Carolin Petterson, Negosentro | We could rightfully say that the world we’re living is currently focuses a great deal on services and experiences and that related industries are booming. Still, we wouldn’t be able to talk about industrial progress if the development was not accompanied by a strong manufacturing industry.
Australia is no exception and its citizens feel strongly about the need to manufacture more. However, one question remains: is Australia ready to respond to changes in the global market?
Finding a competitive edge
It is unrealistic to expect Australia to compete with other countries when it comes to low-value mass production. No matter what type of manufacturing we are talking about, if the total cost of products depends greatly on the cost of labour, Australia simply can’t compete with the developing countries of Asia, for example, in terms of labour cost.
Instead, Australia is focusing on the areas where it has a competitive edge. The proximity of the booming economies of Asia, which are home to almost 3 billion people, means that there is a great opportunity, but only if you know what kind of products are in demand.
Hundreds of millions of consumption-hungry middle class people are the potential that a country, such as Australia, with its stable political situation and skilled and educated population, needs to exploit. Being unable to compete in the manufacturing of cheap products, Australia is investing in intangible assets, such as product design, business models and brand image. If done correctly, the resulting products can justify a premium price that those looking for quality are happy to pay.
Another area being explored and exploited is niche manufacturing, i.e. the production of specialised products in smaller quantities. One example is the production of top-quality excavator rubber tracks, made mainly from natural rubber, which is more flexible than synthetic alternatives. Also, since Australia can’t compete with Canada and some Scandinavian countries when it comes to utilising rich energy sources for high-tech manufacturing, it is turning to the so-called “manu-services”, i.e. a combination of advanced manufacturing and services, where the focus is on the fact that contemporary manufacturing is much more than simply making products.
It’s manu-services that have been reshaping the approach to manufacturing for quite some time now. More and more people involved in manufacturing are undertaking services-related roles, such as legal advice and engineering, instead of being solely occupied with fabrication. Finally, Australia has an opportunity to rely on connected manufacturing, i.e. introduction of digital technology to manufacturing in order to boost speed, efficiency and accuracy.
One of the most important aspects that has to follow current trends and anticipate future ones are policy changes. The education system, something that Australia is rightfully proud of, needs to reflect the fact that services and manufacturing should be treated as complements rather than rivals. What this means in practical terms is that graduates need to receive education in skills that combine the two aspects. For example, production workers need to have customer service skills, engineers should also learn about finances, while designers should have a comprehensive understanding of marketing.
Areas to improve
While Australia is known for its investments in R&D in lower-tech industries, there is still a lot of room for improvement when it comes to high-tech industries, such as pharmaceuticals. Also, since the population and industrialisation are growing, we can expect that energy demand will be higher than ever. The need to find more efficient energy solutions should also help the manufacturing industry become more competitive and attractive for investments.
Basically, Australia is trying to compensate for the disadvantage it has when it comes to labour cost by focusing on higher productivity and capital efficiency. That is the right path that saves Australian jobs and creates new ones. The opportunity to strengthen high-tech manufacturing should not be missed, since it will be a huge boost to the economy. All we have to do is look at what others are doing and apply it in our environment.