Redefining the Australian manufacturer

The dawn of digital and advanced manufacturing is changing the way things are built. Although manufacturing is moving offshore, Steven Impey takes a look at how Australia is changing to become an innovation nation.

Coupled with the disruption of new technologies, the changing demand of the global supply chain is driving Australia to adapt, according to the Federal Government.

The nation’s manufacturing industry has experienced continuous growth for 13 months, according to the AiGroup’s Australian Performance of Manufacturing Index (PMI).

In the wake of closure of Australia’s automotive sector, the transfer from traditional to advanced manufacturing is already apparent and is forcing the government, academics, and the industries they serve to rethink and repurpose their foundations.

With change, the perception of what Australian manufacturing represents is evolving too.

Whereas before, the industry was measured on the wealth of its workforce and the production of hand-made materials, funding is now geared towards more additive manufacturing where investment is intended to inspire ideas rather than the mass production of something all under the same roof.

Six industry-led Growth Centres are said to be a “strategic priority” to yield Australia’s industrial future, according to the Department of Industry. These include work around advanced manufacturing, cyber security, food and agribusiness, medical technologies and pharmaceuticals, mining equipment, as well as the energy sector.

“Australia has established world leaders who provide innovative and high-quality products,” a department spokesperson told Manufacturers’ Monthly.

“The Australian resources sector is at the cutting edge of the application of automation and advanced technologies.

“Additionally, Australian food manufacturing has a number of pioneers. The skills, knowledge and capabilities of Australians are globally recognised and respected, and are a valuable export commodity in their own right.”

The opportunities that a new Australian space agency present the industry will also position the country as an innovator in the realm of space exploration and observation, which, in turn, can further advancements in new technology.

According to the Federal Government, Australia owns “key competitive advantages” in research, design (R&D) and engineering, and this is illustrated by the level of private investment they are attracting.

When Ford halted its production line last year, it established a high-tech Asia-Pacific Product Development Centre in Melbourne, where it has increased its R&D investment in Australia by 50 per cent to $450 million in 2017.

“Many automotive-related firms are utilising government assistance to help businesses innovate, collaborate and invest, to improve productivity and growth,” the department added.

Among them, IMR Technologies recently received an Entrepreneurs’ Programme Accelerating Commercialisation grant to develop car crash alert devices.

Quickstep Automotive and Futuris Automotive Interiors also received funding for a CRC project with Deakin University, to develop bespoke, lightweight carbon-fibre seats for the automotive industry.

Material thinking

Commodities is going through a transition too, with the advent of electric vehicles expected to enhance the production of lithium batteries.

At the German materials solutions company, Covestro, its engineers are looking at ways lightweight bodywork can boost, not only battery-powered vehicles, but also the pursuit of solar travel, which requires smarter materials to allow a car to travel further using renewable energy solely.

Rebecca Lee, the manufacturer’s Melbourne-based managing director, explained how Australia’s resource sector is driving change in the automotive sector.

“From an Australian perspective, it is really about finding out what is cutting-edge in terms of the country’s technology,” she said. “What we still have here – even though the manufacturing and assembly of car parts has gone – are engineers that represent a real commitment to industry quality.”

In October, Covestro teamed up with Team Sonnenwagen, a group of students from Germany, to take part in the 2017 World Solar Challenge – a 3,000km solar-car race from Darwin to Adelaide using nothing but the sun’s energy to complete a race through Australia’s outback.

Lee said the project is aimed at “changing the way we think about sustainability” and to test materials that will be used on vehicles of the future.

“One thing that businesses are changing is how they think about materials and how we can solve the sustainability challenges that are in front of us,” Lee continued.

“When you start to think about other lightweight materials and how they can benefit the industry, from a holistic point of view, that is going to have an impact along the supply chain.    

“In Australia, there has always been an uptake of new technology and one thing I have noticed is that, as a multinational company, that is why we [Covestro] have a footprint here in Australia.

“It is about looking for that new technology we can create awareness around and I think that sustainability as a concept in industry is really going to bring some new opportunities to the fore.”

Intellectual property

Another of Australia’s strategic manufacturing advantages is centred around its protection of intellectual property, at a time when Australian businesses are seeking security for their innovations and products.

This, according to the government, reflects the growing influence advanced manufacturing is having on the national economy.

Speaking at Autodesk University, Michael Sharpe, director of the Advanced Manufacturing Growth Centre (AMGC), considered the industry’s trajectory.

“Let’s look 10 years into the future. It’s October 2027; we all came here by driverless car and your children are going into jobs that you just don’t understand,” Sharpe said.

“Where is Australian manufacturing [going to be] and what impact will this industry have had on Australia over the past decade?

“Is Australia a place that offers high-wage and high-skill jobs? Are we still one of the world’s wealthiest nations or have we slipped behind?

“These are all big questions but they shouldn’t seem too big for us today? Our manufacturing sector and the advanced work it does has a critical role in terms of answering these questions.

“Most importantly, we need to ensure that the next decade guarantees our continued prosperity and creates the right conditions for the next generation.”

Sharpe was also unfazed by the offshoring of manufacturing, claiming that production of an idea doesn’t necessarily have to belong in Australia for Australians to reap its rewards.

Taking Apple as an example, Sharpe explained that, while the product’s assembly takes place in China, nobody considers the iPhone as a peace of Chinese engineering.

Instead, he insists Australia should take stock of its own expertise in the pre- and post-production markets, where higher-tech roles will lead a new generation of manufacturers.

Covestro managing director Rebecca Lee discusses the future of the automotive industry and solar power.
Covestro managing director Rebecca Lee discusses the future of the automotive industry and solar power.

“As we know, manufacturing is not only about making whole products,” Sharpe continued. “Manufacturers – and especially advanced manufacturers – tend to make items that feed into the operations of other manufacturers and assemblers.

“In fact, such intermediate goods now account for more than 41 per cent of global trade while Australia’s share is only about one per cent, so we have a massive opportunity for growth in this country.

“Even though we have seen massive disruption in sectors like automotive, I know that many jobs remain in that area but are directed towards high-skill areas such as engineering, design and research.”

Many Australian businesses are not only succeeding but are leading the world in their category, according to Sharpe, who believes the industry is now at a crossroads.

“We could either find out what is working in manufacturing and try to encourage more of it,” he said, “or find out what isn’t working and try to stop it.

“We are taking the first route, which means looking at why some companies are doing so well. Seeing lots of good things happening in manufacturing, we are asking questions around what has proven most effective and how we can accelerate that.”

   Since January 2014, Australia’s manufacturing industry has seen its share in the country’s export value climb to almost a third, making it the nation’s second-largest export behind mining.

Additive manufacturing

To boost productivity, the government’s Growth Centres are seeking to align industry and innovation policy with the help of bodies such as the CSIRO and Corporate Research Centres (CRCs).

“This is already proving successful, with innovation hubs in carbon fibre, additive manufacturing and Industry 4.0 stimulating collaboration between researchers and firms,” a spokesperson for the Department of Industry added.

At Atlas Copco Compressors, the compressed air and vacuum systems manufacturer, its solution around air compression is disrupting the industry for the better.

In Australia, Atlas Copco is primarily a sales arm to the wider brand, relying on its knowledge and manufacturing centre in Antwerp, Belguim. As well as the manufacture of its products overseas in countries including China, India, Italy and Brazil.

“Australia’s main change in the supply chain over the years has simply been around cost-cutting but, at the same time, higher attention has been paid to highest possible quality and efficiency,” said Nash Bakhit, product manager for Atlas Copco’s compressors division.

“That doesn’t mean our quality is being compromised, not at all. With time, the time it takes to achieve that quality has improved.”

The difference between Atlas Copco compared to other manufacturers is that, while using a third party to build machines is a common practice elsewhere, wherever in the world its products are built, they are built by Atlas Copco owned factories that are run and managed by Atlas Copco employed teams.

“For us being a sales company, we are striving to support the local manufacturing industry and to make it more competitive,” Bakhit continued. “By providing a solution at a competitive price that saves on ownership costs to the manufacturing industry, it helps it get better and gives it the motivation to keep going.

“At the moment, the trend for manufacturing is to have a one-stop shop that supplies the industry with specific solutions that add more quality to manufacturers by providing a more optimum product.”

One of the main issues local manufacturers have, besides the cost of labour, is the cost of energy, which Bakhit says is “going through the roof”.

By investing in R&D, manufacturers are now finding alternative solutions that can impact the wider industry and provide a more tailored service to their customers.

While its products are made overseas, Atlas Copco’s VSDplus air compressor machines are proven to cut a factory’s energy consumption by an average of 50 per cent.

“We are supplying the backbone to the manufacturer’s operations,” Bakhit explained, “and the cost-efficiency and the availability of the new technologies that we bring to the market can really help manufacturers develop longer IPs because they have the tools at hand.

“In the same way that computers helped businesses develop new ideas, our innovative product such as our onsite nitrogen generators, for example, are much more refined and technologically advanced these days than they were before and help the industry to be more innovative.”