Integrators not convinced by US opportunity claims

Integrators not convinced by US opportunity claims

The news that Austrade will be providing greater resources for the Australian channel to move into the US market has sparked local debate about the merits of the Australia-US Free Trade Agreement (AUSFTA).

Companies contacted by ARN have argued in the main that local opportunitues have been increased as a result of the agreement, which took effect on January 1 this year, but opportunities in the US market are few and far between. Brennan IT MD, David Stevens, said the entrance of US players into the Australian market had increased opportunities in the Australian market.

"We are finding that there are a bunch of Federal Government contracts which have been reopened as a result of the AUSFTA," he said. "As US companies have to be allowed to bid on what were previously closed contracts that's also opening up opportunities for local challenger companies like us."

Agreeing with Stevens, Dimension Data ACT branch manager, Michael Gration, said an increase in the number of tenders meant an increase in the response work required by local players.

"There has been an initial slow down in some projects and an extension of the timeframes associated with marketplace initiatives because of the increased tender load," he said. "The cost of business is going up as a result and we will need additional resources to cope."

Dataflex managing director, Andrew Gersbach, said the sheer increase in the volume of tender proposals meant local players had to compete on price rather than the services and support they could offer.

"A recent Defence contract just for cabling attracted around 150 responses where normally it would have received 20," he said. "In effect that supports big US companies, because the bigger the vendor the cheaper the price."

Brennan's Stevens agreed increased competition would likely make deals more about cost, but said winning tenders came down to a question of competitive advantage.

"US companies don't bring any new technology or value to the market which doesn't already exist here," he said. "So if you make sure your proposition is the best value in the market then you will get selected."

Looking toward the US market, ASI Solutions director, Maree Lowe, said the AUSFTA had opened up opportunities for Australian companies with unique intellectual property, but questioned the value of the agreement for mid-tier and services-based companies.

"If I took my business to the US, I'm sure preference would be given to local companies in order to protect their local industry," she said.

While Lowe conceded the AUSFTA provided a legal framework to ensure a fair play in the market, she argued cultural differences would still work against the Australians.

"Most people running Australian businesses aren't of the same psychology as Americans when it comes to litigation," she said. "We aren't as aggressive as we should be."

Dataflex's Gersbach agreed with Lowe, and said that opportunities in the US market were only theoretical.

"With the strong US dollar we are more expensive on IT products and services," he said. "We are allowed to compete in the US, but we can't compete. So the flow of opportunity is for American companies into Australia because of the low cost of entry."

While Brennan's Stevens said the company as yet did not intend to target US government contracts, he argued having the AUSFTA in place assisted its plans to expand its presence in the US.

"It helps in that we know that we have to be allowed to bid on certain kinds of government work which allows us to carry a certain opportunity amount into the cost of opening an office there," Stevens said.

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