How the last 10 years changed manufacturing for good

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AUSTRALIAN manufacturers have experienced their fare share of ups and downs over the past decade, but local companies have continued to thrive because our industry is flexible, it can roll with the punches, and it makes the best of what it’s got. 

Manufacturing output has grown rapidly since Manufacturers’ Monthly was developed in the 1960s, quadrupling by 2003. However, the industry’s share of total output has progressively fallen, in part because of the rising resources sector. In 2001, manufacturing GDP was 11.6% — a figure that has been declining steadily from around 30% in the mid-1950s.

Exports were strong in the early 2000s, at about 25% of manufactured goods, however this figure dropped off approximately 5% by mid-decade due to the high Australian dollar – a scenario we see mirrored in today’s economy.

By the turn of the century, Australian manufacturers had learnt the importance of playing farther afield, and multinationals were becoming more common. International competition – both here and overseas – forced locals to aim higher.

The onslaught of the 2008 global financial crisis hit Aussie manufacturers hard, with thousands of workers losing their jobs as companies moved offshore or closed down completely. According to the Australian Manufacturing Workers’ Union, Australian Government financial stimulus packages saved an extra 50,000 manufacturing workers from losing their jobs during this time. 

But we’re not out of the woods yet, with analyst IBISWorld forecasting in its ‘Top 5 Industries 2010/2011’ report that the paper manufacturing industry in Australia will fall this year, as newspapers, books and magazines are consumed more online. 

Technology advancements

Australian manufacturing has somewhat fallen from grace over the past 10 years, with economists suggesting it’s not a smart place to invest. Fussy consumers, expensive raw materials and rising transportation costs have made our industry a harsh judge of character, where only the innovative survive.

But survive we do. Australia now has one of the most technically-advanced manufacturing industries in Australia, developing some of the most cutting-edge products on the market.  

Cochlear, Resmed, Bluescope Steel, Onesteel, CSR and Boral are just some of our local success stories, proving that specialist products, often with high-IP, are our strong suit. Large, medium and small enterprises can still thrive in Australia, if they adapt quickly to change and embrace new technology.  

From 2000 to 2009, the expectation for local manufacturers to ‘do it all’ skyrocketed. Staying on top of the latest technology, innovating to compete globally, reducing production costs (and time), and keeping valued staff, remain concerns for companies today. 

“Successful manufacturers must improve existing ways of doing things across the board. They must define clearly which kinds of innovation are most important for them and why. They need to do whatever it takes – develop new products and designs, use advanced technologies, bundle products and services, use better processes for market intelligence and assess customer responses, and manage international networks – in a coherent, strategic manner,” said a NSW Business Council report, ‘Innovation – the future of Australian manufacturing’, in 2005. 

Many of the most important advances in manufacturing plants are a direct result of the need to reel-in costs, maintain quality and raise output. The majority of manufacturing centres now incorporate some form of automation, and more sophisticated IT systems that allow greater process visibility, which in turn creates more quality assurance and production insight.

According to Mrs Mac’s pies managing director, Iain Macgregor, the staff costs saved by automating a plant can be redistributed to raise output. 

“Production levels have risen exponentially with a corresponding fall in operating costs. Engineering and staff skills have changed dramatically as manufacturing and distribution technology has evolved. IT is now a key department heading our ongoing development,” Macgregor told Manufacturers’ Monthly.

Systems integration has become more common over the past ten years, streamlining management, simulation and workflow controls into a single unit. Though less reports, a single interface, and time saved in the control room are real benefits, the process visibility allowed by integration shows manufacturers exactly where they can save money.

‘If you can’t measure it, you can’t manage it,’ has been the catch-cry of the decade. Intelligent automation systems can now manage a plant’s energy use, safety parameters, and quality controls. Using this information, manufacturers could react quickly to change, including the introduction of new laws and regulations, standards, products and materials. Maintaining volumes while catering for more niche consumer demands is now more realistic. 

This ‘do it all’ attitude has lead to new demands on staff, with line operators now expected to perform maintenance tasks on plant equipment. Up-skilling is rife.  

Nation of pioneers

According to Australian Made, Australian Grown chief executive, Ian Harrison, innovation is at the centre of any successful manufacturing company. 

“The need to be innovative has become pivotal for manufacturers in the last 10 years. Manufacturers have increasingly embraced the continuation of a global focus and the need to succeed in export markets,” Harrison told Manufacturers’ Monthly.

“Australian manufacturing has become very high-tech in the last 20 years. We are very good at what we do.”

Flexibility is now the key. Globalisation has lead to a shift in which local companies are getting back to their roots and embracing what the country has to offer. The mining boom has recently opened-up a raft of opportunities for manufacturers in the construction, equipment, transport and IT industries. In the building products domain, manufacturers are now developing more sustainable materials in-line with consumer interest. Solar power is just getting off the ground here (we have exactly the right conditions for it) – and the possibility of a carbon tax in 2012 means the whole of Australia will soon be buying energy-saving technology.

So much ingenuity was poured into developing manufacturing techniques during this period, that we’ll never cover them all in one feature article. Safety shut-down systems, advanced robotics, wireless communications, broadband internet, laser welding, hydrogen fuel cells, simulation, cloud computing and mobile devices are just some of the turning points that changed manufacturing capabilities throughout the decade.

Heinz site manager – Wagga, Phil McVeigh, says Australian manufacturers are born pioneers. It’s one thing to roll with the punches when change occurs, but it’s another thing entirely to embrace new battles, and answer them with innovation.

“Twenty years ago, quality was the huge driving force. Ten years ago, it was safety. And now, environment is the driving force. If you manage your quality right, and you manage your safety right, and you manage your environment right, your costs will go down – it’s as simple as that,” he told Manufacturers’ Monthly. 

“Every year, we re-set, and we say, ‘What will be the big challenges this year?’ We welcome that. Manufacturers have got to the point now where change is just a part of life. It’s part of the fun.”

Image: Mrs Mac’s WA production facility in 2009.

Do you have any memories you’d like to share of working in manufacturing between 2000 and 2009? Comment on this article below – we’d love to hear your thoughts!