“At every turn, there are signs of opportunity for Australian manufacturing,” Innes Willox, chief executive officer, Australian Industry Group, wanted his audience to know.
Willox’ discussion at the Australian Insititute of Packaging National Technical Forums at AUSPACK began with his assurance that the decline of manufacturing in Australia is not inevitable but its survival hinges on a few key factors – in addition to the depreciating Australian dollar.
Australia is still battling high labour costs, but slashing wages isn’t the answer. Instead, the focus ought to be on building productivity through workplace flexibility and investment and skills capital, he continued.
Australia’s worker productivity has actually fallen over the past decade due to shrinking manufacturing investment in capital and skills.
“Our workers will produce more with newer or more advanced equipment and the training to use it.”
According to Willox, Australia’s industrial relations system has also failed to encourage flexibility and productivity.
And the current productivity commission enquiry into the workplace relations system needs to identify workable changes to restore worker productivity.
“The reality is that labour productivity is central to our hopes and chances of maintaining and growing Australian prosperity,“ he stated,
Cheaper energy is also a must. Currently, Australian manufacturers pay twice for electricity now than they did in 2004 and their gas bills are on a similar trajectory.
Willox noted that regulatory changes relating to the electricity networks are about to deliver benefits, and Australia’s vast energy resources and technology advances in alternative forms of energy such as solar also present hope.
“Australian can still aim for an advantage in energy but to do so, we will need to transcend the partisanship that has paralysed Australian energy policy,” he added.
Every manufacturer has potential to become an advanced manufacturer with investment and innovation, and to this end, manufacturers must leverage technological advances in automation, robotics and information technology.
This, Willox stated, will enable Australian manufacturers to “seize opportunities across global markets and supply chains at previously unviable scales and speeds”, and will also enable them to switch markets and product categories if needed.
This type of agility also hinges on stronger links between research and manufacturing. “Research collaboration is particular urgent to improve because lack of pipeline innovation can seriously disadvantage Australian industry for years to come.”
He noted that ABS data suggests that fewer than one in ten Australian manufacturers currently collaborate with research organisations even fewer with universities.
“Australia has some of best researchers in world and some of the most vibrant innovative businesses but neither of those capabilities will do much good unless they are working together.
“At every turn there are signs of opportunity for Australian manufacturing,” he concluded.
