Advanced Manufacturing Australia
Australian manufacturing has suffered a number of blows over the years, and it’s the advanced segment that’s bouncing back from the ropes and the business is still going global.
Manufacturing is dead. At least, that’s what the media seemed to report when Pacific Brands moved their textile production offshore last year. But it seems manufacturing still has a life in Australia as the success of advanced manufacturers such as ResMed and Cochlear show, indicating that not only is manufacturing still alive in this country, it’s evolving.
Traditionally, advanced manufacturing includes precision engineering, diemaking and tooling, composites, automation, and new materials, says Hayden Williams, Austrade’s manager for advanced manufacturing. “From an Austrade point of view we see it as high value-added manufacturing. We have automotive, defence, security, aerospace, marine and rail, plus enabling sectors.”
Medical instruments and biotechnology production also fall under the umbrella, though tend to be classified under medical exports. In addition to goods, Williams says exports include intellectual property, services, technology, and inbound and outbound investment.
Dr John Blakemore, principal of Blakemore Consulting and president of the Manufacturing Society of Australia, takes a slightly different view, separating the manufacture of advanced products from advanced manufacturing process. “Australia is not greatly renowned for any advanced manufacturing process. We have some companies that make advanced products, which is quite different, though not a lot of advanced processing is used to make them.”
Advanced manufacturers innovate the process of manufacturing to make a finished product, he explains, thus the sector includes value-add resource processing in the mining industry where we have “refineries with world class technology”. The product may not be high-tech, but the process is.
And taking the definition of manufacturing as a conversion of raw materials to an output via a series of activities, Blakemore adds film production, including computer-generated imagery (CGI) and other types of technical production, under advanced manufacturing.
New exporters
“Australians are very good at short production runs because we have a small domestic market. Our manufacturers tend to be flexible, producing goods of high value and high quality, perhaps in quantities that other manufacturers overseas aren’t interested in doing,” says Williams, outlining some of our key advantages.
His advice to new exporters in this space is to choose an international market carefully. “If the company is export ready, we want to work with them to pick the right market. The world looks to be full of opportunity, but you have to prioritise. It also depends on the specific sector and whether the market requires them to have a presence or not.”
Governments and industry associations run workshops and missions that will give new exporters an insight into the most suitable global markets for their particular segment, he advises.
Existing exporters
Looking for growth markets and growth opportunities is the key to expansion for existing exporters, says Williams. Asia and India are growing markets, particularly for automotive parts, but the space is competitive, he warns: “When the US auto market declined, a lot of Canadian and US auto companies were looking for opportunities as well.”
Blakemore recommends starting a relationship with Asian countries now if you intend doing business there, particularly China. “You have to build long-term relationships with the Chinese, so you have to start early.”
Diversification across sectors has also been helpful for many businesses, according to Williams. “Once where they might have been 90 percent auto, they’re now 50 percent auto and they’ve gone into defence, marine, aerospace. Some have gone into medical instruments. One company went into artificial limbs.”
This especially helps if the nature of the sector is hard on the bottom line, such as with the “lumpy” payments experienced by suppliers to the defence and auto industries, he says. “They have to even out the lumps otherwise, when there’s a downturn, a lot of them go broke.”
Advanced exporters
Austrade has developed cluster programs for more advanced exporters to develop relationships with others. Williams says clusters and missions “aim for cross-fertilisation where companies can help each other with projects” and encourage businesses to be “cooperative rather than competitive”.
Using a supply chain model will allow Australian businesses to focus on our strengths, says Blakemore. “We have a well educated workforce. We can do all the design work for products that could be manufactured anywhere.”
This is an objective of the Federal Government, says Williams. “Most of this industry is global so the imperative is to get Australians into the global supply chain. We have a skilled workforce and we’re interested in keeping the R&D and operations in Australia. If that’s not viable, Australian companies might go offshore to manufacture part of the product, or we look into foreign direct investment.”
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