COLES boss Ian McLeod has hit back at claims that supermarkets are forcing local manufacturers to the wall.

The comments from Mr McLeod, known for his pugnaciousness, comes as soap-maker Cussons blamed competitive pressures from supermarkets' in-house products, in part, for its decision to close its Victorian factory at a cost of 92 jobs, The Australian reports.

Coles boss Ian McLeod has hit back at claims that supermarkets are forcing local manufacturers to the wall, saying suppliers to companies such as Coles were looking for "convenient excuses" to cover up their own failings.

British-based Cussons announced this week that it was closing down its plant in Dandenong, shifting production to interstate and offshore factories.

Chairman Richard Harvey said in January that the company's Australian business had been hit by a reduction in supermarket shelf space and competition from private label products.

The move follows US-owned Heinz's decision to close its Victorian tomato sauce factory in January at a cost of 146 jobs, which Australian Food and Grocery Council chief Kate Carnell blamed on increased competition from supermarkets' in-house products sourced offshore.

But Mr McLeod said the blame for any job cuts lay squarely with the manufacturers themselves.

"I think the responsibility for those workers is for the employers . . . it's a convenient excuse to blame the supermarkets," he said.

"Suppliers who aren't driving efficiency or investing in their business will see a rising cost base; previously those costs would be passed on to the retailer, who would pass that on in the form of prices, so you'd get inflation and the customer would pay."

Industry figures show Cussons Imperial Leather soap can be imported from the supplier's foreign subsidiaries for 39 per cent less than it was selling the locally made product, while its Morning Fresh dishwashing detergent was 32 per cent cheaper.

Woolworths chief executive Grant O'Brien said last month that retailers were increasingly importing products that were also made locally in order to cut costs.

A Woolworths spokeswoman said yesterday the company's first choice was to source domestically, but when identical products could be purchased more cheaply overseas from the same manufacturer the company would pass those savings on to customers.

Mr McLeod said Coles had been responsible for some suppliers increasing staff numbers.

"We work with our suppliers to drive increased volumes through better quality and value -- a number of businesses we work closely with are growing jobs by working with us," he said, citing a private label supply contract signed with Bega Cheese last September.

"I had dinner with a dozen of our produce growers a couple of months ago, and each of them had seen their business grow by 200 or 300 per cent in the last three years, and they're taking on more people and investing growing their business, but that story is seldom heard."

He added that the accusation that Coles was scrapping Australian-made groceries in favour of foreign-made private label product was "inaccurate".

"We would always look to source product from Australia before anywhere else," he said.

However, customers had the right to choose cheaper goods made overseas, he said, citing the example of Vietnamese prawns selling for half the price of locally caught crustaceans priced at $30 a kilogram.

"Not every customer can afford to pay $30 a kilo to buy Australian, so we might get comment about not supporting Australia, but we believe we should give the customer the choice," he said.

Entrepreneur Dick Smith last weekend gave away tonnes of canned beetroot bearing his Dick Smith Foods label, claiming the big supermarkets had refused to stock it even if sold at cost.

But Mr McLeod was unmoved.

"We have Australian-made beetroot on our shelves, including our private label product," he said.

"It might not be Dick Smith's Australian-made beetroot, but he's a supplier like any other."

Mr McLeod noted that in 2007, supermarkets were accused of ripping off customers rather than suppliers, an accusation that led to the the competition regulator mounting a formal inquiry into grocery prices.

"All the debates about what supermarkets are doing seem to feature the customer very low on the list of political priorities," he said.

"Nobody talks about the customer any more."

Read more at The Australian.