make something out of the tree for them, so we created two dining tables. It helps that the timber miller is well connected in town and he has the means to pick up trees like that.”
Most timber, however, is sourced through more traditional avenues, although local timbers have been harder to find since the 2019/2020 bushfires.
For those after something unique and fit for purpose though, the experience of commissioning from a local maker is unmatched.
“The option for customisation is a big factor and we will tailor it to exactly what the client wants,” Barfoed says. “It is always a nerve wracking experience handing over a piece of furniture. You want the client to be happy with your work.”
Kate Stokes, co-founder of award-winning Melbourne lighting and furniture studio Coco Flip says ‘locally made’ also means shorter lead times and more reliable supply chains for retailers, designers and homeowners.
“We have really good relationships with all our manufacturers which means there’s a lot more quality assurance,” she says. “If something goes wrong, you just send it back to us. You can’t do that so easily if it’s arrived by ship.”
While the products, which include their Coco pendant light, Mayu floor lamp and Sequence dining tables often do cost more upfront than imported items, Stokes says they are better financial investments over the long term.
“We want to design things that people are not going to tire of in five years so our designs are classic, contemporary and able to fit into a range of styles and interiors,” she says. “Construction has to be robust and material choices have to be solid and last a long time.
“We want people to love them for a long time.”
Stokes and co-founder Haslett Grounds also work with longstanding manufacturers such as Specialty Pleaters in Williamstown, which was founded in 1925 and is now the last remaining pleating studio in Melbourne.
“We love working with local manufacturers and Specialty Pleaters have been in business for about 100 years but they are potentially facing closure because production is increasingly going off shore,” Stokes says.
Australian furniture manufacturing legend, Tony Parker, of Parker Furniture fame says if Australians don’t support locally made furniture and homewares, they will cease to exist — and those traditional skills will all but vanish.
“When you buy locally made, the goods are also serviced in Australia and the infrastructure to manufacture is here,” Parker says. “You have apprenticeships for training people in cabinetwork, upholstery and other skilled trades.”
He laments what he sees as the decline in quality of mass produced goods flooding the Australian market from overseas, not just because it means jobs are taken offshore, but that buyers are not getting value for money.
“They have slowly eroded quality,” he says. “Everyone closes on price. In actual fact, people are paying more than they were in the 70s, relative to wages, and it was better made then.
“The retailer is looking for a cheaper price and the customer is not looking at quality.”
Fred Kimel, founder of Handkrafted, which connects Australian makers directly with the public, says buying locally is an investment in the future, in more ways than one.
“The result is (a piece) typically much higher quality than the vast majority of furniture that is manufactured overseas,” Kimel says. Locally made bespoke furniture is made-to-last and will retain value as it can always be sold or passed on — it’s far less likely to find its way into landfill.
“On the sustainability front, our local regulations help to ensure that timber used by local makers is forestry certified and not from unregulated or illegally logged forest timber.”
And if it’s that lovely rush of endorphins experienced when you buy that floats your boat, buying an Australian made product has to be the ultimate shopping high.
“Perhaps one of the biggest draw cards is simply the enjoyable process of working so closely with a local maker,” Kimel says.
“Clients will often visit their workshops and take much more interest in the selection of raw materials, design decisions and production methods. It’s an experience that lives on through the product.”
Advance Australia fair, indeed.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
When will Berkshire Hathaway stop selling Bank of America stock?
Berkshire began liquidating its big stake in the banking company in mid-July—and has already unloaded about 15% of its interest. The selling has been fairly aggressive and has totaled about $6 billion. (Berkshire still holds 883 million shares, an 11.3% interest worth $35 billion based on its most recent filing on Aug. 30.)
The selling has prompted speculation about when CEO Warren Buffett, who oversees Berkshire’s $300 billion equity portfolio, will stop. The sales have depressed Bank of America stock, which has underperformed peers since Berkshire began its sell program. The stock closed down 0.9% Thursday at $40.14.
It’s possible that Berkshire will stop selling when the stake drops to 700 million shares. Taxes and history would be the reasons why.
Berkshire accumulated its Bank of America stake in two stages—and at vastly different prices. Berkshire’s initial stake came in 2017 , when it swapped $5 billion of Bank of America preferred stock for 700 million shares of common stock via warrants it received as part of the original preferred investment in 2011.
Berkshire got a sweet deal in that 2011 transaction. At the time, Bank of America was looking for a Buffett imprimatur—and the bank’s stock price was weak and under $10 a share.
Berkshire paid about $7 a share for that initial stake of 700 million common shares. The rest of the Berkshire stake, more than 300 million shares, was mostly purchased in 2018 at around $30 a share.
With Bank of America stock currently trading around $40, Berkshire faces a high tax burden from selling shares from the original stake of 700 million shares, given the low cost basis, and a much lighter tax hit from unloading the rest. Berkshire is subject to corporate taxes—an estimated 25% including local taxes—on gains on any sales of stock. The tax bite is stark.
Berkshire might own $2 to $3 a share in taxes on sales of high-cost stock and $8 a share on low-cost stock purchased for $7 a share.
New York tax expert Robert Willens says corporations, like individuals, can specify the particular lots when they sell stock with multiple cost levels.
“If stock is held in the custody of a broker, an adequate identification is made if the taxpayer specifies to the broker having custody of the stock the particular stock to be sold and, within a reasonable time thereafter, confirmation of such specification is set forth in a written document from the broker,” Willens told Barron’s in an email.
He assumes that Berkshire will identify the high-cost Bank of America stock for the recent sales to minimize its tax liability.
If sellers don’t specify, they generally are subject to “first in, first out,” or FIFO, accounting, meaning that the stock bought first would be subject to any tax on gains.
Buffett tends to be tax-averse—and that may prompt him to keep the original stake of 700 million shares. He could also mull any loyalty he may feel toward Bank of America CEO Brian Moynihan , whom Buffett has praised in the past.
Another reason for Berkshire to hold Bank of America is that it’s the company’s only big equity holding among traditional banks after selling shares of U.S. Bancorp , Bank of New York Mellon , JPMorgan Chase , and Wells Fargo in recent years.
Buffett, however, often eliminates stock holdings after he begins selling them down, as he did with the other bank stocks. Berkshire does retain a smaller stake of about $3 billion in Citigroup.
There could be a new filing on sales of Bank of America stock by Berkshire on Thursday evening. It has been three business days since the last one.
Berkshire must file within two business days of any sales of Bank of America stock since it owns more than 10%. The conglomerate will need to get its stake under about 777 million shares, about 100 million below the current level, before it can avoid the two-day filing rule.
It should be said that taxes haven’t deterred Buffett from selling over half of Berkshire’s stake in Apple this year—an estimated $85 billion or more of stock. Barron’s has estimated that Berkshire may owe $15 billion on the bulk of the sales that occurred in the second quarter.
Berkshire now holds 400 million shares of Apple and Barron’s has argued that Buffett may be finished reducing the Apple stake at that round number, which is the same number of shares that Berkshire has held in Coca-Cola for more than two decades.
Buffett may like round numbers—and 700 million could be just the right figure for Bank of America.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.