Issues and Insights: Weathering the winds of change

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With the move towards newer technologies for increased productivity and sustainability, the Australian industrial sector has lots of catching up to do with Tier 1 manufacturing countries. Steven Impey speaks to several key manufacturers for their thoughts.

What is next for Australia’s machine tool makers? For several millennia, materials have been dug up and turned into instruments which have played a part in industrial and social change.

From the early hunters to the modern-day earthmovers, the country’s technology has evolved quickly through three phases of the Industrial Revolution which saw manufacturers hit heady heights. As the 21st century progresses, Australia’s manufacturing technologies are trying to keep up in a faster, advanced era of Industry 4.0.

Mining still spearheads Australia’s exporters. Yet, it remains a requirement to adapt with firms seeking to use machines to make tools previously made by hand.

Foreign policy is said to have altered the dynamic of domestic production and, while working within a changing global economy, experts are collaborating to find newer ways to give factories a leg up into the unknown.

Adapting to change       

The Australian Government has spoken with Manufacturers’ Monthly about the pressures placed on the shoulders of communities amid significant change in the country’s manufacturing sector.

Job losses across the ailing automotive industry and those following the closure of Victoria’s Hazelwood Power Station are said to be the result of “difficult market conditions” and “global and domestic economic and social changes”.

There are, however, moves to secure jobs at the Alcoa Portland Aluminium Smelter, which received $30 million in federal funding as part of a larger rescue package.

In light of change, the government insists that “existing workforces will have to reskill continuously” while they share a responsibility with businesses “to this next industrial revolution”.

“Over the next 10 to 20 years, Australia’s economy will continue to transform, as it has over the last 10 to 20 years, in response to global and domestic economic and social changes,” a spokesperson from the Department of Innovation, Industry and Science said.

According to the department, Australia’s manufacturing will also transform. Driving the transformation are globalisation, disruptive technologies such as the industrial internet, new consumer demands, Asia’s economic development and other uncertainties.

It also said that Australian manufacturing will continue to be “agile and flexible”, delivering market-appealing products and related services that compete on value rather than price alone. This, according to them, will provide high skill jobs and prosperity to all Australians.

The benefits of automation

Advances in automation technology are already affecting the mining industry. For example, Rio Tinto’s operations centre in Perth is a state-of-the-art facility that enables its mines, ports and rail systems to operate from one location.

Automated vehicle technologies are also used in the agriculture sector, supporting precision agriculture to make farming “more efficient, more productive and less labour intensive”.

“With new technology evolving all the time, it is helping the economy by having the need for less human intervention,” explained Prashant Gokhale, CNC machine tools manager at Applied Machines, based in Victoria.

“The biggest problem we have in Australia, I think, is labour cost; the more material is handled, the more it adds to its production value, making it more expensive and less valuable [to export].

“We need to be flexible with change and that means the less human intervention the better. People won’t like to hear it but one of the things we must do is look at the cost of labour.

“Unfortunately, the mindset of some companies needs to change first. While they are still not using the latest technologies, those who have it are proving more productive and competitive on a global scale.”

Labour cost isn’t the only challenge however. While a further decline registered by Australia’s machine and tool makers at the end of last year saw more than a seven per cent drop, according to the Australian Bureau of Statistics other labour-intensive sectors – including food processing plants – are offsetting the manufacturing industry with promising growth.

Mark Dobrich, general manager of John Hart’s machine and tools division in Sydney, says the industry’s success stories are being told by those open to change and believes the introduction of advanced manufacturing technologies is offering a brighter future than we have been led to believe.

“There is no doubt that manufacturing has changed over the past 20 years, particularly with the reduction [of Australian car assemblers] in the automotive sector,” he said. “But I do feel there has been some narrow reporting around the impact it has had.

“While more engine parts are being imported during a changing economy, there are still companies out there who are making machine components that are being exported to Japan and Europe.

“They are still doing well both in the domestic and export arenas including those in the aerospace and defence sectors, as well as the medical, construction and transport industries.”

One of those companies is Melbourne-based Tomcar Australia, specialists in all terrain vehicles (ATV) vehicles for the agricultural, mining and defence industries, and is still manufacturing in a country which has seen three of its major car manufacturers on the brink of closure.

Elsewhere, the Carbon Revolution is making carbon fibre car wheels for partners overseas.

Quickstep is contributing composite materials for defence, automotive and other global applications and Marand, a defence manufacturer, is working into global supply chains.

The government to play a crucial role

In other fields, industry experts are also championing growth in the biomedical sector, which they claim is the result of a more research-led business models.

Examples include 3D-printed devices for sleep apnoea and human implantations being produced by firms including Oventus and Anatomics respectively.

Dr Phillip Toner is an honorary research fellow in the University of Sydney’s department of political economy and spoke about the challenges currently facing Australia’s manufacturers within a “volatile economy”.

While the industry does not give to the economy as it did during the height of the 1960s, he believes more “R&D intensity” could better link profit from the country’s “temporary” mining and LNG projects to other industries.

“A lot of money is being paid into the resources sector but there are very few linkages back to the rest of the economy,” he said of the slow-down.

“I think there has been an absence of support to the local industry – the exception is across the defence sector which is due to Government policies and decisions to shut down the car industry.

“I therefore see absolutely nothing wrong with a public-critical analysis of what is actively happening with money spent on our free trade agreements to see what the benefits really are. That would be interesting.”

Among five industry Growth Centres set up to “improve the industrial ecosystem”, one has been tasked by the Federal Government with “developing an internationally competitive, dynamic and thriving Australian advanced manufacturing sector”.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) are also contributing to the project alongside Deakin University (in advanced fibre materials) and Swinburne University (around Industry 4.0).

“Manufacturing is all pervasive in our economy, with technological and servitisation opportunities in the food, chemical, metals, oil and gas and minerals sectors amongst others,” said Dr Keith McLean, CSIRO’s manufacturing director.

“The demise of the automotive industry will result in the loss of highly skilled jobs across the sector. The challenge for us as a country is how we seek to redeploy these skills in new advanced manufacturing opportunities or retrain these people to provide new opportunities.”