I am hearing the beginnings of talk about sovereign nations wanting to secure their supply chains and nationally, here in Australia, about increasing our reliance on secondary processing and buying ‘Australian-made’. Many agree a national campaign to achieve this is required. I agree, so what do we call it?
‘Local Content’ is what it’s about but too many either don’t understand what it means, or they use back doors to get around what flimsy obligations are in place to encourage it.
‘Netback’ is heading down the right path, but it’s a term for the oil and gas industries to incorporate the costs of transportation, royalties and production costs to come up with a ‘to market’ cost for a barrel of oil – see https://www.investopedia.com/terms/n/netback.asp
Neither of these words cut it as a description for what we need to describe. A new descriptor needs to incorporate the up and downstream multipliers associated with ‘buying local’. At the moment, buyers mainly resort to price only as the main determining factor in their buying decisions. We need a new term and an agreed formula, to describe the process which captures the up and down-stream economic multipliers associated with a locally produced product in order to compare the true cost of the product with the imported equivalent. The formula would include local wages, transportation, warehousing & storage, retail and wholesale distribution, and all of the, taxes and GST generated for the economy along the way, etc. This formula would incorporate these factors to give us the true economic value to the nation of a locally-produced product when compared to the same product imported from overseas.
So, lets have a debate about it. And while you’re pondering this, can you come up with a new word to encapsulate what I’m proposing (please!)