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Making It in Australia: Our Advanced Manufacturing Future

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Making It in Australia: Our Advanced Manufacturing Future MAKING IT IN AUSTRALIA Our Advanced Manufacturing Future ADVANCED MANUFACTURERS CAPTURE HIGH VALUE DRIVING COMPETITIVENESS AND EXPORTS FOREWORD The world stands on the cusp of momentous change. Technological advances of seismic proportions are creating new industries and transforming old ones. It is in this context - as companies and governments around the world navigate these advances - that we share this series of Australian advanced manufacturing showcase stories with you. This is by no means an exhaustive record; indeed there are literally thousands of innovative manufacturers around the country tapping new areas of growth and taking their ideas to global markets. The stories in the following pages illustrate the many and varied pathways manufacturers can take on the road to success. Formed in 2013 under the auspices of Ai Group, the Australian Advanced Manufacturing Council brings together industry leadership to drive success. Today AAMC members include some of the best known names in Australian manufacturing: enterprises like the ANCA Group, making a global name for Australian ingenuity in machine technology; aerospace and transport local heroes, Marand, and Quickstep; and Australia’s own multinationals including shipbuilder, Austal, biotech company, CSL, and medical device manufacturer, Cochlear; as well as Australian subsidiaries of global companies like Agilent Technologies, Cook Medical, Northrop Grumman, PPG Industries, GE, Boeing, and Ford, all companies with a keen focus on Australian talent and innovative capacity. This publication is both a record of Australian achievement and an acknowledgement that the world is not standing still, and nor can we. John Pollaers Innes Willox Chairman Chief Executive Australian Advanced Manufacturing Council Australian Industry Group MAKING IT IN AUSTRALIA 5 AAMC MEMBERS AND CONTRIBUTORS MAKING IT IN AUSTRALIA 7 Dear Reader At the AAMC, we have been collecting fast facts about Australia and how we compare in advanced manufacturing measures. Many of these show we have the creative talent, the problem solving capacity, and the research infrastructure to build globally competitive high-value manufacturing. Our vision is for an Australia ranked in Australia is still a minor player in global Advanced economies around the world the world’s top advanced manufacturing production sharing, but there are early are investing in their knowledge capacity countries, rich in knowledge intensive signs of Australian manufacturing reaping – and increasing the value-density of industries that drive a diversified gains from joining these networks, their manufacturing. We are fortunate sustainable economy. specifically when companies focus on skill- in Australia to have many manufacturing intensive high value production2. companies demonstrating creative and But international competition for high value technological prowess - and business industries is intensifying, and there are The evidence also shows that Australian acumen – and taking their innovations to THINKING DIFFERENTLY gaps in Australia’s innovation ecosystem. technological capabilities are comparatively the world. A number of them share their more valuable than the global average - and inspirational stories and insights here. Significant technological developments are businesses engaging with export markets disrupting long-established characteristics are more successful. Yet, the export intensity Jennifer Conley of industry, driving convergence in some of Australian manufacturers (measured Executive Director sectors, opening new doors and closing old. as the share of total domestic value added AAMC THINKING COLLABORATIVELY produced by the manufacturing sector to More than 70 per cent of global trade is meet foreign final demand) was the lowest now in intermediate goods and services1. in the OECD in 2011 (25.6%) and lower than Production chains are spread across in 2008 (28.3%) 3. multiple countries and across multiple firms, and the income created within these There are other challenges, in particular THINKING GLOBALLY global value chains has doubled over the in skills development, education, the last 15 years. In general, the greatest value regulatory environment, and research- from providing inputs to an innovative industry collaboration. Innovation and product goes to the countries whose firms Science Australia, led by Chair, Bill Ferris, provide critical, differentiated technologies. and Chief Scientist, Alan Finkel, has been working to fully identify these challenges and propose solutions, as part of its far-reaching 2030 Strategic Plan, due for release in late 2017. 1 OECD, WTO, & World Bank Group. (2014). Global Value Chains: Challenges, Opportunities, And Implications for Policy. Report prepared for G20 Trade Ministers Meeting Sydney, Australia, July 19. 2 Australia’s share of total OECD exports of GVC products has been better than the global average, doubling over the past decade. https://www.industry.gov. au/Office-of-the-Chief-Economist/Publications/Documents/other/Global-production-sharing-and-Australian-manufacturing.pdf3 OECD & WTO. (2015). TRADE IN VALUE ADDED: AUSTRALIA. OECD: http://www.oecd.org/sti/ind/tiva/CN_2015_Australia.pdf MAKING IT IN AUSTRALIA 9 I'VE SEEN FIRST-HAND HOW A CULTURE" OF INNOVATION AN ORGANISATION TO EMPOWERS ACHIEVE THINGS IT NEVER THOUGHT POSSIBLE. " Maureen Dougherty, President, Boeing Australia, New Zealand & South Pacific Team members from Boeing Aerostructures Australia and Boeing Research and Technology - Australia prepare a robot specifically designed to work alongside people. James Lauritz Photography “We’re looking at the Australian model Mr Irving has 28 years’ experience in “We’re not going to be pumping out and seeing if we can implement the same the Australian defence industry, and thousands of base model components, but approach in other countries. I think it’s has been in his current role since July we can make complex subsystems where a great testament to what the defence 2013. He commended the motivation the labour isn’t such a drain on cost. So industry has done, that we as a company of multinationals to incorporate local while there is a lack of scale, it does have have picked up that model and have Australian manufacturers in their global benefits in the way these firms can be applied it elsewhere,” Mr Irving says. supply chain (GSC) process, to become flexible and agile,” he says. NORTHROP globally competitive, and give them access “I am trying to ensure that Australia is the to world markets. Northrop Grumman has a database of exemplar of our overseas markets.” around 140 local suppliers, awarding “The defence department really was a around $32 million to local small and Northrop Grumman, a leading global leader there — the government’s wisdom in medium enterprises in recent years. The security company, has a strong customer establishing the GSC program to motivate firm plans to “really focus and double base in Australia and has been supporting the larger primes to reach out to local down” on increasing the flow to key a variety of both defence and civil industry,” he said. “That’s a real bonus suppliers in Australia in the coming years. GRUMMAN programmes here for more than 20 years. for Australia. What we need to do now is leverage the new initiatives government is Still, the local firms must prove themselves As well as security, it is a key supplier in the placing through the White Paper, focusing to be globally competitive and equal to their defence, information systems, and public on innovation and the establishment of counterparts in North America and Europe. safety communications markets, providing significant local content in our defence a range of capabilities and technologies program.” “There is no charity here,” Mr Irving says. including the RAAF’s Wedgetail, F-35 and “In global markets today there are few the Super Hornet programmes. He says Australia does have the kind of boundary impediments to working in any unique expertise that can compete with, location. So Australia’s industry really needs The firm’s local annual turnover is just shy and even outperform European and to be globally competitive to be considered of $200 million, and management expects American companies in setting up some as a partner in global supply chains.” that to grow by at least the 5 per cent greenfield sites for manufacture. forecast by the Defence White Paper for the entire industry. But the government needs to back local industry and buy local when it can. This The local division has grown quickly from would deliver companies the credentials to just five staff three years ago to nearly 500 market their offerings to overseas buyers. now, partly due to the acquisitions of Qantas Australia’s defence Defence Services in 2014 and M5 Network “It is very hard to export to foreign Security in 2012, but also through organic overseas programs if you haven’t sold to global supply chain growth, and Mr Irving says the firm is your local customer. So we’re looking to initiatives are world- looking to add to its scale in coming years. the government to back industry a little leading policies that bit more to give local companies a fighting “The trajectory we are on will be chance.” other countries should maintained with some of the large look to emulate, says programs coming up. The Defence White Mr Irving notes that GSC offerings to date the head of Northrop Paper shows us that there should be plenty have mostly been at the component level, of opportunity, so coupling our portfolio and says Australian manufacturers need Grumman Australia, with local capability will be the key for our to move “up the value chain” and supply Ian Irving. future success,” he says. technology elements and unique innovation offerings into the GSC. MAKING IT IN AUSTRALIA 13 When Professor Graeme Clark defied Like every upgrade, the Nucleus 6 sound He believes that Australian manufacturers the naysayers to invent the first cochlear processor, which automatically adjusts to shouldn’t waste time trying to compete implant in the early `80s, he was set different environments (for example a noisy against low-cost, low technology products. to transform the lives of hundreds of restaurant), has led to an increase in demand.
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