The Advanced Manufacturing Growth Centre (AMGC) reports that less than one in four Australian manufacturing firms collaborate with one another and even less do so with universities. The gap indicates huge untapped opportunities for local manufacturers to benefit from innovation-related collaboration.
The topic was addressed at a gathering of Western Sydney manufacturers and organisations, including AMGC, in late-2018.
Michael Sharpe, NSW state director of AMGC, encouraged manufacturers to increase their revenues by directing their attention to improving their product design, market distribution and customer relationships.
“Our research shows that 40 per cent of Australian manufacturers do not even have a website. And for companies that do have a website, their latest news is sometimes up to three years old,” Sharpe said.
He cited Rolls Royce’s “power by the hour” service as an example of successful sales models.
Under the sales approach, a complete engine and accessory replacement service is offered by Rolls Royce on a fixed-cost-per-flying-hour basis. This aligns the interests of the manufacturer and operators, who only pay for engines that performed well.
On a smaller scale, Sharpe discussed the case of FormFlow – a Melbourne-based startup company that has developed in-house technology for bending corrugated metal sheets with AMGC’s support.
“Everyone said you can’t bend corrugated iron because it will crack or crease. FormFlow developed a world’s first machine and they now plan to export it globally. But instead of selling it, they are employing the Rolls Royce model where the clients pay by the hour or by the month.
“The beauty of this sales model is that it no longer matters that Australia is so far removed from the rest of the world. A startup company in Victoria can now sell their machine globally and if the clients don’t pay their monthly bill, the company can switch the machine off using cloud technology until the payment is made,” said Sharpe.
In October, AMGC, UNSW Sydney and St.George Banking Group announced a new strategic partnership to accelerate the introduction and commercialisation of new manufacturing technologies.
The event in Sydney was the first in a series of meetings that the organisations plan to hold to bring manufacturers together to encourage closer collaborations.
JAR Aerospace, a startup company specialising in design, manufacturing and sustainment of Unmanned Aerial Systems presented its model as an example of successful collaboration and innovation.
Lochie Burke, co-founder and chief marketing officer of JAR Aerospace, shared the company’s vision and journey so far.
“We are fortunate to be a part of a very highly-educated and talented population in Australia. But, our capabilities are deterred because of a we-can’t-do-that-from-Australia mentality as well as unfamiliarity with emerging technologies and a resistance, especially from the young people, to be innovative and disruptive. That’s why we decided to start a subsidiary company, called JAR Education, to engage young students and give that aha moment.
“The idea behind JAR Education’s initiative is to give the students a small drone that they can build themselves, program, test-fly and even crash, then figure out what went wrong and try to fix it. At the end of the day, when these students go home, they’ll think to themselves, ‘Wait a minute, I just built a drone. Why can’t I build other similar systems?’?” said Burke.
He emphasised the need for collaborations, based on the company’s experience.
“You are kidding yourself if you are a 23-year-old bloke in a garage thinking you are going into aerospace without collaboration. What AMGC has done for us, which is more valuable than any money they could have given us, is putting us in rooms full of different manufacturers that enhanced our capabilities through collaboration and enabled us to do things that we were not able to do by ourselves,” he said.
Building resiliency was another issue brought up by AMGC’s Michael Sharpe. In a recent report, Building Resilience in Australian Manufacturing, the AMGC points out that Australia is home to one of the most volatile manufacturing industries in the world.
The report revealed that average output across Australian manufacturing sub-industries swells to 20 per cent above trend during economic upswings, while contracting to 20 per cent below this level during downturns. This compares with much more modest deviations of 14 per cent in the UK, 10 per cent in the US and 8 per cent in Germany.
To help manage these ups and downs, Sharpe said manufacturers should make efforts to diversify their product portfolio, as well as to create new export markets.
“For 30 per cent of the manufacturers surveyed as part of our research, the loss of only one customer would have moderate to significant impact on their business. Another 10 per cent said their businesses would be forced to shut down as a result,” he said.
Sharpe said collaboration with research organisations is a good way for manufacturers to expand their products.
“Currently, only four per cent of Australian manufacturers have research and development collaborations with the universities. This is while we have some of the word’s leading researchers here,” he said.
John Spender, director of William Buck chartered accountants and advisors, introduced a program called the William Buck Hour.
Under the program, consultants from William Buck spend one hour with the business owners to assess their current position and advise them how they can maximise their business potential.
Following the one-hour session, the advisors will evaluate the businesses in order to develop a prioritised action plan. These will then be presented in a personalised written report.