The coronavirus (COVID-19) pandemic has had a profound impact across both Australian society and Australian manufacturing. William Poole spoke to Gavin Smith, President – Bosch Australia & New Zealand, about how his company has responded to the pandemic.
AMT: Firstly, tell us about Bosch Australia and the business’ activities.
Gavin Smith: Bosch Australia is the representative subsidiary for the Bosch group in Australia and New Zealand. The company here has been around in one form or another trading since the early 1900s. The company’s grown in different directions, but it literally does a little bit of that which Bosch does everywhere. We operate across four sectors: mobility solutions, consumer goods, industrial goods, and building & energy technologies. Some of our businesses are the leaders in their field and large in scale, others are small and relatively new to our portfolio. But we have a team of about 1,300 people across Australia and New Zealand. Our turnover is just under a billion Australian dollars this year. And we are still a significant manufacturing and engineering location for the Bosch group in the areas of vehicle safety and comfort electronics, and we import and trade the portfolio of consumer goods, industrial goods, building & energy, and automotive aftermarket parts as well.
AMT: How has the coronavirus pandemic affected Bosch Australia and what’s been the impact on the business?
GS: It’s interesting because we are a business of many parts. Some parts we would say have been completely unaffected by the virus itself. We haven’t noticed a decline in trading conditions; if anything, a couple of our larger businesses are trading more strongly than had been expected, particularly in the consumer goods areas, which may be a little bit counter-intuitive. Also in the industrial sector, where we have equipment and service for the resources sector, that’s going strongly. If we look at large projects where we’re supplying building technology and smart security systems, they’re going strongly as well.
The areas of our business that are suffering are in and around the automotive sector, particularly supplying the likes of automotive parts to the independent aftermarket through our trade customers, and also the supply of workshop test equipment and services relating to that. They’re the ones that have been adversely affected in the main.
The interesting thing for us is that the parts that are affected contribute about 10% of our revenues. The parts that aren’t affected contribute about 90%. So we’re actually in better shape than many during this really difficult time.
AMT: What have you been doing differently in your operations to manage the impact of the virus?
GS: Obviously the first thing is that any locations which have got a high concentration of staff, we changed almost immediately. I think we were one of the early companies that introduced work-from-home policies. On any given day our campus in Clayton would normally have 900 people there; on a busy day now, there are circa 100 there. That campus is predominantly office-based staff – engineering, sales, admin, finance – so they’re all now working from home. The people that can’t work from home obviously are warehouse staff and manufacturing staff, but within those two areas we’ve segregated shifts, we’ve segregated into specific work teams. We’ve created new breakout areas and meals areas so people are not mixing in large numbers in one place. And obviously we’ve got a rigorous social distancing policy, which the team are adhering to, and a rigorous cleaning process. So interestingly for our company, with 1,300 employees, we’ve only had one reported case of infection, one employee. It’s been well managed, the staff have done all the right things and have been extremely supportive.
And you know, working from home has been challenging for many, but once we settled into this as the new routine, the new normal, we’re actually finding it’s giving us some surprising benefits as well. There are areas where productivity has improved, where our responsiveness is better. It’s forcing us to think differently about communication: not just how we do it, but how often we do it, and what we communicate as well. That’s been an interesting development.
AMT: You’ve been awarded a $1m project as part of an industry consortium led by Grey Innovation, building ventilators to fight COVID-19. Can you describe that?
GS: I think the first thing is that all credit has to go to Jefferson Harcourt, the executive chair at Grey Innovation. He and his team came up with the idea. They put together a straw man proposal of what it could look like, how it might work. They then reached out to companies who could be part of the consortium. Jefferson and I have known each other for a while. He knows what we do and what we are capable of. Interestingly enough, I think he started his career with us some 20 or so years ago before he built the Grey Innovation business, so he knows us from the inside as well. He asked the question: “If we can get a project consortium together and it makes any sense, would you be interested, and can Bosch be involved?”
I said: “Well, off the top of my head, we’d love to be involved, would love to give support to the extent that we can, but I don’t know what that is yet.” It was a very formative discussion, based on blue sky ideas and hope and enthusiasm. But Jefferson then got what I described as a coalition of the willing together who said “Yes, we’d be in it. We’d be prepared to do what we can.” It was pitched to the Victorian Government. The Government gave us some homework to do. And again, all credit to Jefferson and his team, they took it back to the Government, they prosecuted the argument why it was a good thing to do and how it could be done. And lo and behold, we were able to play a role.
So Bosch Australia Manufacturing Solutions (BAMS) is a significant part of our business that we’ve built over the last five years, producing special-purpose equipment for factory automation. It’s something we’ve got a lot of experience doing for our own factories, but it’s only in the last five years we’ve been doing it for external customers. BAMS has built up quite a portfolio of blue-chip customers. We’re also in the medtech and biotech space, so we’re pretty experienced at dealing with companies with these very stringent standards relating to health products. So for us it was quite a logical extension to quote to build the machinery needed to test these ventilators. And that’s the contract we’ve been awarded.
It’s very challenging timelines. The team will be working seven days a week. Some will be working very long days to deliver the equipment by the promised date. But it’s a project the team are very proud to have been awarded, and will be very proud to deliver.
AMT: Outstanding. So what do you think the crisis reveals about the importance of manufacturing in the Australian economy and Australian society?
GS: I think many people will be reflecting: why are we so reliant on overseas supply for things which are of national importance and critical in the public health space? I know at a government level, both state and federal, there will be some soul searching: what should we do differently? What will we change?
One of the hats I wear for the Victorian Government is as a member of (Minister for Industry and Trade) Martin Pakula’s innovation taskforce. Even in that group, we were talking among ourselves and also with the minister and his department about: what does post-COVID-19 Victoria look like when it comes to manufacturing things that today we bring in from offshore? I don’t think anyone has a silver bullet or a magic answer to all the problems that have to be solved for us to make things in Australia, which have either been lost or never been made here, but we certainly need to take a fresh look at what would make sense.
One of the biggest disappointments for me in my professional career is that there was no way to save the automotive industry in Australia. Having had more than a hundred-year history making cars in Australia, and more than 50 or 60 years designing, developing and manufacturing them in the country, the competence and capability of that sector built up, which then benefited the whole economy and other manufacturing sectors, whether it be in biotech, medtech, materials or whatever else. To lose that as a fundamental cornerstone of manufacturing, engineering, design, development and production capability… it was tragic. We can all argue whether it should or shouldn’t have been subsidised, built the right cars or didn’t build the right cars. But the core fundamental issue is that industry policy was flawed, and that’s what resulted in the industry not developing in a way that could be sustainable.
I think that’s what the federal and state governments now need to rethink: what is appropriate industry policy to attract manufacturing back? What is an appropriate contribution of manufacturing to the Australian economy? Its current level at 6% is too low. The German equivalent is 23% – that’s too high. But certainly anything south of 10% is, in my own view, is far too low. We need an economy that has got multiple strong pillars. Manufacturing can and should be one of those.