Growth in manufacturing operations: The best kind of problem to have

While conditions in the Australian manufacturing industry remain challenging amid weakness in the global economy, there are certain companies that are bucking the trend and taking advantage of strong opportunities for growth.

Many Australian businesses are become increasingly specialised and are able to offer high-value and innovative products and services which is driving their growth.

For businesses that take advantage of these opportunities, experiencing rapid growth in manufacturing operations is welcome; however it can throw up some challenges. Navigating these challenges is all part of the growth journey.

Pharmaceutical industry poised for growth

Medicines manufacturing is one industry which poses some good opportunities for growth over the next 10 to 20 years. The medicines export industry in Australia is substantial and is currently worth $3.8 billion, employing over 13,000 people.

While the growth of the industry in general has been slowing over the last few years, there are certain key areas in which we expect to see significant growth over the coming years, for example biopharmaceuticals and complex delivery systems.

As Australia’s largest pharmaceutical company, AstraZeneca Australia exports over $220 million in finished products to 36 countries and has experienced rapid growth in its manufacturing operations in North Ryde, Sydney over the last few years. We have developed a niche specialism in complex delivery systems which is largely driving strong growth in production.

One of the key products manufactured at the site is a medication called Pulmicort Respules, a respiratory product for asthma sufferers. We are on track to produce 180 million of units of the product this year; set to increase to 500 million a year by 2020.

This growth in production is largely in response to a thriving Chinese market, where demand for the product is rapidly on the rise as the country seeks to open up access to medicines. 

AstraZeneca is the sole supplier of this product into China, due Chinese licensing laws which require just one global access point into the market.

Growing pains can be a challenge

For businesses like ours which experience sharp increases in demand, requiring a manufacturing unit to rapidly escalate production rates almost overnight, there are some barriers to overcome.

Understanding how to prepare your business to cope with them will ensure a much smoother path to expansion.

The search for talent

One of the biggest challenges that rapid growth brings is finding good people. We have found that recruiting good, capable pharmaceutical executives and technically skilled workers is not easy, especially given that some medicines companies have reduced their manufacturing capability in Australia.

In the absence of any immediate solution to this ongoing challenge in many industries, you may need to think about growing your own talent.

AstraZeneca is an active supporter of the pharmaceutical industry at a tertiary level as well as being involved closely with the work of pharmaceutical associations in a bid to stay closely involved in the professional and technical development of the industry’s young talent.

It is also worth considering if talent can be attracted from outside your immediate industry.

AstraZeneca has sought to attract talented individuals from the food and FMCG industries, for example, given that individuals trained in these industries can have the general skills and capability required to excel in the pharmaceutical industry if they are given the technical know-how and specific skills.

Bringing in staff on overseas contracts and secondments is another option, as these staff can then play a valuable role in capability building and knowledge transfer on the ground.

AstraZeneca seeks to actively develop staff by giving them the opportunity to grow their skills and capability on secondments overseas and to other parts of the business, and then bringing them back to benefit the business unit through valuable skills gained.

Increasing importance of risk management

We have found another key challenge of rapid growth is managing risk.

Growth can bring a number of operational changes such as dealing with new suppliers or materials, which needs to be managed carefully.

For example, as AstraZeneca’s production has grown, our pool of suppliers has reduced as the pharmaceutical industry itself has shrunk, making the sourcing of some of our key raw materials from within Australia challenging.

Sourcing materials from overseas adds lead time and complexity which can equate to risk. In order to maintain local suppliers wherever possible and limit risk, we work closely with our suppliers to build their capability for the production of specific materials, to enable them to produce the materials we need.

Quality is key

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Finally, performance is a natural concern when any business has gone through a period of rapid growth.

The quality of the product, level of customer service and cost are critical considerations which may need to be addressed.

AstraZeneca’s rapid expansion of exports to China has meant additional freight costs and increased production of a complex, expensive product in a relatively high cost labour market. Fortunately, the volume of the growth has enabled costs to be kept down meaning a consistently priced, quality product.

Quality is often a key reason for a business winning a contract initially, so it cannot be compromised by the rapid growth necessitated by delivering on the contract.

In AstraZeneca’s case, our unique specialism to produce high quality, complex delivery systems on a large scale is what our buyers value so it is important that we uphold our standards through growth.

Change can always be challenging, even when the end result is positive for the business.

Ensuring that your business navigates the potential problems associated with growth, such as a lack of skilled staff, new risks and a ‘no compromise on quality’ attitude are key to leveraging opportunities for growth in the Australian manufacturing industry over the next decade.