How will the AMGC differ from other attempts to address Australia’s poor industry/research collaboration record? Brent Balinski spoke to chairman Andrew Stevens as the initiative works through its consultation phase.
The service dimension
The appointment of Andrew Stevens in February to head the Advanced Manufacturing Growth Centre, a major part of the federal government’s industry policy, might’ve been a head-scratcher for some.
Though the former managing director of IBM in Australia and New Zealand is a high-calibre exec and a serious thinker about the nation’s economic challenges, he has never held a role at a manufacturing business. Nor does he have a reputation as somebody enthusiastic about the industry. Nearly his entire career has been in the service sector.
When he was offered the role, he was slightly surprised, too. But then it made sense.
“Once I’d thought about it and had some conversations there were three factors that are important here,” he told Manufacturers Monthly.
There’s a lack of vested interest and the ability to consider the sector with a fresh set of eyes. And then there’s a tonne of experience at the sharp end of transformation – something manufacturing worldwide is in the middle of and something that defined IBM during the three-and-a-half years Stevens spent as its local managing director.
Stevens was charged by industry minister Ian Macfarlane with part of the modest task of “[guiding] Australian industry into a new era of opportunity” in February through the Growth Centre, to be a not-for-profit company operated by a public/private partnership.
Stevens also pointed out the direct link between the information business and the increasingly switched-on world of manufacturing.
“The world of advanced manufacturing and engaging in global supply chains is increasingly digital in the way it works: digital control, digital ordering, digital feedback from customers,” he said.
Getting to “to be”
Australian manufacturing has been shaken up since the GFC, with its workforce shrinking by 141,400 from February 2008 to August 2013, according to the Ai Group.
Much heavy industry has been lost in recent years and will be lost shortly – from smelters to car assembly.
Additionally, ever-increasing levels of automation, the industrial internet, and newer methods of production will continue to reshape the way things are made.
Stevens announced his retirement from IBM in July last year. He led “Big Blue” in Australia as the company made an (often painful) re-focussing of its energies to grow within the cloud, analytics, mobile and social (CAMS) market.
So, is one transformation relevant to the other?
“As technology moves from the on-premise ownership and operation of hardware and software to the cloud-based and software as a service world, similarly, manufacturing using old scope and old techniques – and let’s call them less-advanced [approaches] – in today’s world [moves] to advanced manufacturing for an environment that is defined by global supply chains,” said Stevens.
"I think there are some parallels in all significant changes.”
The first step in this case has been to identify why certain ways of doing business in this environment have been unsuccessful.
“Realistically if we’re not at the ‘to be’ then let’s define the ‘to be’ and let’s work out the various paths to take and let’s choose the best one as we get there,” he said.
“So: ‘as is’, ‘to be’, ‘how do we get there’.”
A chunk of “to be” involves improving on Australian industry’s much-lamented record in business/university collaboration, recently ranked a dismal 29th out of 30th OECD countries.
One theme of the Growth Centres’ Agenda – the others are around skills, reducing regulatory burden and engaging with global supply chains – involves “encouraging collaboration and the commercialisation of new products”.
The initiative has been described in briefings as being in line with international “contemporary industry policy thinking”. International examples listed as models include the Canadian Centres of Excellence and the UK’s Catapult Centres (though these are far more generously funded).
And after four years, all Australian Industry Growth Centres are expected to be self-sustaining.
Stevens has just visited three of the United States’ National Network for Manufacturing Innovation Institutes: Oak Ridge National Laboratory, America Makes (at Youngstown, Ohio), and the Digital Manufacturing and Design Institute (Chicago).
The AM Growth Centre has a slightly different (and broader) remit than the institutes. However, Stevens said that parts of the concept were worth borrowing.
Also not for profit companies, the NNMI centres charge membership fees, and this allows “various involvement on prioritisation committees such as the Technology Advisory Committee,” he said.
“And most importantly, I think, which is part of the magic here, this would also enable them to access the IP of the result of various projects, some of which will be research-related, some of which would be business model-related, some of which will be workforce-related.
“They can access all of the IP, if you’re at the Tier-one level, without any royalty, and all of those institutes operate on that same sort of basis.”
Research undertaken by academics for any projects through the Growth Centres is explicitly to fulfil commercial needs and not be of a “discovery type”. Centres will have access to a $63 million Industry Growth Project Fund for projects, with funding matched by participants.
Asked how collaboration would differ from other initiatives tried here, Stevens said it would be an inversion of previous models, and be led by the industry rather than researcher end.
He offered that, “My own view is they probably have emphasised the supply side of capability of research and other inputs into the process ahead of outcomes.”
In its emphases on being industry-led and collaboration-focussed, the AMGC has similarities with Manufacturing Excellence Taskforce Australia – launched in 2013 as the Manufacturing Innovation Precinct by the former Labor government and a casualty in 2014’s May budget.
META’s members have been a part of the Growth Centres’ consultation process, and the AMGC has a “constructive working relationship” with the former Manufacturing Precinct.
META declined to comment, but after the federal government released its Industry Innovation and Competitiveness Agenda last year, its chairman told this magazine it saw definite similarities in what it had done and the agenda.
“I would say 50 per cent of our strategy paper, for META, is reflected,” said Albert Goller last October.
“And that the government’s policy took over a lot of it, I think I can only be very pleased with that.”
Getting off the ground
The new centre is on track to submit its proposal on June 1, according to its chairman, which will then be reviewed by the Growth Centre Advisory Council. After approval, establishment funding would be released, and a managing director hired.
Things are on schedule for a mid-year kick-off.
The AMGC would have “soft boundaries” with the other four centres (in food and agribusiness; mining equipment, technology and services; oil, gas and energy resources; medical technologies and pharmaceuticals).
As for what Advanced Manufacturing – that tricky and ambiguous term – includes, the definition here is broad. It’s “a way of proceeding” in this case, and a whole-of-business approach rather than a set of industries.
You couldn’t segment asset codes within the AMGC to list the industry’s components as you could with the other four centres, noted Stevens.
“It starts with the customer, it starts with design led thinking, it includes inbound logistics, includes production, includes outbound logistics, marketing, sales and also the service element,” said the chairman.
Those successful in advanced manufacturing have, as many have noted before, often “servitised” their business, offering solutions rather than an item in some packaging made in a factory.
The country’s leading micro-multinational manufacturers actually had all the hallmarks of the service industry, said Stevens.
“They’re very close with their customers, they are highly customised and highly value-oriented in what they offer, they are very clear on the customer problem that they are solving,” he said.
“And the fact that they make something tangible and they use very advanced techniques, materials, processes, skills etcetera is just part of the equation.”
The AMGC is currently engaging the manufacturers as it develops its proposal. For more information and to be a part of the initiative, click here. Growth Centre consultations are open until May 19.
Andrew Stevens will be putting the AMGC’s perspective forward as part of a panel discussing “Making it in Australia” at the Cooperative Research Centres Program’s 25th anniversary event in Canberra, May 26. The panel will also feature Professor Murray Scott, CEO, CRC for Advanced Composite Structures; John Pollaers, Chairman, Australian Advanced Manufacturing Council; and Peter Roberts, founder of the Australian Manufacturing Forum on Linkedin.
Images credits (in order)
Luke Hopewell/ZDNet Australia