AUSTRALIA’S MANUFACTURING ADVANTAGE Policy and industry reforms for a sustainable manufacturing future
AUSTRALIA’S MANUFACTURING ADVANTAGE 21 CONTENTS MANUFACTURING HAS A BRIGHT FUTURE IN AUSTRALIA. IF WE COMBINE FROM THE CHAIRMAN 4 INDUSTRY-LED INNOVATION WITH SMART POLICIES THAT REMOVE BARRIERS TO OUR MEMBER COMPANIES AND CEOS 5 COMPETITIVENESS, CAPITALISE ON OUR NATURAL ADVANTAGES AND ENABLE APPLIED INNOVATION: PRODUCTIVITY IMPROVEMENTS, THEN MEMBER CASE STUDIES 6 - 13 WE CAN ACHIEVE A MANUFACTURING RESURGENCE IN AUSTRALIA. FOUR PILLARS OF POLICY REFORM FOR A SUSTAINABLE MANUFACTURING FUTURE 14 - 19 MARK CHELLEW CHAIRMAN - MANUFACTURING AUSTRALIA
2 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 3 FROM THE OUR MEMBER CHAIRMAN COMPANIES AND CEOS
Manufacturing Australia’s member companies operate Since 2011, MA has championed reform in four approximately 300 plants around Australia and directly areas that we believe can drive a resurgence in the employ almost 40,000 people. Having overcome Australian manufacturing sector. many external economic challenges in recent years, Australian manufacturers continue to demonstrate they These include: are efficient, well-managed and innovative businesses • reducing the burden of regulation and the cost of that can adapt their operations to improve productivity doing business in Australia; and remain competitive. • increasing productivity through workplace reform; INNOVATION IS VITAL TO COMPETITIVENESS • harnessing Australia’s energy advantage; and, JOSEPH DI LEO TONY DRAGICEVICH PAUL O’MALLEY IN AUSTRALIAN MANUFACTURING. • supporting fair trade. Allied Mills Capral Bluescope APPLIED RESEARCH, COLLABORATION AND Managing Director Managing Director & Managing Director & CONTINUOUS IMPROVEMENT TO PRODUCTS, Australian manufacturing can thrive if governments Chief Executive Officer Chief Executive Officer PROCESSES AND SYSTEMS IS AT THE HEART and industry work together to deliver strategic reforms that create the right economic environment OF WHAT WE DO. to attract investment.
Policy settings also play a critical role in the success There is much at stake. If Australia is to prosper of manufacturers. Both federal and state governments in the decades ahead, we cannot allow our can deliver policies and programs to drive productivity, manufacturing sector to wither. foster innovation and deliver jobs growth. As Chairman, I represent some of Australia’s largest manufacturing companies to ensure our sector can thrive, and secure the next generation of industrial employment in Australia. ROB DAVIES LINDSAY PARTRIDGE NIGEL GARRARD Cement Australia Brickworks Orora Ltd Chief Executive Officer Managing Director Managing Director & MARK CHELLEW Chief Executive Officer CHAIRMAN MANUFACTURING AUSTRALIA
ROB SINDEL JAMES FAZZINO MATT SEXTON CSR Incitec Pivot Rheem Managing Director Managing Director & Chief Executive Officer Chief Executive Officer
4 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 5 Brickworks Limited was established in 1934 and listed THE CARBON NEUTRAL on the ASX in 1961. From its BRICKS, PRODUCED AT THE origins as a New South Wales and Queensland based brick LONGFORD FACILITY IN manufacturer, it has grown to TASMANIA, USE BIOMASS become one of Australia’s largest ENERGY SOURCED FROM building products suppliers, with LOCAL ‘FOREST LITTER’ significant operations across all WASTE BY-PRODUCTS, Australian states. The Building INCLUDING SAWDUST. Products portfolio includes THE RESULT IS A market leading brands Austral Bricks™, Austral Masonry™, REDUCTION IN CARBON Bristile Roofing™, Austral DIOXIDE EMISSIONS OF Precast™ and Auswest Timbers ALMOST 100 PER CENT ™. In addition to the Building – FROM 6,131 TO JUST Products Group, Brickworks also 215 TONNES OF CARBON comprises significant property DIOXIDE. THIS REDUCTION interests and a 42.72% holding in Washington H. Soul Pattinson. IS EQUIVALENT TO THE ANNUAL OUTPUT OF 328 In April 2014 Brickworks launched AVERAGE AUSTRALIAN THE NEW ACTIVATE Australia’s first carbon neutral brick certified under the Australian Government’s HOUSEHOLDS. TECHNOLOGY USES A National Carbon Offset Standard (NCOS) COATING THAT SEALS Carbon Neutral Program. Brickworks’ Building Products Group is also currently facing the challenge of increases EXPOSED SURFACES BlueScope is a flat product steel in gas costs. In response, Brickworks has MAKING THE STEEL developed initiatives to substitute gas use producer employing over 9000 with alternative materials and fuels. For people at more than 50 facilities SHEETS MORE RESILIENT example, at the company’s Horsley Park and 100 distribution centres WHEN DRILLED, CUT plants in NSW a large amount of money was invested in substituting a portion of gas across Australia. OR SCRATCHED. with landfill gas from a nearby landfill. This project has saved Brickworks approximately BlueScope is committed to innovation, with At a consumer level, this next generation $1 million per annum in gas consumption. more than 70 researchers and scientists COLORBOND® steel with Activate Additionally, following a substantial at its major innovation and product technology won the Western Australia amount of research, trials and time spent development facility at Port Kembla. Housing Industry Association Product seeking regulatory approval, Austral Bricks One example of its innovation is the $100 Innovation Award at the 2014 Housing now manufactures some brick products million in research, development and Awards. The judges noted that BlueScope incorporating waste materials. This project manufacturing investment by BlueScope in had made an “extensive investment in has reduced Brickworks’ cost of gas its new Activate technology, at the heart of finding a better way” and that the increased consumption by approximately $600,000 the next generation of COLORBOND steel, warranty period provides “peace-of-mind for per annum, as well as lower transportation
BLUESCOPE which Australians know and trust. the customer and consumers.” costs as a result of lighter weight products. BRICKWORKS
6 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 7 An icon of the Australian cement THE NEW PLANT IS A industry, Cement Australia is HIGHLY AUTOMATED the nation’s leading supplier of FACILITY, FEATURING THE cement products and services. LATEST TOOLS TO ALLOW Cement Australia delivers a OPERATIONS TO CONTINUE broad range of competitive UNMANNED, OTHER THAN A products and services – from bulk and packaged cement SMALL SUPPORT TEAM. products to alternative fuels The facility can also be remotely managed and waste management. The through the use of iPad and iPhone access, company’s team of over 1,100 as well as an online product quality monitor people supplies major concrete and login to view a number of on-site cameras. An intelligent control system producers, building and also ensures stable operations and self- engineering contractors, leading correcting processes. retail building suppliers and some Port Kembla is the first vertical mill in of the nation’s largest mines. Australia for cement and slag production, and is much more energy efficient compared CEMENT AUSTRALIA’S PORT to a conventional ball mill. The facility reduces carbon emissions by 30 per cent KEMBLA PLANT IS THE per tonne of product and reduces electricity COMPANY’S LATEST STATE- consumption by 40 per cent per tonne of product. The plant also collects all storm OF-THE-ART FACILITY, water to be handled in the bio retention WITH 1.1 MILLION TONNES basin, and is designed to prevent dust emissions through the use of dust collectors, OF MILLING CAPACITY. covered conveyors and enclosed storage. Capral commenced operations in Australia in 1936 and is now Australia’s largest manufacturer and distributor IN ADDITION, CAPRAL HAS of aluminium products for BEEN WORKING WITH the industrial, residential and NSW BASED AUTOMATION commercial sectors, employing COMPANY, APPLIED 900 people at its eight operating presses and distribution centres ROBOTICS, TO DEVELOP across the country. A FULLY AUTOMATED ROBOTIC PACKING LINE, Recently capral began work on a project that WHICH IS A WORLD FIRST will make the Campbellfield Victorian site the leading technical subtractive machinist FOR AN EXTRUSION PLANT. of large, long length aluminium extrusion products. The project, which is unique In a market increasingly challenged by to australia, will see the company using imports, projects like these not only allow robotics and the latest laser measurement Capral to maintain competitiveness, but also systems to tackle the next generation of to actively bring work back to Australia that
CAPRAL aluminium profile manufacturing. was previously the preserve of imports. CEMENT AUSTRALIA
8 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 9 Incitec Pivot is the largest THEIR LONG TERM supplier of fertilisers in EXPERIMENTS AIM TO Australia; the largest supplier PRODUCE INSIGHTS THAT of industrial explosives products and services in North America; BENEFIT AUSTRALIAN and the second largest supplier FARMERS AND ALLOW THEM of industrial explosives products TO IMPROVE FERTILISER and services in Australia. USE EFFICIENCY AND ADOPT SUSTAINABLE The focus of the Incitec Pivot fertiliser extension and research programs is on the FERTILISER PRACTICES, efficient use of existing fertiliser products AS WELL AS IMPROVE and the development of enhanced efficiency fertilisers. The company operates one of PRODUCTIVITY AND the largest commercial plant nutrition PROFITABILITY. research and development programs in Australia, with more than 30 replicated One of Incitec Pivot’s sustainability keystone research trials per annum, often in projects is the establishment of a joint conjunction with customers, independent research partnership with Melbourne UTILISING CSR’S BUILDING organisations and agronomists. University to study nitrogen losses from PRODUCT AND BUILDING conventional and enhanced efficiency SCIENCE EXPERTISE, THEY fertilisers. Part of the project, Incitec Pivot’s Green Urea™ is a top dressing DEVELOPED THE PANELISED fertiliser, recommended where volatilisation WALL AND FLOOR BUILDING losses of ammonia are likely. Green Urea products contain urea treated with the Founded in 1855, CSR is a leading SYSTEM, WHICH REDUCES urease inhibitor and are aimed at delaying building products company in OVERALL BUILD TIME BY hydrolysis of urea into unstable forms that Australia and New Zealand and MORE THAN SIX WEEKS AND may be lost to the atmosphere, thereby is the name behind some of reducing emissions and the environmental REDUCES WASTE. impact. This year the sales of Incitec Pivot’s the market’s most trusted and new Green NV enhanced efficiency fertiliser recognised building products The new system has also been integrated product doubled. for residential and commercial into the design and construction process in construction. Committed to meet order to avoid having to make changes to new challenges in construction, current architectural designs. CSR invests in continued CSR also recently established the CSR research and development to House Building Research Centre to introduce new products and improve the company’s knowledge of eight star house building costs, the impact of innovations. In the past three design changes on performance, how years alone, CSR has filed 56 CSR products integrate with each other, patents and 12 of these have building processes and trade interactions, and innovation opportunities. Some of the been granted or certified. knowledge gained from the Research Centre includes energy savings from air tightness, CSR has a dedicated innovation team, reducing condensation and mould with which recently teamed up with Velocity vapour permeance, reducing the costs of to accelerate quality building for the next achieving higher energy ratings, and how
CSR generation of residential buildings. window options impact on daylight filtration. INCITEC PIVOT
10 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 11 Rheem will be amongst the first adopters in the world for a number of the technologies, whilst other technologies now being installed have never been used in water heater manufacturing before.
By the time the project is completed in the first half of 2016, Rheem’s facility will put them amongst the most efficient water heater manufacturers in the world, and Rheem Australia has ensure that they remain globally competitive. manufactured water heaters in Australia for over 75 years, and supplies more than half of all the Orora is headquartered in water heaters sold in Australia. Australia and was formed in Like all Australian manufacturers, 2013 after Amcor, one of the the company has faced strong IN ADDITION TO HELPING world’s largest packaging headwinds created by the rapid companies with a 150 year TO MAKE BEVERAGE CANS increase in import competition history in Australia, demerged MORE COMPETITIVE FOR over the last few years. their Australasian and Packaging CONSUMER CAMPAIGNS BY In developing a response to this challenge, Distribution businesses. The REDUCING PRODUCTION Rheem has shunned the traditional path packaging producer employs COSTS BY 80 PER CENT, THE of many appliance manufacturers who 5,500 team members across have shifted production to low labour TECHNOLOGY INNOVATION cost countries, and has instead focused seven countries and operates out ALSO WON BEST PROCESS on reinvesting in local manufacturing of 39 manufacturing plants and operations with innovative new 83 distribution centres. INNOVATION AND ORORA manufacturing techniques. WERE LISTED IN THE Traditionally, aluminium can designs have 50 MOST INNOVATIVE been applied directly to the can and were A SIGNIFICANT PROPORTION difficult and expensive to individualise with COMPANIES AS PART OF OF THE $60 MILLION BEING a mix of different designs during a single THE BRW MOST INNOVATIVE production run. This lack of flexibility INVESTED IN RHEEM’S 60 meant cans were not able to be used in COMPANIES 2015. YEAR OLD RYDALMERE, targeted promotions as affordably as glass SYDNEY FACILITY IS BEING and PET containers. Orora’s innovative Using the new technology, Orora has beverage can individualisation technology produced 328 million cans for local SPENT ON LEADING EDGE has overcome this challenge by allowing customers in numerous promotional TECHNOLOGIES THAT 8-12 different blank silver design plates to campaigns, such as the ‘Share a Coke’ be applied per machine and pallet run. The individualised names campaign, which WILL REDUCE CYCLE technology was also further innovated to saw a 7 per cent increase in consumption TIMES AND IMPROVE enable positive printing of raised coloured among the world’s first target demographic
ORORA words and numbers. in Australia. COMPETITIVENESS. RHEEM
12 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 13 FOUR PILLARS OF POLICY REFORM FOR A SUSTAINABLE MANUFACTURING FUTURE
MA advocate for sensible, strategic public policies that encourage Australian manufacturing to grow its capacity, create jobs and maximise the value returned to all Australians. Where manufacturing is left unburdened by unnecessary and costly regulations, innovation and job creation can thrive.
MA has identified four priority areas that require urgent action by government to ensure Australia’s manufacturing sector remains internationally competitive. REDUCING THE BURDEN OF AND THE COST OF REGULATION DOING BUSINESS IN AUSTRALIA INCREASING PRODUCTIVITY REFORM THROUGH WORKPLACE OUR COMPETITIVE MAINTAINING OF DIVERSE AND ADVANTAGE RESOURCES ENERGY AFFORDABLE TRADING CONDITIONS ENSURING FAIR THROUGH A STRONG ANTI-DUMPING AND SHIPPING REFORM REGIME, COASTAL FREE TRADE AGREEMENTS APPROPRIATE 01. 02. 03. 04.
14 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 15 01. 02.
REDUCING THE BURDEN INCREASING PRODUCTIVITY OF REGULATION THROUGH WORKPLACE REFORM
OUR VISION OUR POSITION OUR VISION OUR POSITION
A thriving and competitive manufacturing sector The following measures would reduce the regulatory Australia’s manufacturing workplaces are innovative, MA believes that an efficient and effective labour enhanced by appropriate and cost-effective regulation. burden on Australian manufacturers: adaptive and flexible, producing quality value-added market is best achieved through a workplace relations goods delivered by a skilled and productive workforce. framework that supports four fundamental principles: MA supports government regulations where they • Improve consultation with manufacturers when ensure safety or set minimum industry standards, proposing new regulations An efficient and flexible labour market is vital to global 1. A strong “safety net” in the form of national encourage continuous improvement or help stimulate competitiveness in manufacturing - but Australia’s employment standards is fundamental to Australia’s demand. However, too many regulations are applied • Apply an ‘Australian Manufacturing Test’ to assess competitiveness gap is worsening. During much of workplace relations system, so that employees and inefficiently, duplicate or contradict other regulations, whether proposed regulations in effect give an unfair the 1990s and early-2000s, labour productivity grew employers alike can have confidence that wages, change frequently, or aren’t properly enforced or competitive advantage to importers strongly in Australia, averaging 3.1 per cent growth conditions, rights and obligations meet community resourced. These regulations damage the economic per year. However, in the second half of the 2000s expectations. value, competitiveness and normal functioning of • Remove regulations that encourage or support anti- productivity performance sank, only averaging 1.4 per Australian manufacturing businesses. competitive behavior, unnecessarily add to the cost cent per year. Although it has recovered modestly since 2. Direct engagement between employees and of business through duplication, are poorly applied or then, it is still well below the peaks of the 1990s and employers is the most effective way to build enforced, or have unintended negative consequences early-2000s. understanding of customer, employee and business needs at the local business unit level. Direct • Remove federal regulations that are in conflict with Improving labour productivity is critical if we are to engagement is supported preferably through or add to the burden of state regulation, or vice versa. maintain the powerful combination of economic and individual arrangements that respect the “safety social benefits that a strong manufacturing sector net”, or collective agreements with employees and/ delivers to the Australian community and secure the or unions where this is preferred. next generation of industrial employment in Australia. 3. Change is inevitable; flexibility is essential. Enterprises must be able to respond to shifts in technology, dynamic global markets and changing levels of demand. This will at times involve restructuring and re-tooling.
4. The Fair Work Commission has an important role to play in enabling and facilitating change that secures a more sustainable position for the enterprise, while ensuring employees are protected by the strong safety net.
16 AUSTRALIA’S MANUFACTURING ADVANTAGE AUSTRALIA’S MANUFACTURING ADVANTAGE 17 03. 04.
HARNESSING AUSTRALIA’S SUPPORTING ENERGY ADVANTAGE FAIR TRADE
OUR VISION OUR POSITION OUR VISION OUR POSITION
Australia maximises its abundant energy resources MA believes Australia can harness its energy Australia’s trade system supports the fair trade of MA has identified three priority areas for action by by providing reliable access to diverse energy through advantage if we: goods through efficient and effective regulations that federal, state and territory governments: functional, competitive markets. Downstream ensure Australian manufacturers can maximise their processes that add value to our domestic resources • Create a competitive domestic gas market competitive advantage. • Deregulate coastal shipping to ensure Australian should thrive alongside export industries. that ensures gas is available to the domestic manufacturers are not disadvantaged manufacturing sector alongside a thriving gas Australia is a trade-orientated economy that has Australia is an energy and resources superpower. export industry prospered over the last 30 years by pursuing an open • Strengthen anti-dumping enforcement to stop We enjoy one of the most generous and diverse supplies trade agenda. Mismanagement of open trade can predatory dumping and circumvention of dumping of traditional and renewable energy sources on Earth. • Ensure that our carbon and emissions policies easily lead to unintended or perverse outcomes, such duties by foreign importers and provide redress With global demand for resources and energy continuing follow, not lead, the positions of our major trading as dumping and exclusion of domestic manufacturers against subsidies to foreign manufacturers. to grow, Australia will continue to benefit from its competitors and partners so as not to place from domestic markets. It can deliver unfair natural resource advantage for decades to come. Australian industry at a competitive disadvantage. advantages to our competitors and limit growth in • Strengthen industry participation schemes to remove domestic manufacturing. “gaming” – where operators of major projects can However, Australia needs a balanced economy to • Deliver clarity in energy policy to minimise meet their local industry participation requirements mitigate the peaks and troughs of cyclical industries uncertainty, deliver efficiencies and encourage MA is seeking fair outcomes for trade-exposed or quotas through non-tradable goods such as such as resources, agriculture, tourism and services. investment industries that, within World Trade Organisation catering or housing, which would not otherwise Manufacturing is a key element of a balanced economy. guidelines, allow Australia’s manufacturing sector to be sourced from overseas. Ensure they meet their It is a major employer and contributor to small to Manufacturing in Australia can thrive if supported by a grow. The Australian Government must stay the course intended aim of boosting Australian involvement in medium enterprises and outer-suburban and reliable, competitive and cost effective energy system. on strengthening the nation’s anti-dumping regime by major publicly and privately funded projects. regional communities. implementing key reforms in partnership with industry. For more information, detailed policy positions and MA believes our current domestic energy policies sector news visit www.manufacturingaustralia.com.au largely fail to capitalise on this natural advantage, undermining our ability to convert raw materials into value-added products that are competitively priced.
Manufacturing flourishes in those countries that identify and exploit their natural advantages. MA believes that Australia can seize its energy advantage by managing our energy resources for maximum benefit of the nation, recognising the national interest must be served if we are to support a diverse economy and jobs growth. Our natural advantages must be shared throughout our economy, and maximised for the sake of future communities and industries.
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