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AUSTRALIA’S manufacturing industries are being held back from growth because of stumbling blocks including poor community perception of its value and an inability for many existing manufacturers to work with government, research institutions or collaborate with other manufacturers.

At stake are substantial employment opportunities, the creation of further export revenue, value-adding to Australia’s natural resources and diminished reliance on imports.

An industry report from the federal government’s Advanced Manufacturing Growth Centre (AMGC) – which included research with the public, the manufacturing industry and more than 1000 students – said Australia is too reliant on trade and not adept at creating home-grown industries.

The results of the AMGC report “Ten Ways to Succeed in Australian Manufacturing”, released this week, show more work has to be done on promoting and properly identifying manufacturing opportunities.

The report came just as Covid-19 swept the world and almost immediately changed the perception of manufacturing in the eyes of most Australians.

AMGC managing director Jens Goennemann said the virus “thrust Australian manufacturing into the national spotlight”.

“Manufacturers responded in record time to produce everything from hand sanitiser to ventilators,” he said.

“However, for some, the impact of the pandemic served to reinforce pain points identified in the report and that businesses need to be worked ‘on’, rather than ‘in’.”

Mr Goennemann said the response to the pandemic proved that there is a high level of onshore manufacturing capability and significant public appreciation for the industry.

He said that by adopting 10 practical steps, manufacturers can become smarter operators: more advanced, resilient, competitive, and globally impactful.

“Australia remains very much a manufacturing nation, reliant on global trade. We must take decisive action to reduce our dependence on the export of primary raw materials and transition from being a lucky country to a smart country, by adding value and advancing our onshore capabilities,” he said.

“We must expand our understanding and look beyond the outdated view that manufacturing is just production. Manufacturing is a capability, an enabler and a vital component of our economy, it is a key driver of prosperity – it deserves our attention and needs to be nurtured.”

One of the outdated views is making income from digging material out of the soil.

Mr Goennemann said ways should be found where commodities can be made rather than just extracted from the ground.

“The business model of extracting commodities – especially fossil-based commodities – is something that will not be the business model for the next decade,” he said.

“If buyers don’t want it, the price will drop. Add value for global consumers and you add income for Australia. For example, look at the ability to make hydrogen as a product of commodity extraction. Let’s not wait until it’s too late.”

He said many things should be done to get the nation more involved in manufacturing.

“There is a poor perception of manufacturing which is wrongly classed as production,” he said.

“The problem is that, for example, food and pharmaceuticals, are not seen as manufacturing.

“Those two industries alone are highly paid and so far away from the sweat jobs that many people associate with manufacturing.”

Part of the problem with perception starts at school and in the home. In the report, AMGC interviewed students and asked about manufacturing.

It found that 44 per cent of students were surprised by the information on the value of manufacturing; even if their family worked in manufacturing. Most surprised were women in Years 11 and 12, undergraduates and international students while the least surprised were TAFE students.

“We need to do better at increasing the awareness and knowledge of the manufacturing strength to students specifically,” Mr Goennemann said.

“Many other countries teach students to learn something new first – like an apprenticeship. If you can embrace manufacturing and embrace a trade, there is a rewarding career path.

“I know how hard it is to get a tradie and I know how much they charge.”

In the report, the AMGC said the “Ten Ways to Succeed in Australian manufacturing” revolved around:

  1. Australia needs to recognise its manufacturing strengths:
    • 60 per cent of Australians believe manufacturing is changing, becoming safer and more innovative
    • Youth sees potential in manufacturing careers, rate job security and career progression highly
    • Industry and media have an active role to play in addressing common industry myths.
  1. Manufacturers should focus on good leadership:
    • Local management skills rate average when compared to countries with similar GDP
    • Good leadership is crucial to success and practical steps can be taken to address leadership issues
    • Business culture, self-confidence and leading by example are vital for innovation and growth.
  1. Change has to be planned for:
    • Two per cent of business do not have a strategic plan, while 42 per cent do not monitor KPIs
    • AMGC found business owners and operators worked ‘in’ rather than ‘on’ the business
    • Manufacturers are encouraged to make time to plan, seek advice and engage with industry or governmental support agencies to unlock potential.
  1. Build a network and collaborate:
    • The 12 per cent of Australian manufacturers that collaborate are more successful
    • ‘Zero-sum’ thinking is a barrier to growth. Collaborating with peers and research institutions can unlock productivity, quality and product gains while delivering 8 per cent in revenue gains.
    • Australian manufacturers’ competitors are not the businesses next door, but the businesses overseas.
  1. Work with Australian research institutions:
    • Four per cent of small and 75.4 per cent of medium-sized enterprise do not engage with research institutions
    • Manufacturers that invested in collaboration are more successful than those that do not
    • It is a two-way street: Researchers gain practical experience, industry gains expert insight.
  1. Adopt technology
    • Far from being a ‘job-killer’, technology is an enabler and equaliser, it can lead to productivity, quality and upskilling opportunities
    • Australian manufacturers lag behind other industries in adopting advanced technologies
    • Some manufacturers are ‘put-off’ by a lack of understanding or misconceptions about the cost of investment, these businesses should seek expert advice.
  1. Accessing capital
    • One in five Australian businesses have stated difficulty accessing finance and 45 per cent of SMEs do not use accountancy software
    • Six per cent of respondents cited access to capital as an obstacle. 15.8 per cent also cited cost inputs as a barrier and 18.6 per cent listed overdue accounts as a handbrake on capital
    • Accessing capital should not be onerous. Having an up-to-date business plan (Way Three), accessing grants and talking to your financial institution are good places to start.
  1. Hire the right people
    • Manufacturing suffers from one of the highest skills shortages at 17 per cent
    • Just three per cent of students considered a career in manufacturing, and many were advised to seek careers elsewhere
    • Two-thirds of the public recognise that manufacturing is evolving and will become more innovative
    • Talent can be sourced by engaging with local schools, providing internships, and using technology to recruit.
  1. Build your workforce culture
    • Building a healthy workplace culture can lead to a ready talent pool and an engaged workforce
    • In-house upskilling, job shadowing and mentoring lead to better performing and more productive teams
    • Culture is not a nice-to-have, it is a must-have and can impact retention and innovation.
  1. Extend your market reach
    • Just five per cent of Australian manufacturers account for 99 per cent of the industries’ total export value
    • 80 per cent of Australians recognise that trade and export of Australian goods benefit the economy
    • Companies that export demonstrate growth, productivity, profitability and wage benefits and more should take active steps to increase their reach and customers.

The AMGC report can be found here.

By Neil Dowling

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