One on One – David Chuter

AMT: What is the IMCRC and what are its objectives?

David Chuter: Well the IMCRC stands for Innovative Manufacturing Cooperative Research Centre. We carry on the great legacy that these CRCs have been doing for 20-plus years in Australia. We were formed officially in 2015. After a bit of a slow start-up we have just really got ourselves running since the back-end of last year into this year. This month sees our team fully recruited; we’ve got two more project research officers joining us later this month, and our direct staff will then be our full complement.

We see our role as very much helping to champion the transformation of manufacturing in Australia. And that’s a pretty broad agenda which many parties are working on. At our core, we co-fund and de-risk industry investment in research projects. We try and focus on manufacturing companies: small, medium and large. We encourage them to work with the Australian universities and CSIRO to conduct manufacturing research projects.

AMT: Can you give an example or few examples of what those projects are?

DC: Yes, I have to be slightly careful because some are more confidential than others. We’re funding projects today that basically involve research into advanced manufacturing technologies, and that’s a fairly broad spectrum. We’ve got projects today in: advanced robotics; vision systems; virtual reality and virtualisation; advanced materials; nano-technologies and others. We have projects spanning equipment manufacturers, we have medical technologies, we’re doing projects in 3D printing and additive manufacturing. So we’ve got quite a broad range of projects.

I guess if there’s one thing that binds them together, all of those projects have to meet our project selection criteria and that criteria is really driven around manufacturing outcomes, so it’s not purely the research per se. It’s actually creating outcomes that benefit the industry participants, that demonstrate high levels of collaboration, and demonstrate innovation. And every project also has a requirement that they need to identify in some form how they are going to access global supply chains. This is not just about creating little pockets of excellence here in Australia, but understanding that we’ve got to be playing on a global playing field if we’re going to have some relevance and competitiveness.

AMT: How might one of those projects take shape, and who are the participants?

DC: First of all, a project has to be led by industry. Expressions of interest will come to us, companies may want to undertake research, but they may not know which university or universities they could work with. Others may come to us through universities, through engagement they’ve already got with industry. But basically we will seek expressions of interest for research into manufacturing technologies. As those concepts mature, and people start filling in application forms, we will coach them through the process to make sure they’re a good fit to the criteria. We weed out ones that don’t, and if possible and if necessary, we’ll redirect people towards other forms of government assistance where they may not fit the criteria of our CRC.

What we’re trying to do is bridge that “valley of death” between a proof of concept and commercialisation. We don’t really fund programs that are “blue sky” pure research; we’re more applied research. So once you’ve got proof of concept, but you have so many questions left to answer in terms of how you’re actually going to manufacture this and how you take it to market. What we will do is we will co-fund the research on a dollar-for-dollar basis with industry, solving all those problems, answering questions to the point whereby you have an extremely robust business case. You know how much it’s going to cost, you know how you’re going to make it, what sort of equipment, people and skills you’re going to need, and you know your commercialisation plan that you’re going to implement. And at that point we’ll end the project and back away, and let them take forward that commercialisation plan.

We talk about manufacturing readiness levels, similar to technology readiness levels or TRLs. We operate ideally in a manufacturing readiness level of 4 to 7 – level 3 being you have a proof of concept, and level 8 is that you’re starting to gear up for serial, volume or large-scale production. We fund the research in between to help take industry from that proof of concept through to the point where they’re ready to commercialise.

AMT: How do you identify the value of a project in order to take it forward?

DC: Good question. It’s been fairly well documented that Australia has some of the highest intellectual capital sitting within its universities but one of the lowest levels of collaboration between industry and universities. I’ve just come back from 10 days in Europe, and I’ve seen what appears to be a much higher level of collaboration that is quite normal between industry and universities. Having said that, a number of the projects that we’ve got on the table have been introduced to us by the universities through relationships and engagements that they already have with industry.

What we want to do is make it much more normal, much more accepted and much more desirable for manufacturers to want to work with Australian universities as a legitimate arm of their research and development activities. And what we’re finding is that some projects come directly to us, and that might be through understanding of what we’re doing through our website, or word of mouth. But a number of projects will actually come to us through some of our partner universities.

Not every project at the outset will meet the criteria we have, and that’s why we go through the process of coaching and mentoring and really trying to understand what is the problem or the challenge that the industry participant is trying to resolve through doing a research program. We will then encourage them to bring other SMEs to the table as collaborants or participants in the project. Can they work with more than one university to bring the smartest brains across Australia to the table? What sort of commercialisation opportunities do they have? What do they intend to do with any intellectual property (IP) they create? And we will work our way through an application form, with very much an open dialogue as to how they are going to solve those problems.

We have an independent committee that is set up that is separate from the staff at the IMCRC and separate from the CRC Board, which then reviews those project applications, scores them on a weighted basis, and either can approve outright depending on the value of those projects, or can make a recommendation to our Board that that project is approved or requires further development to get it approved, or is outright rejected. And I have to say we’ve had a pretty good success rate going through that process – when projects come to us, if they’re put up to the committee, there’s a good chance they’re going to get approved because we tend to do the weeding-out process quite early on. We don’t want to waste anybody’s time; we’d rather point industry towards other funding opportunities that may suit them better than our CRC.

AMT: In terms of collaboration, we often hear that, because Australia’s industry is so SME-dominated, there’s that tendency to not share information, to keep things in-house and not seek out ways of collaborating. That must be one of the harder things you have to overcome.

DC: It is. And we have, by design, tried very hard to remove all sorts of barriers – real or perceived – that prevent SMEs from working within universities or even talking to other companies or conducting their own research. I’m not from academia or from government. I’ve come from 25 years of manufacturing experience. And there is absolutely a perception of competition out there that is not real. The competition is China, Asia, Europe. The competition is not often the company next door. And yet that’s often the perception that people have that stops them collaborating.

I’ll give you some examples: we’ve determined that, even though we fund half the cash cost of research programs, our CRC will have no share of any IP that’s created, because we don’t want an argument or discussion around IP at the outset to be a barrier for people wanting to conduct research. Our view is that the IP should be owned by those who are best placed to commercialise it, and that might quite often be the industry participant in the project.

We don’t have an online application process. We use a fairly basic Word document process, but one that is comfortable and familiar for SMEs to use. We try and coach people through the process, as opposed to simply applying online and then the first thing you hear two months later is a Yes or a No. What we try and do is expand the project opportunities so that it’s beneficial to the SME or manufacturer involved. So by design we’re trying to remove any of those perceived or real barriers that exist.

The one challenge that still exists is that a lot of SMEs don’t have spare cash. And naturally the way these research programs work is that in effect the industry is contracting a university or universities to conduct their R&D on their behalf or in parallel with them, and cash is basically a prerequisite for that process to take place. Now we de-risk that, we fund half of that cost, but at the end of the day it still requires that manufacturer to have the wherewithal, the willingness, the commitment and the cash availability to conduct research with a third party. The reality is that with the rapidly changing pace of technology in the world, companies are having to invest in R&D, and using external researchers is a very credible way of doing it. And if they do that, we can help with half the cost. So I think it’s a very good value proposition for those companies that have the right mindset.

AMT: So what would your advice be to a regular manufacturing firm who feel they’ve got a great idea for a product, but they have no idea how to start getting that into the marketplace?

DC: The first thing you have to do is understand where they are in that process and what are their barriers, because there are a number of bodies set up who can help them with that process. We’ve got the Advanced Manufacturing Growth Centre that is fully up and running. There are Growth Centres in each of the key sectors in Australia. If it’s a medical company that also does manufacturing, actually there are two Growth Centres that could potentially help them. Depending on whether they’re looking for business improvement or research programs, others such as the Entrepreneurs’ Programme, which AiGroup and AMTIL have business advisors in – they can help them. There may be State Government funds. If it’s access to capital equipment, or production tooling, then perhaps some of the State Government programs such as the Future Industries Fund in Victoria may be better suited to them. If it’s core research that they want to do and they’re prepared to work for with universities then that’s the sweet spot that we work in.

So I think the key thing is to engage them in conversation to understand what problems they’re trying to solve, where they need some help. Trade associations are another good way to help. AMTIL, AiGroup, prefabAUS – they’re all partners to our CRC, and we encourage companies to join those organisations because of their collaborative nature. You can talk to other manufacturers and realise that the problems are often shared and there may be some collaborative opportunities to work together.

But first things first… it’s the willingness to come out and have a conversation with people about how you grow your business. And there are lots of organisations that can help that are perhaps separate from consulting companies who are also very credible, but there are a number of government organisations set up to do that as well, particularly in the manufacturing space.

AMT: Tell us about your professional background and you came into the IMCRC.

DC: I’ve come out of the best part of 25 years in the automotive industry. So I’m obviously watching with great interest how the next few months unfold and I have a particular passion to make sure the legacy and investment we’ve made in automotive in Australia, particularly at supply level… that this knowhow gets carried forward in some form into other sectors. I did 10 years working in the UK with a company called Magna, which is one of the world’s largest Tier 1 suppliers. I worked on car interiors – dashboards, door panels, floor carpets, headliners.

I migrated to Australia in 1999 and did a stint with Deloitte Consulting and got to see a range of other industries, but a bit like a ‘bad drug’, automotive sucks you back in. I spent 13 years with Futuris and helped play a role in taking that business from an Australian-only business to now operating in multiple countries around the world. Then I spent two years in Thailand running Futuris’ business there, which was an exciting time seeing the growth of the Thailand automotive industry. I came back and had an opportunity to take the helm at MHG AsiaPacific, one of Australia’s largest suppliers in the automotive industry. I ran that business from 2014 to 2016. We went through a diversification program and successfully acquired a business in the construction industry space – so a great example of an automotive company finding a life in Australia beyond automotive production.

I’ve always played a bit of a role through industry associations with both state and federal government, helping to advocate for manufacturing in Australia and the continuity of the automotive industry, and we know how those cards have played out. But when this opportunity came up to lead the CRC, and in effect lead a lot of the investment and strategy around research in manufacturing, it seemed to be a good fit for a background in manufacturing but also a passion for Australian manufacturing to continue beyond the end of automotive. It was something I found of personal interest and the opportunity to do something quite different and hopefully influential in terms of the landscape of manufacturing here in Australia.

I think there’s been a bit of shift in the approach across a range of government-facilitated organisations, such as the Growth Centres for example. We have people with deep industry experience who are now running these organisations and who have the ability to effect change across manufacturing and other landscapes in Australia. I’m playing that role within the CRC, we have Jens Goennemann in the Advanced Manufacturing Growth Centre, Sue MacLeman at MTP Connect. All of these individuals have come into strategic, government-influencing roles, but they’re not politicians or bureaucrats – they’ve come from deep-seated experience in industry. What we’re finding is that between our respective organisations, even we are finding great opportunities to collaborate because we’re very industry-focussed, we’re strategically focussed, we’re looking at outcomes and impact. We’re not just managing the funds that we’re managing – we all wear industry hats, with a passion for the industry that sits above the business cards that we hand out and the roles that we do day by day. And that’s a powerful force for change at a time when manufacturing is going through huge changes. None of us really know what new technology is going to look like in 5-10 years time. None of us know how this digital transformation of industry is going to play out. But at least we’ve got organisations led by people who have got the right background who can apply that knowledge and keep a focus on industry outcomes going forward.

AMT: So what are the major opportunities and challenges facing Australian manufacturing today?

DC: I think the perennial challenge for manufacturing in Australia has always been our limited scale. We’re extremely fragmented when you look at the proportion of SMEs compared to some of the big industry primes. And that situation is only going to be compounded by the end of vehicle production in Australia. Because even the big Tier 1’s will be diminished and diluted because of that.

The tyranny of distance is often spoken about, but I actually think with those companies who have found a way to compete globally either through export or partnering or licensing – the one thing that the whole digital revolution allows you to do – that distance disappears. Therefore for those companies who have found their way into global supply chains the hard way, perhaps this opens up immense opportunities for them by applying digital tools and looking at different service models in addition to supplying actual physical products. For those companies that have found it difficult to do anything outside Australia, again that whole digital world and moving toward a servitisation process may actually create new business opportunities through apps, multi-media, virtual reality, additive manufacturing… basically through business model innovations they might not have otherwise seen.

It ends up being a bit of cliché, but words such as innovation, collaboration, and being technology-driven actually are the recipes for success as we go through this transition. Not just moving away from being a country that makes cars, but one where the manufacturing world, including Australia, is looking at this Fourth Industrial Revolution, Industry 4.0, and trying to sort out the reality from the hype.

There’s no doubt a lot of companies can find benefit inside the walls of their factory by applying some of these digital tools and building on Lean implementation and so on. I think the real opportunity is in looking at the business model as a whole and seeing “where can I find new business, market and partnership opportunities, that the digital age actually opens up for me”. It’s going to be a challenging time, but we’re seeing a wave of new technologies coming in at an unprecedented rate in manufacturing. It’s a real opportunity for companies to get on the journey and see how they can grow their businesses.

AMT: So where do you see the industry in 10-20 years?

DC: I would love to see it as thriving and relevant… relevant globally. We talk about being competitive a lot, but I talk about sustainable relevance. In other words, that you’ve built yourself up to such a platform that other parts of the world cannot do without you. And that would be fantastic to see Australian manufacturing as having that place in the world. You look at the reputation of Silicon Valley for example, or you hear of phrases such as “Danish by Design”. I’m not sure what the right phrase is for Australia, but wouldn’t it be great in 10-20 years to have that kind of reputation, of Australia being trusted, high-tech, value-add manufacturing, with really smart people, and an exemplar of how to collaborate and innovate. That would be a great vision for us to have for the industry, and one that is perfectly possible by adopting the right technologies and working together.

www.imcrc.org