Buy Australian won't protect jobs, warns industry group

A BUY Australia campaign would be a unwanted slide into protectionism, a business lobby group says.

Pacific Brands, the manufacturer of iconic labels Bonds and King Gee said on Wednesday it would close seven sites and axe 1850 jobs around Australia, saying the company no longer had a manufacturing future in Australia.

The losses comprise 1200 manufacturing roles and 650 non-manufacturing jobs slashed as part of a cost-cutting strategy to save the company $150 million a year.

The Textile, Clothing and Footwear Union has called on Australian governments to buy Australian-made textiles, as a way of supporting local jobs during the current economic downturn.

But Australian Industry Group (Ai Group) chief Heather Ridout said a Buy Australia campaign was unlikely to work, with the country's manufacturing sector now too integrated into the global economy.

"I think now the industry is so globally integrated, over 20 per cent of manufacturing production is now exported (and) whether you're in Bendigo, whether you are in the Illawarra, they are part of the global supply chain,'' she told ABC Radio.

"So just saying 'Buy Australian' ... I think it is just protectionist sentiment that really won't wash.

"What we do need to do is make sure competitive Australian companies get a fair go at all sorts of contracts.''

Ms Ridout said 42,000 jobs had been shed in the manufacturing sector in the past six to nine months, and the industry would need to ready itself for more tough times ahead.

"People say we don't need manufacturing in Australia. We've got finance, we've got mining, it doesn't matter what happens,'' she said.

''(But) it does matter - 1.1 million jobs, the biggest provider of full-time employment by a country mile is in manufacturing.

"I think we have to prepare ourselves for very tough times. But the industry has shown its enormous capacity to reinvent itself.

"Whilst this may mean that we have to change business models like Pacific Brands are doing, we have been able to preserve the one million plus jobs in manufacturing through thick and thin.''

The tough lending environment, which had seen cautious banks cut lines of credit to business, might mean government would have to step in and guarantee small business loans, Ms Ridout said.

"Banks say we've got to manage our books very carefully. The world is very short of capital at the moment ... they are really hunkering down,'' she said.

AAP