There's little doubt Australia's textile sector is shrinking thanks to the growing tide of cheap Asian imports.

AARTI BETIGERI, REPORTER: There's little doubt Australia's textile sector is shrinking thanks to the growing tide of cheap Asian imports.

But things aren't necessarily as bad as they seem. Smart manufacturers like Creswick Woollen Mills have realised the way to stay in the game is to change how they operate.

BOAZ HERSZFELD, EXECUTIVE DIRECTOR: The Australian textile industry is very, very vibrant. We hear a lot of bad news stories but there's a number of companies growing and developing and the reason for that is because over the last five or 10 years we have been forced to live in a global village.

AARTI BETIGERI: Last year Creswick Woollen Mills in country Victoria celebrated 60 years in business. That's no mean feat in an industry where the removal of tariff protection in recent decades has seen much production move offshore.

Creswick CEO Boaz Herszfeld is the grandson of the mill's founder and says it's adapted to the changing times.

BOAZ HERSZFELD: Our business model these days is a roughly 50 per cent of the company's products that is sells are imported and 50 per cent roughly are Australian made. So therefore we're able to provide the customer an Australian made option if they require it and custom made to their specification.
Once upon a time there was literally 50, 60 coloured woollen mills throughout Australia and unfortunately Creswick Woollen Mills is the last coloured woollen mill of its type left in Australia.

AARTI BETIGERI: The changes have seen Creswick's workforce sink from about 90 in its heyday to around 30 today.

BOAZ HERSZFELD: About five years ago Creswick Woollen Mills wasn't known for consumer products at all, primarily the business was fabric. The risk was there we were selling fabric to manufacturers, a number of whom have gone out of business subsequently. What we aim to do is take control of a great part of the business. We've branded products, natural fibre products that are available to the consumer, and where Creswick Woollen Mills is in charge of that supply chain.

AARTI BETIGERI: The mill has now taken a punt on diversification and is now spinning alpaca fleece.

BOAZ HERSZFELD: The actual fibre off the animal is a coloured fibre, beautiful browns and greys, and they're able to be spun in their natural state, creating an undyed product. These days people are very, very keen to have natural products.

When I joined my grandfather was 85 and he was still a raging bull. His management techniques were not what you'd call modern; he wasn't shy to share his experiences and opinions.
Two pieces of advice that he gave: don't import, they'll send you rocks, and don't deal with department stores, they'll send you broke.

AARTI BETIGERI: They're two pieces of advice Mr Herszfeld opted to turn his back on.

BOAZ HERSZFELD: Now taken literally that advice is maybe not correct in this current environment but it's two important lessons: import quality control, and as manufacturers we excel at import quality control because we create very detailed specifications for our product; and dealing with large customers for any business you have to be very, very mindful that that large customer does not begin to rule and put your business at risk.

AARTI BETIGERI: Turnover these days is between $4-million and $6-million. Surprisingly one aspect of the business that's growing is tourism, with around 40,000 visitors to the Creswick factory in the last year.

BOAZ HERSZFELD: The thirst of the general public to see manufacturing occurring is incredible and I guess that stems from the lack, the perceived lack of manufacturing in Australia. Being in a country town we've been able to open our doors to the public.

Australians have an affinity with wool. It's something that's very curious to them and they love to come in and see it. And a visitor to Creswick Woollen Mills can see carding and spinning taking place and are obviously able to take away either a souvenir or something functional for their home.