As local industry looks to build on recent momentum, how do manufacturers plan to meet the challenges and take advantage of the opportunities awaiting them in 2019? Mark Goodsell, head of the Australian Industry Group in NSW, explains.
Manufacturing entered 2019 with a lot of momentum built up over the past 2-3 years. With 85,000 jobs created by the industry in 2018, it was among the highest of any sector according to the Australian Bureau of Statistics.
It has been a period of growth with change, as a new model of manufacturing success emerges from the twin currents of technological innovation and the globalisation of supply chains. Every business has its own priorities, but across manufacturing industry some common themes dominate.
Many manufacturers report their growth plans are constrained by skill shortages. It is a complex problem that can be sourced to a range of demographic and economic changes over the past few decades including older school leaving ages, reduced commitments and funding of trade training, imbalance between the perceptions of university and vocational education and training as career enablers, and unduly pessimistic perceptions of industry.
To gain work-ready entrants for the workforce, companies are starting to look to new modes of engagement with local schools and with vocational and university level education. They are reframing their recruitment practices, the way they describe the careers they offer, and are exploring rapid cycles of learning and work based on specific skill sets and microcredentials, higher apprenticeships and other forms of work-integrated learning.
Internship programs as well as other innovative models of student-industry activity are growing and are a great way to get new thinking into a workplace as well as potential future employees.
The battle for policy outcomes to underwrite reduced energy prices and greater reliability will continue just as companies will continue to learn to be cannier energy purchasers. However, significant gains can and need to be made in energy demand for us to regain competitiveness. One consequence of Australia’s historically low energy prices is that households and industry are estimated to be up to 30 per cent less energy efficient than the better economies. Both levels of government are increasingly focused on supporting industry efforts to improve energy efficiency.
Rapid technology advances and new government programs means that it pays to constantly trawl for solutions and support and re-assess payback calculations. Resources are already available for common manufacturing energy guzzlers like compressed air and refrigeration. A great starting point is knowing where and when your energy is being used.
China’s decision to severely restrict the unsorted waste it accepts from countries like Australia is already impacting household and industry waste streams.
There are more government programs emerging to provide advice and financial support for recycling and the circular economy. These focus all along the waste cycle, from redesigning products for reuse to developing products or technologies that increase the use of recycled materials, and processes to better sort waste streams.
Standards in the built environment
The Infinity cables recall, building cladding fires and the Opal Tower failure are the tip of a much larger problem identified in the nation’s construction industry. The senate’s comprehensive assessment of the problem confirms the view that non-conforming building products (NCBP) remain a significant issue for the community. The problem lies with weaknesses in the application of building standards and poor enforcement.
Australian manufacturers have felt disadvantaged by frameworks that appear (when applied) to more strongly impact local manufacturing than offshore supply. A lack of robust surveillance, check testing and enforcement, plus a hollowing out of technical capacity in industry leading to an overreliance on paper trails in lieu of explicit knowledge, may have contributed to serious decline in the quality of our built environment. Manufacturers should educate their customers on the risks of opting for low-priced building product that may be non-conforming. If NCBP are encountered, then report it. This is now a legal obligation in Queensland.
Employment and safety regulation
At both state and federal level, a raft of new regulations and proposed laws are emerging – to increase regulation of casuals, labour hire, so called wage theft, gig economy workers, workplace safety penalties and exploitation in global supply chains. These ideas are coming from both current governments and confident oppositions.
In workplace safety the debate is centring on industrial manslaughter and the increasing penalties for the highest levels of negligence by those who lead and manage companies. Under current laws, courts have recently imposed prison terms on company directors for workplace fatalities.
Manufacturing requires more vigilance on safety than many other industries, and companies would be wise to reconfirm that their employment arrangements and safety systems are compliant and working as intended.
A wave of digitisation is rapidly changing what is manufactured, how and where it is made, and how manufacturers are making money. It is dealing higher cost nations like Australia back into the global manufacturing game if we have the right mindset and policy settings.
It needs management, employees and a skilling system that can all absorb new trends rapidly; a mindset that understands and values data as much as physical goods; a mature view on cybersecurity; and a greater willingness to seek unique capability though collaboration with other companies and with research institutions. The number of manufacturers, including SMEs, seeking collaborative partnerships with universities and research organisations is increasing. Manufacturing start-ups are emerging from innovation incubators. Both are healthy signs for the industry’s future.