Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Australian manufacturing is at the cross roads

By Leon Gettler - posted Friday, 22 May 2009


In February, Pacific Brands announced it would axe more than 1,850 jobs. The company behind such iconic Australian brands as Bonds, King Gee and Holeproof said it saw no future in manufacturing in Australia and would shift its clothing manufacturing operations to China.

In May, a report from PricewaterhouseCoopers and the Australian Industry Group revealed that the manufacturing sector was in record decline. The seasonally adjusted Australian Performance of Manufacturing Index (Australian PMI) fell by 3.1 points to a record low of 30.1. Producers were cutting inventories at the fastest rate in the index’s history as demand vaporised around the country.

If ignored the social and economic costs will damage the nation’s fabric. According to the Australian Bureau of Statistics, manufacturing is still the biggest employer in Victoria providing full time work for more than 300,000 people. This is more than retail, agriculture and mining combined. And while many suggest Australia’s future lies in such areas as biosciences, agriculture, data processing and software engineering, call centres and hospitality, manufacturing remains either Australia’s biggest or second biggest export earner depending which variable one uses.

Advertisement

The Advanced Manufacturing Cooperative Research Centre (AMCRC) based at Swinburne University could well play a critical role here. It seeks to turn Australia’s unique qualities of a highly educated workforce, a stable economy and political system into competitive strengths and help nurture companies that produce innovative, high value and unique products. The AMCRC started operating in June 2008 with a government-funded research budget of $49 million.

The centre’s aim is to identify innovative manufacturers and take them to the next level through co-investment and connecting them with other institutions and technology. It plans to have a $523 million impact on Australia by 2016, targeting such areas as defence, aerospace, biomedical, fine chemical, mining, energy and fabricated metals products sectors. It also plans to co-invest $42 million into selected industry research projects with an additional $7 million focused on “over the horizon” projects.

The AMCRC assesses each company’s management, its technology, the competitiveness of its people, its corporate governance structures, intellectual property protection, market demand and its ability to carve out a niche market. The timing of the company’s product cycle is also critical.

The centre also provides them with access to the expertise and technology at such organisations as the CSIRO, Swinburne University of Technology, Deakin University, RMIT University and University of New South Wales.

And with Treasurer Wayne Swan’s Budget pumping an extra $50 million into the Export Developments Grants Scheme for aspiring and existing exporters and a new $1.4 billion R&D tax credit scheme doubling the amount available under the existing R&D tax concession, new opportunities to revolutionise Australian manufacturing may well emerge.

Examples of innovative and high value products come from such companies as the Bishop Technology Group which makes power steering technologies. It operates out of Villawood in New South Wales and has more than 180 patents and patent applications. Indeed, more than 20 per cent of all cars produced globally carry some Bishop technology components. There is also Bayswater-based ANCA which manufactures and designs precision grinding-machine tools for use in a range of industries from automotive to aerospace, medical to metal-based engineering. About 95 per cent of ANCA's products are exported, including to car and airline companies. ANCA has been honoured with more than 25 business and industry awards.

Advertisement

These companies, both participants in the AMCRC initiative, represent the future of manufacturing in Australia. They produce highly refined and innovative products that create a value well beyond the traditional manufactured goods that Australia produced in the post-war years and which were, despite the quality, commodity products manufactured everywhere else.

Just as significantly, these manufacturers have identified niche markets which seek to give Australia a unique position in the global economy. In that sense, their strategies echo the insights of INSEAD academics W. Chan Kim and Renee Mauborgne who, in 2005, depicted a market universe of two sorts of oceans.

First, there were red oceans, crowded spaces where the competitive rules of the game were defined and accepted, where companies tried to outperform competitors and where products turned into commodities. That is the old model of Australian manufacturing.

Blue oceans are the alternative. Largely uncharted, these seas represent an untapped market space and completely new territory where competition is irrelevant because the rules are waiting to be set by companies introducing new and innovative products and services. Just as significantly, blue ocean strategies are easier to imagine than imitate. Because they attract customers in large volumes, they can generate the scale quickly that puts aspiring imitators at a cost disadvantage. Blue oceans are the future of Australia’s advanced manufacturing sector. ANCA and the Bishop Technology Group are Blue Ocean proponents.

The AMCRC also works with the Victorian Centre for Advanced Materials and Manufacturing which acts as a “portal” for sophisticated manufacturers, providing them with access to materials and advanced technologies, and with the peak body Advanced Manufacturing Australia.

In addition, the AMCRC plans to provide a highly skilled workforce for the industry through special education and training programs. The aim is to send up to 100 PhD employment ready candidates into the industry.

The AMCRC agenda is nothing short of ambitious, a bold plan focused on nation building by developing emerging industries wanting to take on the world.

  1. Pages:
  2. 1
  3. 2
  4. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

16 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Leon Gettler is a senior business journalist, writing for The Age, BRW, CFO and AFR Boss magazine. He is also the finance writer for the green lifestyle focused G Magazine. He writes on mining for Australian Resources and Investment, human resources issues for HR Monthly and is the management writer for CRN which focuses on computer resellers and the IT market. Leon also does the weekly Talking Shop podcast for Sensis.

Leon manages three blogs. One, www.soxfirst.com, is focused mostly on the American business market and has a strong following in the US. His second blog, Management Line is for The Age and Sydney Morning Herald and his third blog is Business of Green is published by G Magazine.

Other articles by this Author

All articles by Leon Gettler

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 16 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy