How do we shape the future of manufacturing?

Where are Australia’s strengths and how do we make the most of them? Innovation and productivity guru Professor Roy Green tells Brent Balinski about the kinds of companies that thrive here and what needs to be done to encourage more of them to emerge.

As anyone involved in the industry can probably tell you, there are many successful Australian companies about, though they usually aren’t names the average person would recognise.

Call them micro-multinationals, Hidden Champions or something else: there’s an estimated 1,500 – 3,000 Australian manufacturers who are leaders in their various niches.

They are generally research and knowledge-intensive, have an international mindset, and compete on value rather than price.

“These companies are not household names,” Professor Roy Green, Dean of the Business School at UTS since 2008, told Manufacturers’ Monthly.

“They tend to operate below the radar, because many of them don’t have consumer relationships in consumer markets, they are part of value chains which have an ultimate consumer of a different overall product.”

These high-achievers, Green and others argue, are the future. They are suited to Australia’s high-cost environment. The problem is that we don’t have enough of them.

“A very good way of creating value is through knowledge-based manufacturing,” said Green.

“We can’t find new sources of growth simply by selling each other piccolo lattes.”

As revenues from resources decline, there is a need for Australia to find growth elsewhere. Manufacturing has an important role in this, Green believes. What’s needed is an environment and policy setting that help can produce innovative companies like Textor Technologies, Hoffman Engineering and ANCA.

Australia is reasonably placed for tomorrow, according to Green, who will be one of the presenters turning their minds to the future at this week’s Vivid event, Australia’s Industrial Revolution: Manufacturing in 2030.

The country has the requisite skills and knowledge, and, to some degree, the necessary entrepreneurial streak.

But there’s work to be done. And there’s a role for many to play, including government.

“This is something that does need to be led by government in collaboration with all the relevant stakeholders, which include the manufacturers themselves, universities, research institutions like CSIRO,” said Green.

“At present, compared with some other countries, we lack that ecosystem of collaboration and commitment.”

There’s also an urgent need to seriously examine what areas are ones of specific strength, and to craft industry policy – something Green believes hasn’t been seriously rethought since the Button Plan – accordingly.

“The thing that’s been very badly lacking in Australia for many years – and which other countries do: Sweden, Denmark, Germany, UK, the United States recently, they all do some variation of a technology foresight,” he said.

“In other words: identifying for their countries what are the areas of existing and potential strategic and competitive advantage that they have and which they can foster, and to the extent that they have the resources to do so, to mobilise them to encourage those areas to the fullest extent.”

The previous government’s Prime Minister’s Taskforce on Manufacturing report – delivered in 2012 and to which Green contributed – was an example of what might be done, but lacked the comprehensiveness seen in reviews conducted by other nations.

The demands of industry include better linkages between researchers and business, something regularly pointed out by experts.

Cuts to agencies such as the CRC programs and CSIRO in the recent budget were a mistake, according to Green.

“It’s tragic and short-sighted,” he said.

“It’s scarcely believable that at the very time that all economists recognise the need to encourage and identify new sources of growth for the economy, we are cutting off the prospect of doing so at the very source, which is knowledge and innovation.”

Though not in the same league as the above cuts, the disbanding of the Manufacturing Leaders Group last month – which Green was a part of, along with other researchers, union leaders and business representatives from Boeing, Textor and Thales – was also misguided, according to the Professor.

Green believes it was, “Disappointing and emblematic of the government’s approach” to axe a group with “no political axe to grind and their only interest is in promoting the future of manufacturing in Australia.”  

As in other countries, there is a role for government to play in assisting businesses adapt to the future.

There is also a need for services promoting not just business improvement but transformation.

“And this applies not just to technologies, but also to non-technological innovation, which means for example the development of new business models for companies, the development of better systems integration, improved, high-performance work and management practises,” said Green.

“All of these can be assisted and accelerated by good, cost-effective public policy. And we seem to be running away from that under the glib slogan of ‘ending the age of entitlement’. Well the issue is not about ending entitlement, it’s about identifying where our competitive future lies as a country.

“Until we do that, our discussions of entitlement are irrelevant.”

In comments that might not go down well with die-hard neo-liberalists, the Professor blames a lack of attention to industry policy over the years to a worship of market forces and a complacency driven by the country’s success in exporting raw materials.

He believes Australia’s long-term laziness with industry policy and subservience to free market ideology is unique.

Every technological hub in the world – including Silicon Valley – needed a kick along from government, he pointed out. Doing nothing and believing the market will always pick winners is not the way to exploit potential growth.

“In the Silicon Valley case, the role of DARPA, the Defense department, of national government, of competitive research programs have been very important. As has been national procurement policy, the SBIR – the small business research program,” he said.

“So this idea is intellectually bankrupt.”

For information on Australia’s Industrial Revolution: Manufacturing in 2030, held on June 3 at Sydney’s Museum of Contemporary Art, click here.

 

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