Australian manufacturing set for huge shake-up, says report

A new CEDA report has raised questions about how ready Australia’s workforce is for an era of self-driving cars, hyper-connectivity and artificial intelligence. Brent Balinski spoke to the group’s CEO, Professor Stephen Martin, about what the future will hold.

The country’s workforce is about to be shaken up by a new industrial age, and manufacturing is not immune to this set of fresh challenges.

Modelling in the recently-released Australia’s Future Workforce report from the Committee for Economic Development of Australia shows as many as 5 million jobs are at a high risk of being rendered obsolete in the next 10 – 15 years.

“We’ve already seen in some of Australia’s traditional economic areas – the resources sector and agriculture – where mechanisation has certainly replaced people,” Professor Stephen Martin, CEO of CEDA, told Manufacturers’ Monthly.

“And that, I think, is a bit of a foretaste of what might potentially come in the future.”

The report questions how well the nation is prepared. Shifts in skill requirements due to technology are not new, but the pace of change is unprecedented.

Cheaper, more powerful computation, an increasingly connected world, higher levels of automation and machine learning are among the reasons.

What's needed?

STEM educational skills will be vital for those growing up in next stage of the “Infotronics Age”. Digital disruption will make computational skills more important than ever, and businesses and workers will have no choice but to adapt.

“We have to develop our skills so that we can participate as part of that,” said Martin.

“And we have to recognise that long-term policies are going to be required to enable us to develop the skills around each of those, which clearly must be underpinned by a good skill level in basic computing.”

For this industry, the future is very much about high-tech, globally-minded manufacturing, with traditional manufacturing businesses and their employees continuing to be challenged.

“There’s no doubt that advanced manufacturing is the future for Australia,” said Martin.

According to the report, despite some recent policy positives, Australia is doing nowhere near enough to ensure the manufacturing of tomorrow flourishes. It charges that the nation’s industry innovation measures are appallingly underfunded compared to comparable overseas efforts.

The federal government’s five Industry Growth Centres – including the Advanced Manufacturing Growth Centre – initiative has been singled out against other, overseas initiatives such as the US’s National Manufacturing Institutes, Germany’s Fraunhofer organisation and others.

“They certainly need to be more adequately funded than they are in projections at the moment,” said Martin.

“These industry centres have been built on the Catapult centre concept in the UK, and we are only spending an estimated $190 million over four years, whereas the UK government is spending $3 billion.” 

We have also done ourselves no favours with broadband speeds, which recently fell to outside of the global top 40.

And national efforts to prepare for the automotive sector’s demise, the lack of a top-class innovation ecosystem, and an industry policy approach of “lavish[ing] resources on the mining sector through fuel rebates, investment incentives and infrastructure spending in an old style and discredited ‘national champions’ approach” are all criticised.

The manufacturing sector will continue to adapt and become more sophisticated. CEDA notes, as others have, that Australia is in its third wave of industrial evolution.

Infotronics age

A contributor, Phil Ruthven, founder and chairman of business intelligence firm IBISWorld, characterises the current period – following the Agrarian Age (up to the mid-1860s) and Industrial Age (following this up to the mid-1960s) – as the Infotronics Age.

The current era has seen productivity double and the standard of living increase two-and-a-half times over.

It has also seen ever-lower numbers of workers in manufacturing, which currently employs over 900,000, and these are tipped to continue to drop. (This is not unusual in recent times in developed countries.)

Ruthven predicts over half the jobs lost in the next five years will be in manufacturing.

Martin agrees with the assessment, with advanced manufacturing a growth area but traditional industry to continue to shed workers, citing reports that BlueScope is mulling over a closure of its No. 5 blast furnace at Port Kembla.

“There will always be as a manufacturing base, as the methodology, the skill sets all change, as mechanisation is applied, as there’s greater use of computers, then clearly it’s going to mean that the number of people with fewer skills will be needed in those operations,” said Martin.

More attention needed re. successes

The Port Kembla site employed about 22,000 in the early 1980s, though that number is now around 3,500. 1,000 workers were shed when the No. 6 furnace was closed in 2011, and roughly 2,000 would lose their jobs if the last blast furnace stopped running.

Factory closures are obviously bad news, said Martin, but there were too many doom and gloom stories written and broadcast. More attention should be directed towards the many Australian manufacturers who were globally competitive, with advanced manufacturing alive and well across a range of segments.

“Whether we’re talking pharmaceuticals, whether we’re talking in developing our parts, whether we’re talking in electricity generation, there are niche manufacturers that are employing highly trained, highly skilled, highly paid people – fewer of them, absolutely – but also linked to global supply chains,” said Martin.

“And we need to be giving due recognition to the role that they’re playing now and will play into the future for Australia’s economic sustainability.”

To read CEDA's Australia's future workforce? report, click here.

 

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