Australia manufacturers: Apathetic, too busy or just plain Fed Up?

I am a passionate manufacturing person who cares a little too much about things I can’t control, which subsequently results in me taking many things to heart that I really shouldn’t. This includes experiencing decisions about the manufacturing sector that I just don’t understand, which just seems to make me even more exasperated and upset than I would have been anyway. I don’t mean to sound philosophical but I believe that people are either passionate about something or they’re not; and if they’re not, then they have most likely just given up on whatever it was that they did at one point care greatly about.

In my case this was the closing of the Australian automotive manufacturing industry. Then, after going through the Seven Stages of Grief – well, six of them – the seventh stage: “Acceptance & Hope”, was in my case really more thinking that there must be other things I could get interested in, and perhaps eventually even get passionate about. I was correct: there are; and I am again.

I wrote an article for the December 2019 edition of AMT Magazine entitled ‘Is “Manufacturing Value-Added” undervalued?’. It highlighted the fact that, despite all the public hype and rhetoric around advanced manufacturing and Industry 4.0 and how this would change, improve and save the industry, manufacturing in Australia was actually continuing to decline. At that time manufacturing was hovering around only 6% of Australia’s annual GDP, and yet somehow this fact seemed to be entirely lost on Australia as a nation, and in fact on most Australians. Maybe people didn’t understand the serious implications of this fall with regard to generating wealth for our country – or worse still, perhaps they just didn’t care.

It’s amazing to me to realise that the manufacturing sector contributed almost 30% of Australia’s GDP in the 1950s before beginning its long and continuous decline. According to the World Bank, by 1999 this contribution had fallen to 12% with seemingly little concern, but by 2016 this had halved again to a miserly 6%. This figure is the second-lowest of all 32 OECD countries, and almost two and a half times less than the OECD average of 14%. To me at least, this would appear to be extremely concerning, and yet it continues to decline.

Again according to the World Bank, Australia’s contribution to GDP from the manufacturing sector in 2019 had fallen to only 5.6%. While other countries have realised the contribution from this sector is far too low and have already halted the decline, in Australia the number is still falling. This is confirmed by the Australian Bureau of Statistics, whose data shows that by December 2020 the percentage of GDP represented by the manufacturing sector had now fallen to 5.5%. Although the rate of decline is slowing, the level is still very low compared to almost all other countries.

Can this number be turned around? What does it take before we as a Nation decide to get involved and do something about it? Why don’t we do something? As a Country, do we actually understand what is happening? Do we care? Have we given up? Have we actually just lost the passion?

Recently AMTIL undertook a survey to try and identify ways to help the manufacturing industry, and then pass this information onto government. As one of only 253 people to complete the questionnaire, I was completely taken aback by the extremely low number of people who took the opportunity to provide feedback to AMTIL on questions regarding the help they needed and the government support programs that could support them. I wondered about the reasons why people would not take 15 minutes to identify things that could help their business. As Professor Julius Sumner Miller used to ask: “Why is it so?”

AMTIL has a longstanding reputation that has been well earned from its excellent connections and relationships with government representatives and its no-nonsense manner of communicating with them. Based on that fact alone, I saw this as the perfect opportunity for people and companies to get their thoughts and messages directly back to government – whether it was positive or negative feedback they wanted known. This started me thinking (sometimes a dangerous thing) about why, from the 4,777 invitations sent out to people and companies, only 5.3% took the opportunity to complete this important survey.

Apathy?

Based on 10 years as the Director of the Automotive Supplier Excellence Australia (ASEA) program – that coincidently ended on the same date as the last of the OEM automotive manufacturers left Australia – I know that there are many companies that simply cannot be bothered participating in programs run by organisations trying to help them become more efficient and effective. Despite the outstanding results achieved by the participants in the ASEA program, and the publicity this received, there were still companies we spoke to that just did not see any reason to take part.

In some cases it was a lack of trust; others could not see how we could possibly help them; and for others, they just didn’t want to change. For many, all they knew was the insular world they operated in, and that world was purely within OEM automotive manufacturing. The majority of suppliers didn’t even have any sales people, as they knew that if they did the right thing by their OEM customers (Ford, Holden and Toyota) on the current models, they would continue to get business on the new models.

However as that world evolved, changed, and finally disappeared, they were left stranded because they could not operate outside the very narrow, sheltered environment they had been operating within for so long. When those companies did eventually realise they needed outside help and support, and were willing to accept it, there was no time left to implement the changes needed before their decades-long revenue stream finally disappeared forever. No matter how strong a company’s current revenue stream looks today, tomorrow’s changes can stop it in its tracks.

Too busy?

I am aware that most manufacturing SMEs (particularly after a year of COVID) are short of two things: time and money. I am also aware that 99.8% of the 2,375,753 registered Australian businesses in 2020 have fewer than 200 employees, and a whopping 2,314,647 have fewer than 19 employees.

Therefore time is definitely in short supply in smaller organisations. However, completing the AMTIL survey was an opportunity to provide important feedback to Government about the things they could do to support and help their company, so I can only assume that there were a lot of people that didn’t really give “completing the survey” a very high priority in their busy daily schedules.

Far too often, those things that can benefit us the most in the future are overridden by the many daily tasks and activities that must be completed, just in order to run the business. Time management is a critical part of any business, particularly for the leaders, and somehow time needs to be created or allocated throughout the day to focus on the future, and not just the now.

Fed Up?

The third possibility of course is that people are just sick and tired of providing years and years of feedback to a variety of different governments (state and federal) that seem to come and go at regular intervals, but see nothing at all change in helping or supporting them in their endeavours.

One of the great strengths of the ASEA program was the incredible support that was received form the three government participants; federal, Victorian and South Australian. The representative from the SA Government had previously worked at Holden, and the Victorian representative had previously worked at both Holden and Ford, so their knowledge about what industry needed was relevant and up-to-date.

This industry knowledge within government, and the close working relationship between the government and industry people on the program were crucial to the huge success of the program. Unfortunately many of the former industry people in government are not there anymore, and I personally believe the relationship between government and industry has suffered because of it.

Why is SME feedback important?

Based on the company breakdowns above, I believe that a very large percentage of AMTIL members would fall into the SME category. If that applies to your business, your specific feedback is very important. To understand why SME feedback is critical, let me refer to my earlier article from January 2019.

Typically, most of the small-to-medium-sized manufacturing companies are focused on “Operational Excellence”, and need different types and levels of support to their larger counterparts. SMEs typically need support and assistance to help them move through the “Operational Excellence” phase and into the “Business Excellence” phase, so they can successfully grow and become larger, and hence more successful.

There are currently many government programs, schemes, initiatives, CRCs, Innovation Labs and more to support innovation, advanced manufacturing, Industry 4.0, vollaboration, R&D and so on. That is excellent news for those companies who are already at the “Business Excellence” stage of their journey. However, many SMEs are still in the “Operational Excellence” stage, and if you are one of those, you need a totally different type of support. If SMEs do not voice their opinion, the bulk of the help and support will be focused on advanced manufacturing and “Business Excellence”.

If Australia wants to halt the decline and begin to regrow its manufacturing industry, there needs to be a broader focus on the needs of the entire sector and a shift in both the thought processes and the funding mechanisms. The significant levels of support to help companies who are at the pointy end of their journey regarding “Business Excellence” should be broadened to also help those companies who are at the beginning of their journey with their “Operational Excellence”.

Without industry feedback and strong representation, your message cannot be heard. If you are one of the people who did not complete the survey, which category are you in? I am sure AMTIL would like to know this information and get your feedback.

Linsey Siede is the Director of Likatibro Consulting Pty Ltd. Siede began his career in engineering with GM Holden, before becoming Managing Director of Delphi Australia in 1990. He was also General Manager of ANCA Machine Tools, prior to spending the last ten years as the Director of Automotive Supplier Excellence Australia (ASEA). Email: likatibro@bigpond.com