Resources boom invites expanded role for industry

While Queensland is riding the resources boom, the manufacturing industry remains a key component of the state's GDP.

Jim Walker, CEO of QMI Solutions (pictured, right), says the take-out message from the organisation's recent conference was that manufacturing is alive and well in Queensland.

"However the industry is changing its spots in many cases. It's moving from straight manufacturing to manufacturing, services and solutions," Walker told Manufacturers' Monthly.

"Those companies that are doing well are those that are embracing and unlocking the potential of their organisations.

"The new Queensland Government, the Liberal National Party, want to build the economy on four pillars; construction, mining and resources, and tourism.

"And while manufacturing is not mentioned, the government acknowledges that every supply chain that feeds into everyone of those pillars has a very strong element of Australian manufacturing," he said.

Walker says the resource sector offers exciting opportunities, but warns manufacturers have to change some of the ways they go about their business.

"Many manufacturers have realised there is actually more money to be made in other parts of the value chain, by providing equipment, and services, to mining companies.

"Successful companies continue to provide the manufactured part, but also provide total life cycle support," he said.

"One well known Queensland company has moved from being a straight manufacturer to a manufacturing and solutions company with 75% of its revenue now coming from providing solutions through life support to mining companies. The manufacturing part of the company is now a cost centre. It produces the parts so the company can service the equipment."

He says you just have to look at Rolls Royce to see how that company has changed from an aircraft engine manufacturer to an integrated turbine solution provider to the aerospace industry.

"In fact, Rolls Royce don't sell engines to Boeing anymore, they lease them power by the hour. And if one breaks, not a problem they come and fix it.

"That has driven far more efficiency back into the company's manufacturing process, because now they are responsible for the total life cycle of that engine, with more money to be made in those parts of the life cycle than just in the straight production," he said.

Walker says companies that are embracing the solution concept, not just service, are thriving. 

"For example, one company we work with in New Zealand makes taps. 

"The company has come up with an innovative way to save water and energy by colliding two streams of water together so the person having a shower gets the feeling of more water over their body for half the water.

"Now for a new building, they don't sell the owners taps anymore, they provide the 'hydraulic solution' for water and energy saving, and get a cut of the savings.

"For very little extra effort, the company is able to appropriate value out of a service through knowledge of its product," he said.

Government's role

Rather than punitive actions by government, Walker says we should create an environment where the owners of the major mining projects are motivated to use local industry.

"The most important requirement is to ensure local manufacturers have the capabilities, skills and capacity required. 

"There is a range of strategies the government has put in place to assist, these include us at QMI, and MSQ plus ICN and Enterprise Connect.

"Together we have a number of programs, either free or heavily subsidised, where we can assist companies to make sure they have the right processes in place, and that they are productive and efficient, and have quality and environmental processes in place to position them best.

"This new Queensland government has an absolute commitment to creating an environment where local industry can compete. Now it's up to local industry to make sure they are prepared.

"There is enormous opportunity for manufacturers in Queensland, it is a very strong part of the economy and supports the Government's four pillars," Walker explained. 

"We have to make sure the industry is positioned for the future and one very important part of that is having the skills and capacity, and that is what our recent conference 'Making Queensland's Future' was all about.

"Manufacturers need to address four key issues to survive: having the right skills to meet demand; ensuring their processes are efficient; having the capability to deliver; and looking for innovative ways to improve business," he said.