Over the past several years Blundstone have been faced with the pressure of keeping our production facility viable in Australia against the background of a changing world.

Long after the rest of our industry had relocated most, if not all, of its manufacturing offshore, we have been trying our darnedest to make a fist of local manufacturing - at the expense of profitability. Blundstone is privately owned by people who are committed to the Australian community. Had we been publicly owned, the pressure to make a return for shareholders year on year would have seen us make the same decision many years ago.

We share the disappointment many people are feeling. We are proud of our 137 year heritage, the iconic nature of our brand, our workforce and products. Moving some of our manufacturing offshore has been a very difficult decision for us.

The decision has been made for three key reasons:

1. Competitiveness - the Australian market is being opened up to all corners of the globe as a result of the removal of trade barriers. This means that the shops are full of our competitors products manufactured offshore. These products offer greater retail margin than ours and we have seen these products take over some of the retail space over the last few years. Consumers have shown that, en masse, they are not willing to pay more dollars for product that is of comparable quality and features just because it is Australian made.

2. Consumer shift - we are a bulk manufacturing operation in Hobart relying on long run products with simple design, i.e. minimal labour content in a maximised efficiency operation. That is what has given us a competitive advantage for the last 20 years and for many years we have served up to the consumer the type of products it has wanted to buy so the match has been perfect. Unfortunately, many consumers behave differently these days. It is particularly the case for age 35 and under people. They buy the products that have the bells and whistles that can only be added with a lot of extra labour content - exactly the sort of product that we cannot make efficiently in Australia.

3.Loss of Technological Support - we have a cutting edge manufacturing facility in Hobart and this investment in plant and technology has enabled us to keep ahead of our competitors. We have maximised efficiency to the point where we are respected for that worldwide. In doing so, we have relied upon a stream of technological improvement by the plant makers to continue to drive new efficiency into our operation to offset other cost increases such as labour rates. Unfortunately, that stream has dried up. Without a vision for ongoing technological improvement, all we can see is our costs going up, the market forcing our prices to either drop or stay the same. Run an equation out that has costs rising by 4% per annum without prices rising commensurately and you quickly go broke. Growth could alleviate it in some part but growth in an environment where your competitors have access to more flexible and cheaper manufacturing sources has not been able to be achieved.

Blundstone do not wish to lose any of our loyal friends and wearers and we would hope that they would understand that we haven't exercised a choice here, we've been forced to make the decision. We were choosing to stay for the last 5 - 10 years when others had not and we would hate to see a situation where we were penalised by consumers for having tried to make a go of local manufacturing but being forced to face the reality of it not being possible.

If we didn't make these changes the company would not be viable into the future. We are keen to maintain our future business, its remaining employees and our products.

Staff affected by the changes have been given at least 5 months notice for any employment changes and will be provided with a compensation package in excess of community standard as well as assistance with finding new employment.

Blundstone continues to be Australian owned and passionate about Australia and will continue to operate from Tasmania employing up to 100 people. Blundstone will still have a manufacturing presence in Tasmania making gumboots (our best selling product) and specialised leather footwear.

Our commitment has always been to provide quality reliable great value footwear and it is our intention that this remain.