Companies need to look further than their own backyard

Image: http://www.suttontools.com/about/about-sutton-tools/

Success isn’t about just making things for a domestic market. Brent Balinski spoke to Michael Grogan, who recently finished up as CEO of Sutton Tools, about going global, and why the industry’s future is a bright one.

An industrial multinational giant such as Bosch, Boeing or GE is unlikely to spring up in Australia any time soon, but the future of Australian manufacturing belongs to local firms providing solutions to these multinationals.

This is the opinion of various industry bodies and policy-makers. It is also consistent with the opinions of some of our leading companies. A survey of over 80 of the country’s leading manufacturers by the Advanced Manufacturing Growth Centre found access to the supply chains of these multinationals – which account for the vast majority of global trade – was the number one concern to becoming more successful.

One such globally-minded Australian manufacturer is Sutton Tools, which exports about 40 per cent of what it makes at its three sites in Victoria, where it employs roughly 400 staff. It is known for its constant reinvestment of revenues in R&D and its skill at solving customer problems for global clients, such as Apple contractor Foxconn.

“Over that period we set up operations in Singapore and in Europe to be able to tap into those markets,” explained Michael Grogan, who joined Sutton when it acquired P&N in 1994.

Michael Grogan“And if you’re doing it yourself it’s a lot of hard work. It takes huge amounts of resources setting up greenfield sites in greenfield markets.”

Grogan moved to Australia in 1997 and recently left Sutton after two decades at the family-owned business, finishing as its CEO. Last week he began as Director, Victoria at AMGC Ltd, overseeing operations at the organisation’s Innovation Hubs in Clayton and Geelong.

He begins his new role at an arguably exciting time for Australian manufacturing, currently enjoying an unbroken 11-month period of month-on-month growth, and in which new technologies are shifting the focus away from raw production and towards “intangible” stages.

It is a period in which the industry is being redefined, and many within it – such as the Australian Advanced Manufacturing Council – are trying to make those outside it realise that manufacturing nowadays is generally not repetitive, dull, unsophisticated, or stuck purely within four walls of a factory.

“Advanced manufacturers don’t just make things,” as Grogan’s new employer reminds us. “They also innovate, design, distribute and market products.”

The Growth Centre is preparing to deliver its Sector Competitiveness Plan, including a study of “two or three” of the international value chains where Australian companies are poised to do well.

One area where there are potential opportunities is in intermediate products for the aerospace industry, such as those made Tier 3 and Tier 4 manufacturers, according to a presentation by the group’s managing director Jens Goennemann during National Manufacturing Week recently. This is an area where Australia plays little part, though has a few success stories.

Whatever the eventual exact approach for engaging companies with such value chains, Grogan believes that there will be a great benefit for manufacturers through the AMGC, and the process will be sped up considerably.

“And after going through the pain of that for the last ten years I can see it as a huge benefit to small to medium enterprises,” he said.

Better exposure to these, goes the plan, will see the industry flourish, more success stories told, and therefore a more positive view of the industry. This will eventually see more attracted to a thriving, globally-oriented career.

“It’s got a very bright future, worldwide, but there is a change in the way we’re looking at it – it’s not just the old-style production line, or the old-style perception of where manufacturing is,” said Grogan.

“And I think parents need to understand that as well. It has been for the last 20 years of trying to change the attitude to it. And have the perception and understanding that it’s still offering great career opportunities for young people and it’s got some worldwide attraction as far as skills are concerned.”