Though not a new term, “advanced manufacturing” has gained a lot of traction in Australia in the last year or two.
There is no universal definition of the term, despite organisations all over the world making their own attempts to pin it down.
The consensus seems to involve a holistic approach to the way a business operates, with a high level of technology and expertise applied throughout every step of a company’s value chain.
Many argue that to remain relevant into the future – given factors such as an open economy, a high-cost environment and a small local market – local industry must adopt advanced manufacturing.
There are many, many ways of understanding just what the term means.
Below we present a series of comments given to try and describe “advanced manufacturing”; all are from knowledgeable respondents, each of them well-placed to comment.
All answers have been given in interviews with this magazine unless otherwise stated, and come from a variety of experts including business leaders, academics and members of government organisations.
For answers to the question “what is advanced manufacturing?”, read on. For further explanations, an option is to consider the panel discussion at the 2015 Advanced Manufacturing Summit, to be held Tuesday November 17 at The Menzies Hotel in Sydney. For more details, click here.
It’s about delivering value
Pat Boland, co-founder, ANCA (May 28, 2015)
"It’s a very difficult definition, really. To me, advanced manufacturing is where you’ve got really very high value-adding. So you’re delivering a whole lot of value beyond just the basic material cost of whatever you’re manufacturing.
"Why is ANCA an advanced manufacturer? I think the fact that ANCA – we are exporting into the leading value chains throughout the world. We export precision grinding machines to Switzerland, to Japan; we’re selling components of the missiles which are heading off to mars. If you touch virtually anything in the world of any complexity, it’s probably been touched by a cutting tool which has been manufactured on our machines.
"It gives a fantastic feeling when you get on an airplane and you look around at all the components, you even look at the tray, and you’ll see it’s all been machined out of a solid, and maybe it’s by one of the cutting tools manufactured on our machines that’s played a part in it."
It’s about looking well beyond the factory floor
Andrew Stevens, chairman, Advanced Manufacturing Growth Centre (May 5, 2015)
"You can’t segment the asset codes to list those industry components that make up advanced manufacturing. Advanced manufacturing is about high value, it’s about a very broad, full value chain scope, and it’s certainly well beyond what happens on the production floor, so to speak. So it’s broad in nature, full scope and it’s more a way of manufacturing – process, mindset and approach. So it’s not a list of companies, it’s not a list of industries, but it’s a way of proceeding.
"You don’t say ‘this industry’s advanced and this one isn’t’. This company is [for example] advanced in the way it approaches [manufacturing]. Realistically, it starts with the customer, it starts with design led thinking, it includes inbound logistics, includes production, includes outbound logistics, marketing, sales and also the service element. And it’s hard to find a company that is in a strong competitive position that doesn’t adopt that sort of approach. Conversely, there are examples of companies that are really struggling at the moment who are manufacturing one product for one customer according to the customer’s specifications. But they are really only engaged in the production process that they would clearly be hard to define as an advanced manufacturer."
It’s about ideas and more
Bruce Grey, former managing director, Advanced Manufacturing CRC (2009 – 2015), currently director on several boards (October 20, 2015)
"Prior to 2000, manufacturing generally referred solely to the production of goods. Today, manufacturing is about ideas, products, processes and services. This post-industrial global manufacturing system represents a complex and highly integrated value chain. This value chain includes cutting-edge science and technology, innovation, skills, design, systems engineering, supply chain excellence and a wide range of intelligent services, as well as energy-efficient, sustainable and low-carbon manufacturing.
"Further I have always defined Innovation as follows: The creation, development, protection and commercialisation of know-how, new products and/or processes that pre-empt the market by the application of scientific and technological skills."
It’s about the future
Professor Stephen Martin, CEO, CEDA (June 18, 2015)
"There’s no doubt that advanced manufacturing is the future for Australia.
"Advanced manufacturing, as we pointed out in our report last year, is very much alive and well and is reflected across a broad cross-section of Australia’s economy already. Whether we’re talking pharmaceuticals, whether we’re talking in developing our parts, whether we’re talking in electricity generation, there are niche manufacturers that are employing highly trained, highly skilled, highly paid people – fewer of them, absolutely – but also linked to global supply chains. And most of them being small businesses, doing an incredible job in this country to contribute to Australia’s economic wherewithal.
"And these sorts of things we need to be praising, we need to be talking about them far more than we have in the past."
It’s about information
Herbert Hermens, CEO, Keech Australia (May 28, 2015)
"Advanced manufacturing is centred on sharing information, and making sure information flows right through the whole production chain. This is absolutely key. It is not necessarily talking about a unique and dynamic change in manufacturing, it just means a process development. And that’s the key.
"I think that it’s a mistake to just imagine Australia can build a future on what they call very high-tech manufacturing. I think for Australia to be a credible force in the international field, it must have a broad spectrum manufacturing base. It means adapting advanced manufacturing techniques from the most basic manufacturing right through to the most complex. Companies such as mine, which is a foundry, and is thought to be the second-oldest profession in the world, yet we can adapt, and we can put processes to control information so that we can improve our systems and reduce our production cost. That’s the key.
"Manufacturing done in a thoughtful way – and making sure everyone’s involved in the process."
It’s about information and science
US President’s Council of Advisors on Science and Technology (from https://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-advanced-manufacturing-june2011.pdf) (June, 2011)
“[A] family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example nanotechnology, chemistry, and biology. This involves both new ways to manufacture existing products, and especially the manufacture of new products emerging from new advanced technologies.”
It’s about non-traditional manufacturing
Professor Roy Green, Dean, UTS Business School (August 21, 2015)
"I guess advanced is meant to distinguish new forms of manufacturing from traditional ones, which are often based on volume, on routine manufacturing, on large facilities and in non-complex products, in many cases. Whereas advanced manufacturing is characterised by knowledge intensity, it’s integration with a services ecosystem, with the virtual world, through the internet of things and the internet more generally. It’s increasingly digitised. It links the virtual to the physical, because of the products, including in 3D printing. And it’s often generated within smaller units of production as parts of global value chains, rather than as large, vertically-integrated organisations.
"So that’s the change I see to advanced manufacturing.
"We’ve always had advanced manufacturing, ever since manufacturing began. There has always been a more advanced form of it, and that is the form that, ultimately, everyone adopts. And then we move on to a new form of advanced manufacturing."
It’s about using technology to simplify factories
Dr Rodney Brooks, founder, chairman and CTO, Rethink Robotics; Advanced Global Australian Award winner 2015 (Advanced Manufacturing category) (August 14, 2015)
"What I’m doing in my company, Rethink Robotics, is putting robots into factories. So certainly manufacturing is what we do. These are somewhat different from traditional industrial robots in that they’re safe to be next to: they’re collaborative. Instead of programming the robot you show it the task and train it. And it’s got some intelligence built into it. I view that as advanced manufacturing, in terms of advanced technology used for manufacturing.
"Some people use advanced manufacturing to mean weird materials, advanced materials. I think of it in terms of using advanced technology to make manufacturing simpler."
It’s about asking the right questions
David Hodge, managing director, Plastic Forests (May 28, 2015)
"I think if you’re going to be advanced, you’ve got to be in front of the pack, and being in front of the pack means you’ve just got got ask a better question. And if you can ask a better question and you can solve an existing problem better, and better than anybody else globally, well then you’re going to be at the front. And I think we’ve got a bit of an attitude problem. I think that we ask really great questions and come up with really great answers and great outcomes."
It’s about keeping modern
Ulli Spranz, managing director, B.-d. Farms Paris Creek (May 28, 2015)
"I would call us an advanced manufacturer, because we are using the most modern technology in what we are doing in producing our dairy products – cheese and milk and yoghurt and butter – and we are always looking for the most modern technology to keep the health in our products and to keep them as natural as possible. And also, in our farming system, biodynamic farming is one of the most advanced farming methods."
It’s about globalisation and innovation
John Pollaers, chairman, Australian Advanced Manufacturing Council, speech to University of Melbourne (http://fbe.unimelb.edu.au/insights/vol17/is-there-a-future-for-manufacturing-in-australia) (October 29, 2014)
“The concept or term 'advanced manufacturing' is necessary to distinguish the older industrial model ….from the kind of manufacturing where Australia can, and already is, triumphing. We define advanced manufacturers as globally-oriented and innovative manufacturers, in general sharing the following characteristics:
– High Intellectual Property component; high knowledge base
– Dependent on global supply chains.
– The only public sector support needed is at the Research & Development phase through tax credits or leveraging public/private partnerships.
– Advanced manufacturers tend to be engaged in collaborations with universities, the CSIRO and other research institutes.
– Advanced manufacturers sell to a global market and compete on distinctive qualities. The domestic market is not a constraint.
– These manufacturers constantly innovate to remain competitive. They leverage the latest thinking in technology and materials.
– They produce high margin products.
– And they have smaller capital and labour footprints but are higher paying, and provide higher quality work.”
It’s about smarter automation
Thomas Hughes, project engineer, Machinery Automation & Robotics (May 28, 2015)
"I guess advanced manufacturing is a step forward from what we’re used to. A lot more sensing, [which] is what we specialise in, a lot more vision – making automation smarter. So back in the day robots used to do the same thing over and over again. Now we’re trying to make it smarter, with sensing, and to give the robot more brains, essentially. More flexibility, it makes it faster, it makes it safer."
It’s about investing in the best equipment
John Guest, managing director, Jubilee Springs (May 28, 2015)
"The only way of keeping ahead of the world market is having the latest equipment, and we’ve always gone out around the world to seek the latest equipment. And at Jubilee Springs we have three of the latest spring-coiling machines in the world, literally. We’ve got to keep ahead of the overseas [competition] with technology, otherwise they’ll just leave us behind."
It’s about excellence across the entire spectrum
Albert Goller, former chairman of Siemens Ltd and META (in CEDA’s Advanced Manufacturing: Beyond the production line policy paper.) (April, 2014)
"[We] see advanced manufacturing as business excellence across the entire value chain not just innovation. This is the future for our industry. Many companies are already doing this and they are our hidden champions. It is about taking full responsibility for not only what is manufactured but the process from beginning to end. It looks at how the product or material is produced, considering all regulations and communities impacted and how profits are then returned to the business or investors."
It’s about using advanced materials
Chris Gilbey, CEO, Imagine Intelligent Materials (formerly NanoCarbon) (October 1, 2014)
"Advanced manufacturing is about novel materials, I think. So I don’t see how you can really develop the potential of advanced manufacturing – and I’m thinking in terms of additive manufacturing as well as the use of materials that provide new kinds of functionality to those things that we’re quite familiar with.
“When you think about advanced manufacturing, what does that mean? It’s doing something different than traditional manufacturing. The something different that enables us to do different things is truly going to be empowered by novel materials, those novel materials being composites – they might be carbon fibres with new attributes, and really delivering on the expectation that people have had for years for carbon fibre, which has only been partially realised because there are limitations to what you can do. But when you think about composites, you’re thinking then about the utilisation of materials such as graphene."
It’s about both the product and the process
Jeff Connolly, CEO, Siemens Australia (June 18, 2015)
"I think the answer to that is there’s a varied appreciation of what the definition of manufacturing will look like in the future. So it’s still a challenge that many people associate manufacturing with fixed production lines and what goes on within the four walls are manufacturing: static, old views, take the auto industry [for example].
"There are a number who have visualised that, because the world is become ever more connected, digitally, that there are additional opportunities. And I think what’s happening in Australia as examples should be taken as a CSL, a Textor: they’re seeing that now, actually, they have access to the world because they’re able to communicate and able to participate in what’s going on offshore with advanced products and advanced manufacturing techniques. There’s two elements that we come up with all the time.
"Are we talking about, in the world of advanced manufacturing, the product or the mechanism of manufacturing? And the answer to that is it’s both.
It’s about technology enabled by chemistry
Ross Pilling, managing director, BASF Australia and New Zealand (September 17, 2014)
"I think if you just talk about advanced manufacturing; there’s been a lot of buzz around advanced manufacturing. I was a little bit puzzled frankly – what is advanced manufacturing? So I did a little bit of work and looked up a definition of advanced manufacturing being defined by the rate of technology adoption and the way that a firm uses that technology to remain competitive and add value.
"Actually, from the chemicals and plastics industry what’s interesting is what sits at the bottom of both those businesses is chemistry. The composite materials that Boeing use to build an airplane are all about resins and carbon fibres and chemistry, how these things are put together and what are the materials that make them stick together and what are the materials that make them strong, that make them resilient, that make them flexible and that actually make them do the things that they need to do in their application.
"And similarly, with Textor, the properties of those textiles that they’re producing are all about chemistry, they’re about the chemistry of the fibres and the chemistry of the coatings and the way these things are put together. And so chemistry is the critical enabler, the ultimate enabler, behind both of these complex, advanced technology, advanced manufacturing operations."
It’s about making machinery
Compete to Prosper: Improving Australia’s global competitiveness, McKinsey Australia, (from http://www.bca.com.au/docs/becc9d88-f873-48bf-b5fb-c5b3d0335aba/McKinsey_Compete_to_Prosper_Improving_Australias_Global_Competitiveness_FINAL_28.7.2014.pdf) (July, 2014)
“Advanced manufacturing, which includes machinery and all equipment manufacturing, has been considered a transitional sector as broadly competition is cost-focused…
“…For rough sizing purposes, we have considered advanced manufacturing to cover the ABS classifications of machinery and equipment manufacturing.”
It’s about knowledge, specialisation and serving a global market
Professor Goran Roos, an academic, businessman, consultant, and member of South Australia’s Economic Development Board (October 11, 2015)
Most people would make their own definitions here. Here is mine:
· An industry that has very advanced knowledge (does not need to be technology, it could be, for example, design) built into: its offerings, its production processes or its capital equipment.
· An industry that produces and exports things that very few other players outside the country can produce.
· An industry that have a large and diverse range of inputs necessary for its activities of which a relatively large share is sourced from within country from firms that have similar characteristics as themselves in terms of advanced manufacturing or advanced services.
· An industry that has a high export share, high growth and high profitability.
Slider image: www.davidsonccc.edu