As part of National Manufacturing Week, Manufacturers' Monthly hosted the Leaders' Summit where manufacturers and the industry gathered to discuss what's really happening in the industry.
Below is the opening address by Manufacturers' Monthly editor Cole Latimer.
Welcome Ladies and Gentlemen to Manufacturers' Monthly's Leader Summit, where we will discuss the state of Australian manufacturing in the Asian century, what we can do to take advantage of this new market, and what it means for our future.
Firstly I'd like thank our speakers at the event, from Futuris Automotive Mark de Wit and Dexter Clark, from EFIC Robert Dravers, and from Austrade we have Phil Bourke.
Hopefully today we can all come away with a better understanding of our position in this current market, as we experience the massive global shift towards Asia.
As manufacturers in Australia we also need to shift our perception of how and where we operate.
Australia is part of Asia.
This is now a fact.
We can no longer view ourselves as a nation apart – a piece of the West in the East, and in turn we need to embrace our role in the growing Asian sphere of influence; as we can all agree that this is the Asian century.
The rise of the Asian Tigers in the 90s, followed by the unstoppable growth of China that has now slowed but in turn aided the rise of its South East Asian neighbours, has cemented this.
Previously Australia has attempted to compete against manufacturing nations such as China or Japan.
But with the high Australian dollar, the high cost of labour, and increasing energy costs going head to head with these low cost nations – despite our manufacturing excellence and capabilities – means we may have to either lower our quality (which we can't do) or we have to think smarter.
So how does an Australian manufacturer work smarter?
We trade on lower costs offshore, while we utilise our reputation.
However we have to be careful not to trade our reputation.
Australia is known across Asia as a nation of high quality products, our food, beverages, pharmaceutical products, and proficiency in design set us apart.
If a product is known as an Australian product then it is held in high esteem in Asia; the end users knows that their product is made to the highest standards
We can utilise this reputation to gain a greater foothold in Asia, to use what is now the largest growing middle class in the world – these people want the top quality products and equipment that their newly found money can buy, and Australia is in a unique position to provide this.
This new demand is essentially an untapped market that we as Australians can enter, riding on the back of our already high reputation.
On top of this is our capacity for additive manufacturing, taking a fairly basic product and providing additional manufacturing, processing.
We have the capability to turn good products into great products.
But how else can Australians develop this position in the Asian economic sphere?
Offshoring – possibly.
Recognising where new opportunties lie, in terms of cheaper manufacturing, free trade agreements, and manufacturing locations that open up markets that would simply be unobtainable by manufacturing solely in Australia.
For instance, Australian automotive components manufacturers are looking to new opportunities in Thailand, as there exists a free trade agreement with one of the world's largest car manufacturers – Japan.
This means that their components are able to go straight into Japanese built cars that are later exported back in to Australia, essentially coming full circle from Australian design, Thai built, added to Japanese cars, and ending up on Australian roads.
Realising that Australia is part of a wider economic sphere that now allows us to play within that market as never before is something that our manufacturing space needs to do.
However this does not mean that we should echo the US where all manufacturing is shipped offshore, only to create such an economic blackhole where it eventually becomes cheaper to manufacture in the US again, thanks to generous subsidies and overwhelming governmental support.
We have to be careful that all of our manufacturing and in turn our experience and unique skills are all exported as well, essentially causing a brain drain and removing all our manufacturing capabilities.
Australia can not leave itself vulnerable by moving our entire industry offshore.
There are so many opportunities available, but we mustn't ignore what it means for Australia.
We can continue to manufacture in Australia, and use Asia as a new market for our goods, providing the high end, quality manufacturing that these nations just can't provide or assure without Australian input.
However we won’t be able to do it without government support.
A government that looks at the rising energy costs, addresses the carbon tax, and provides the kind of backing the industry needs, as well as, dare I say it, continued subsidising.
We are here to discuss the potential, the possibilities, what it means for manufacturing, and how we can do it.
Because we need to embrace the Asian century, before it leaves us behind.