For the past 17 years, SEMMA has been providing a collective voice for manufacturers in South East Melbourne. Manufacturers’ Monthly speaks with newly appointed CEO, Vonda Fenwick.
While the announcement of the end of Australian vehicle assembly in 2017 may have awoken the broad public’s consciousness to the importance of a vibrant and healthy manufacturing sector, those in Australia’s manufacturing heartland, south east Melbourne, had been preparing for that day for over 10 years.
In 2002, following a series of workshops sponsored by the City of Greater Dandenong, local manufacturers joined forces as the South East Melbourne Manufacturing Alliance (SEMMA). As Vonda Fenwick, recently installed CEO of SEMMA, recalled, there was a need for urgent action.
“One of the people at an industry breakfast stood up and spoke about how he had lost business to overseas competitors for work that traditionally he had done. Everyone was devastated about the loss of work for this business that was known to be a good business producing high quality products.”
The sector itself makes a significant social and economic contribution not only to the surrounding region, but to the country as a whole. As of 2016, roughly one in five manufacturing jobs in Australia are located in south east Melbourne. In addition, manufacturing’s contribution to the economy can be estimated at $1.28 for every dollar spent, significantly higher than other sectors. Furthermore, what distinguished the manufacturing businesses of south east Melbourne was their size, primarily small to medium enterprises, making a collective voice all the more necessary.
“While a number of our members are large, household names, the bulk of our members are the smaller companies so we’re talking the 1-20 or the 20 to 40, through to the classic SME definition of up to 199 employees,” said Fenwick. “SEMMA was really established to advocate for those businesses. They can feel as if they don’t have a voice when it’s just one business struggling with an issue impacting them, so we endeavour to advocate for all our members who are concerned about a particular issue impacting manufacturing.”
Although these businesses, which now number more than 200 members of SEMMA, may be small in size, they have and continue to make an impact due to their capabilities and high-quality processes and product. This was where Fenwick began her career in manufacturing, as a consultant working with companies to improve their operations by applying total quality management principles across an entire company.
“Originally, in a lot of the companies, they saw quality in a very narrow way. The standard has changed over the time that I’ve been involved with manufacturing, so meeting the requirements of international standards has become a basic, fundamental aspect for businesses,” said Fenwick.
In the last two decades since the initial conversations which led to the foundation of SEMMA, what has carried manufacturing through as supply chains reorganise are those Australian manufacturing businesses that have been able to distinguish themselves based on their commitment to company-wide quality processes and continuous improvement. Fenwick was reminded of this when recently visiting a several SEMMA members.
“I was delighted when Richard and Nikki Weinzirl at APT Engineering said the start of their success had been actually getting someone in to help them get their quality system established, and it was from there that they actually took off with improving their business.
“It is only a small engineering business doing beautiful machining, but they’re providing to defence and also to aerospace now,” said Fenwick.
“They’ve gone from a Mum and Dad company where the owner will say, ‘Oh, I’m just a fitter and turner,’ to having a business that is incredibly impressive from the values on the walls right through to their process control, the quality of the parts that they’re dealing with and their ability to meet demanding customers requirements.”
At TransGlaze, another SEMMA member, Darren Laidler, told Fenwick when she visited, the company’s focus on quality enabled the business to sell into overseas markets often thought of as impenetrable for Australian manufacturers.
“What distinguishes the TransGlaze offering from the local product that the buyer could get in China is they know that when they’re buying the Australian product it is meeting those safety-critical standards,” said Fenwick.
“Darren said he doesn’t even talk price initially. He secures the work because they know that the company’s product is good, and the standards are being met.”
SEMMA has been an active force in assisting businesses to distinguish themselves and overcome issues such as higher input prices. One area where the organisation has done so is through group purchasing deals for rapidly increasing costs including energy. The organisation has also held networking sessions and develops connections between members which help overcome the limitations of operating a small business.
“Members would say to us, ‘I’ve been in this factory working away and making sure that I have a healthy business, but I didn’t realise that the guy in a factory down the street could actually help me and be part of my supply chain’,” said Fenwick. “The business to business connections are a plus, because they don’t have a lot of time to get out there. Plus, Also, they’re often hands on in a smaller business, so we perform the function of being able to find out what’s going on in the larger environment.”
While local government has been involved in SEMMA since the beginning, the association has also acted as a voice for its members to state and federal governments, raising the profile of manufacturing and alerting policymakers to the benefits of a strong manufacturing sector. These actions often come down to finding areas of shared common ground.
“We want the same things. We want those robust businesses, we want employment for people, we want community, we want those social benefits that come from manufacturing businesses being healthy, so it’s a natural partnership,” said Fenwick.
SEMMA has also partnered with local educational institutions such as Monash University, Chisholm Institute, Swinburne University of Technology, and Deakin University, as well as CSIRO, which operates a significant proportion of its research out of Clayton.
These partnerships again go toward confronting the critical issues that manufacturers face, that of finding a skilled workforce. Here, SEMMA is the vital middleman, ensuring that courses are fit for industry requirements, and that industry members are prepared to receive apprentices and trainees.
“Whether it’s stand-alone internships or part of a course to have work experience, the businesses benefits having people selected for them through our contacts at the universities,” said Fenwick. Further, a number of our members are also working on leading-edge research into new materials through Deakin and Monash Universities.
Educational institutions have approached SEMMA to provide feedback on course structures and design, to ensure that businesses are able to participate fully. Now, SEMMA are exploring the potential for microcourses or microcredentials that upskill workers in a short period of time.
In concert, these efforts ensure that local manufacturers, no matter their size, are ready and prepared for the work that is available. With Victoria preparing to invest in significant infrastructure upgrades with the requirement for local content as part of the delivery of those projects, and the federal government looking for local manufacturers to fulfil defence contracts, combining the skills and expertise of Australian manufacturers can ensure that local content targets are not just met but exceeded. For SEMMA, this will be a priority for 2020.
“The Victorian government is has assured us that they are very serious about developing a robust local supply chain for major projects, that might be rolling stock, that might be helping to support and grow defence suppliers in Victoria, and we’re certainly looking to ensure that SEMMA members can win more of the big contracts,” said Fenwick.
What this requires, however, noted Fenwick, is a shift in thinking from government, an understanding that in working together local manufacturers can compete with major international firms. However, Fenwick highlighted, there needs to be a recognition of the difference between contracting with SME’s and major corporates.
“Your typical SME does not have a legal department and cascading of onerous risk clauses down to SME’s is unacceptable. Moreover, the rationale for Government purchasing decisions needs to be one of total cost benefit. To compare simply on the basis of price without recognising that if work goes to overseas suppliers, we lose employment of direct labour, we impact service jobs and other related jobs that depend on manufacturing,” she said.
“When we source overseas, we increase unemployment with the consequential societal and economic costs that result from the failure to recognise the critical role a vibrant manufacturing industry plays in a healthy economy,” said Fenwick.
Another challenge is prime contractors wanting to limit the number of suppliers they deal with.
“They would prefer to work, understandably, with a smaller number, so we are definitely looking at ways that our members can collaborate to increase the scope of work that they do and the scale of what they can provide, because we believe that that’s going to be key to securing the work on offer.”
Seventeen years on, SEMMA remains committed to advocating for local manufacturers and growing the region’s capability for the coming decades.