Manufacturing News

Calls for government to prioritise local manufacturing

Local wind tower manufacturing

Weld Australia has called for urgent action, saying the Australian Government is prioritising international trade relations over support for the local manufacturing sector. 

Last week, Australia progressed negotiations to upgrade the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). The Australian Government said the purpose of the upgrade is to modernise the trade agreement, further reduce trade barriers and boost trade and investment in the region.

Assistant minister for trade and manufacturing Tim Ayres led Australia’s delegation at the negotiations in Cambodia, and said foreign investment was critical for a region that needs investment in productive capability and renewable energy infrastructure to meet the challenge of climate change and Paris targets.

Geoff Crittenden, CEO of Weld Australia said, “These foreign trade policies seem to be in direct opposition to comments made by Prime Minister Albanese on adding resilience and building sovereign capability.

“Leading figures advocated for investment in local manufacturing in the face of geopolitical pressures and the likelihood that imported renewables infrastructure would attract a price tag three times higher than locally fabricated goods over the lifecycle of the asset,” Crittenden added, saying that foreign policy must be in line with local objectives.

“If the AANZFTA free trade agreement is signed, Australia could see a massive influx of poor-quality wind towers and other fabricated renewable infrastructure. This free trade agreement could be the reason why the Australian Government has avoided commenting on local content mandates for the renewables infrastructure program,” Crittenden explained.

The Federal Government’s National Reconstruction Fund (NRF)—designed to work alongside the Powering Australia Plan—will establish a financing vehicle to provide loans and equity to help maximise opportunities for local manufacturers.

“The NRF may be of assistance in the development of facilities to increase tower manufacturing capacity. However, without a local content mandate and free trade agreements that prioritise poor quality imports, local manufacturers will continue to struggle to secure projects. While funding is nice to have, it is only part of the puzzle when it comes to securing the future of an industry,” Crittenden further elaborated.

The main competition for Australian wind tower manufacturers are overseas suppliers from Vietnam, China and Indonesia, who do not adhere to Australian safety requirements and standards.

Local fabricators comply to internationally recognised Australian standards and are certified by the relevant Australian authority.

These quality and safety issues will only be exacerbated by increased global demand as there is a rising demand to transition to renewable energy. Not only will increased global demand likely reduce the quality of wind towers manufactured overseas, it will also increase scarcity of supply, Crittenden explained

“The Federal Government must commit to building sovereign manufacturing capability for renewable energy—in the same way that it has for shipbuilding,” he said.

“The Federal Government must legislate local content policy. This will create a capacity mechanism that generates a clear, long-term signal for investment by private equity and local manufacturers. The Federal Government must also mandate that all wind towers are constructed, erected and inspected according to Australian Standards.”

“Unless industry and governments come together now to formulate a plan of attack, when the time comes to manufacture the assets needed for a clean energy transition, there will be no fabrication facilities, no skilled workforce, and no regulatory frameworks in place,” he added.

An opportunity for local manufacturers and regional areas

According to Crittenden, wind tower manufacturing offers a host of opportunities for local manufacturers.  Fabrication facilities set up for onshore wind can transition to offshore wind with additional investment, increasing the lifespan and opportunities for the fabrication facility.

Wind tower manufacturing requires a large numbers of employees, over 50 per cent of which could be unskilled and trained on the job or via the TAFE training system. Wind tower manufacturing also generates demand for higher skilled roles as well as a logistics network for movement of tower sections and raw materials into the facility.

There are also downstream benefits for local suppliers of welding consumables, electrical components, safety equipment, painting consumables, internal components like platforms and handrails, hire equipment and facility maintenance.

Importantly, wind tower manufacturing requires a large area, and establishment of a wind tower manufacturing facility would generate immediate employment, economic and related benefits in regional communities.

Industry and Government Support

To overcome the established overseas supply chains and generate investment into fabrication capability, local manufacturers need certainty of demand, which must stem from government, project investors and developers, and Original Equipment Manufacturers (OEMs), according to Weld Australia.

“Weld Australia has been calling on the Federal Government for the last five years to mandate that all steelwork in Australia—both local and imported—is manufactured and erected according to Australian Standards.

“The Federal Government must act now to create a sovereign wind tower manufacturing industry, create jobs in regional areas and ensure public safety,” concluded Crittenden.

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