Aussie manufacturing is resurgent, but it needs help to build for the future

The signs are good for Australian manufacturing. The Australian Performance of Manufacturing Index (Australian PMI) has seen a long run of strong results. In addition, AMTIL has endorsed the optimism surrounding the metals manufacturing sector in its AMT magazine. Articles have highlighted government grant funding to over 90 companies, buoyant sales for the Australian Manufacturing Week (AMW) exhibition, and rocketing student interest in manufacturing careers.

The nucleus of this resurgence was the Manufacturing Taskforce, led by Andrew Liveris, whose work has resulted in the Federal Government’s Modern Manufacturing Strategy. However, Liveris stressed the plan involved more than just current funding initiatives; it is a decade-long transformation plan involving all stakeholders: government, unions, industry bodies, the education sector, and industry itself.

To accelerate this transformation, various conditions must be met. That manufacturing remains ‘top of mind’ in the economy’s rebuilding and is not subsumed by political short-termism. That a climate of ‘bottom-up’ innovation is accentuated and funded. That the future skills required are supported and better funded, not just by the Government, but by the manufacturing industry itself.

In his final column for the Aug 2021 edition of AMT Magazine, the then-Industry Minister Christian Porter spoke in buoyant terms about how the Modern Manufacturing Strategy is delivering for business with a range of grants. The Manufacturing Modernisation Fund (MMF) has delivered $55m in grants to 86 companies, and the Modern Manufacturing Initiative (MMI) is offering $800m for larger transformative industry projects. However the most pleasing aspect of MMF is not the $55m but the hidden fact that these 86 companies have invested $330m of their own funds into growth initiatives. Let’s also put the $55m into context – an English soccer club just paid nearly $200m for one player!

Of course, the political imperative in these schemes is jobs, jobs, jobs. And it is necessary to boost the economy post-COVID. Plus of course, politicians will want to strengthen their re-election prospects. However, there are signs that the strategic plan is more expedient than transformative, and lacks a real understanding of the amount of change required. First, the appointment of Porter as Industry Minister saw this key role occupied by someone with no manufacturing or engineering experience. Linked to this is the apparent departure of Liveris from the strategic execution of the Modern Manufacturing Strategy. His international pedigree and knowledge would have made him an ideal guide for the journey.

Another important issue is the strategic plan itself, with its four pillars of action. It looks more like a set of disparate ‘considerations’ rather than an integrated structure. Maybe it is just a foundation, but that remains to be seen.

The really disturbing aspect, however, is that it does not mention the word ‘Innovation’ once! Surely, it is well accepted that, given its structural challenges – its high-cost economy, its large land mass, its small population – Australia must develop high-value innovative products to compete internationally. Maybe the pillar ‘Making science and technology work for industry’ embraces this key area but ‘Innovation’ demands a pillar of its own!

In his column for the last edition of AMT, Steve Murphy, National Secretary of the Australian Manufacturing Workers’ Union (AMWU) claimed: “As we all know, manufacturing drives innovation.”

Sorry, but it is the other way round – innovation drives manufacturing!

History is littered with atrophied companies who failed to recognise innovation and emerging technologies. Mature products are offshored for lower cost benefits, whereas new product manufacturing is kept close to its design base. It is Australian innovation that will drive tomorrow’s Australian manufacturing jobs!

Murphy’s article understandably emphasises protecting jobs and attacks the casualisation of the workforce. But casualisation is just one factor – automation, digitisation, offshoring, industrial relations and investment, all influence employment. There are shortages now in high-paying, permanent jobs for people with the right skills! Hopefully ‘skills for jobs’ will become a greater focus.

Future engineers are the theme of two other AMT articles. Australian Industry Group CEO Innes Willox declared that: “Skills are key to continued manufacturing growth.”

Growth cannot be sustained without the right skills and attitudes. Skill deficiencies are why ANCA created its own in-house apprentice training, why RMIT linked its training with Okuma, and why Sutton Tools and Swinburne are collaborating on real industry placements. Willox endorses the point that technological and cultural influences are significantly affecting the industrial landscape now. He quite rightly concludes that “skills development needs a different approach moving forward, where learning is not separated from doing”. Again, skills development needs to be integral to the strategic plan!

Shane Infanti, CEO of AMTIL, cited two imaginative schemes in his column ‘Attracting the next generation of manufacturing talent’. He looks to address the current skills shortages by reskilling mature unemployed workers now, through intense short-term education programs. Meanwhile his Young Ambassador Program would endorse manufacturing career opportunities through a mix of integrated school and industry programs. Unfortunately, these schemes remain futuristic (the word ‘imagine’ is used eight times) because as Infanti concludes, “how do we fund these programs?”

Both Willox and Infanti’s articles embrace the funding actions required now, and reflect the need for the Modern Manufacturing Strategy to provide funding that provides both short and longer-term return results.

One of the major messages highlighted by Liveris in his promotion of manufacturing was ‘Advocacy’. And he clearly looked to the manufacturing sector itself to promote its appeal and value to the Australian economy. In other words, “Manufacturing must sell itself!”

In 2020, the AMGC released ‘Ten Ways to Succeed in Australian Manufacturing’, a report that outlined the ways businesses could promote their value to potential employees, their community and the wider public: things like factory tours for school students, open days for the local community, industry experts providing talks to schools and other groups. All these ideas could be implemented by the industry itself, at low cost, with two main purposes: to demonstrate to high school students that focusing on STEM (Science, Technology, Engineering, Mathematics) studies can lead to challenging and rewarding careers in manufacturing and engineering; and secondly, to dispell perceptions – among parents, school career officers, and the wider public – that manufacturing is an unappealing profession.

In 2016, in recognition of our international decline in STEM, the Government launched its STEM investment program. Judging by anecdotal evidence, this has been a success with schools setting up STEM initiatives. But again, this sector needs more investment. Governments are both Federal and State levels invest in STEM, and it is hard to determine actual sums, but one credible recent report suggests that the 2020/1 Federal budget allocated $27.3m over five years. With over four million Year 6-12 students, this amounts to roughly $1.30 per student per year! Many local businesses make direct donations to schools, and industry-focused charities like the Vernier Foundation make grants for STEM learning tools, but more needs to be invested.

JFK once coined an epochal message: “Ask not what your country can do for you – ask what you can do for your country!” Today, it could easily be paraphrased as “… ask what you can do for your industry!”

Industry needs to look to be more innovative, but innovation really needs government backing. There are many SMEs looking to innovate who are not focused on the six industries identified under the Modern Manufacturing Strategy as Australia’s National Manufacturing Priorities, but they need financial help to drive their transitions forward. Grants as low as $10,000 could boost their productivity. The Government also need to look at innovation as a gamble. As Thomas Edison said: “I have not failed. I just found 10,000 ways that did not work.” Policymakers need to look at leading innovative nations like Israel, where investments are only paid back if they succeed!

Ultimately all members of the manufacturing community need to look at what part they can play in this decade-long, highly necessary transformation. We need to advocate for manufacturing!

Jack Parr is the Coordinator for the Vernier Foundation, a charity aimed at funding and supporting, STEM education in schools. The Foundation is the charitable arm of the Vernier Society, an organisation that for nearly 80 years has worked to support Victorian Manufacturing.

www.vernier.org.au