Building infrastructure and creating jobs

We now finally have a government at a Federal level. Irrespective of my politics I sincerely wish them success in guiding our country to allow it to grow and prosper over the coming three years. The groundswell of discomfort with state governments will continue though and, sadly, here is where we have bottle necks to growth and job creation on a confusingly amateur scale.

A few sound bites from last week’s news…

Woolworths, one of our country’s largest employers, both directly and indirectly, released excellent results. Among the results it made mention of the new hardware division. It is estimated that Woolworths will spend at least one billion dollars over the next five years to build up its hardware and broader store network. I have seen the new Caringbah store in NSW and it’s money well spent.

ALDI who, incidently, stocks fantastic wax wrapped cheeses, has increased its Australian profits by almost 30%. Well run retailers are doing well here in Oz. ALDI has invested significant sums over the past decade building a store and logistics network which now has more than 230 stores up and down the eastern seaboard. ALDI has apparently also allocated one billion dollars into new capital funding to support its store opening strategy, predominantly in NSW and Victoria.

But malls are the village greens and town centres of our century, and when they open or are redeveloped, new or smaller retailers are given the opportunity to grow too. In Marrickville, a Sydney inner city suburb, AMP want to invest $165 million in extending and re-developing the existing mall, Marrickville Metro.

So that’s three unrelated announcements totalling $2.2 billion in capital investment in and around retailing in our little country. These three investments alone will create thousands of construction jobs each time the money is spent on building or redeveloping a site.

Following the construction phase the new stores will create thousands of new full-time and part-time jobs. This mixture of full- and part-time jobs is crucial to our ever-changing population, with new Australians, students, young mums and dads and “retired from full-time work but still want to work” older Australians being able to earn an income in a way that suits their needs.

So it was saddening that Marrickville’s deputy mayor, the Greens councilor Fiona Byrne, announced councilors were united in their opposition to AMP’s development and that the Victorian Planning Minister Justin Madden rejected the development of a 13,500sq m Woolworths hardware store in Geelong.

ALDI is a very large private company, and has lived with this frustrating and inconsistent planning process every step of its 10 year Australian journey. As a past owner of a medium-sized private company and now an executive in a large private company, it’s only through a calm and very long-term vision that you stick around and see these things through. Most public companies can’t afford to be slowed down this much and tend to pull up stumps, taking their investment dollars and the potential to create and sustains jobs with them. I hope ALDI doesn’t follow in their footsteps.

Companies, public or private, don’t have to invest capital and won’t do if it’s all too hard. They can pay it out in special dividends; returning capital to shareholders they call it. This, however, doesn’t build infrastructure and create jobs.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.