The latest research report from Advanced Manufacturing Growth Centre looks at the sector’s pain points and 10 ways manufacturers can be smarter operators.
Advanced Manufacturing Growth Centre (AMGC) managing director Dr Jens Goennemann said the extensive research undertaken for the report Ten ways to succeed in Australian manufacturing: insights from peers, the public and AMGC, shows we must look beyond outdated views of manufacturing.
Goennemann said: “We must take decisive action to reduce our dependence on the export of primary raw materials and transition from being a lucky country to a smart country, by adding value and advancing our onshore capabilities.
“We must expand our understanding and look beyond the outdated view that manufacturing is just production. Manufacturing is a capability, an enabler and a vital component of our economy, it is a key driver of prosperity – it deserves our attention and needs to be nurtured.”
The genesis of the report was to identify perceived barriers in the sector and compare them to actual barriers. AMGC interviewed manufacturers around Australia on their experiences and attitudes about their business and potential for growth or development.
Those findings were then stress-tested against industry peers, the public and 1000 students, with the goal to gauge where Australian manufacturers can focus to better align their practices, to increase positive perception, and to grow their overall business impact.
Key findings included 88 per cent of manufacturers did not have a strategic or long-term business plan. Many were not monitoring KPIs. This was tied to Australia’s strong SME manufacturing base, whereby there was not the staffing to work on the business as well as in it.
Goennemann said the impact of COVID-19 reinforced this pain point and that businesses need to be worked ‘on’, rather than ‘in’.
Manufacturers also cited skill shortages as a major issue. The sector suffers the highest level of skills shortage in Australia at 17.2 per cent, followed by construction at 15 per cent.
Breaking down ingrained attitudes and images of manufacturing is critical AMGC said, providing the example of a manufacturer working with local high schools to challenge perceptions about the industry.
The AMGC said that currently five per cent of Australian manufacturers make up 95 per cent of export value, or roughly $9 billion a month. If a portion of the remaining 95 per cent of the industry could scale, the impact would be substantial.
AMGC developed 10 ways businesses could help their business:
Ten-ways to succeed in Australian manufacturing offers the following insights
1. Australia needs to recognise its manufacturing strength
- 60 per cent of Australians believe manufacturing is changing, becoming safer and more innovative;
- youth see potential in manufacturing careers, rate job security and career progression highly; and
- industry and media have an active role to play in addressing common industry myths.
2. Manufacturers should focus on good leadership
- local management skills rate average when compared to countries with similar GDP;
- good leadership is crucial to success and practical steps can be taken to address leadership issues; and
- business culture, self-confidence and leading by example are vital for innovation and growth.
3. Change has to be planned for
- 88.2 per cent of business do not have a strategic plan, while 42 per cent do not monitor KPIs;
- AMGC found business owners and operators worked ‘in’ rather than ‘on’ the business; and
- manufacturers are encouraged to make time to plan, seek advice and engage with industry or governmental support agencies to unlock potential.
4. Build a network and collaborate
- the 12 per cent of Australian manufacturers that collaborate are more successful
- ‘zero-sum’ thinking is a barrier to growth. Collaborating with peers and research institutions can unlock productivity; quality and product gains while delivering 8% in revenue gain; and
- Australian manufacturers’ competitors are not the businesses next door, but the businesses overseas
5. Work with Australian research institutions
- 81.4 per cent of small and 75.4 per cent of medium-sized enterprise do not engage with research institutions;
- manufacturers that invested in collaboration are more successful than those that do not; and
- it is a two-way street: Researchers gain practical experience, industry gains expert insight.
6. Adopt technology
- far from being a ‘job-killer’, technology is an enabler and equaliser, it can lead to productivity, quality and upskilling opportunities;
- Australian manufacturers lag other industries in adopting advanced technologies; and
- some manufacturers are ‘put-off’ by a lack of understanding or misconceptions about the cost of investment, these businesses should seek expert advice.
7. Accessing capital
- one in five Australian businesses have stated difficulty accessing finance and 45 per cent of SMEs do not use accountancy software;
- 17.6 per cent of respondents cited access to capital as an obstacle. 15.8 per cent also cited cost inputs as a barrier and 18.6 per cent listed overdue accounts as a handbrake on capital; and
- Accessing capital should not be onerous. Having an up-to-date business plan (Way 3), accessing grants and talking to your financial institution are good places to start.
8. Hire the right people
- manufacturing suffers from one of the highest skills shortages at 17 per cent;
- just three per cent of students considered a career in manufacturing, and many were advised to seek careers elsewhere;
- two-thirds of the public recognise that manufacturing is evolving and will become more innovative; and
- Talent can be sourced by engaging with local schools, providing internships, and using technology to recruit.
9. Build your workforce culture
- building a healthy workplace culture can lead to a ready talent pool and an engaged workforce;
- in-house upskilling, job shadowing and mentoring lead to better performing and more productive teams; and
- culture is not a nice to have, it is a must-have and can impact retention and innovation.
10. Extend your market reach
- just 5 per cent of Australian manufacturers account for 99 per cent of the industries’ total export value;
- 80 per cent of Australians recognise that trade and export of Australian goods benefit the economy; and
- companies that export demonstrate growth, productivity, profitability and wage benefits and more should take active steps to increase their reach and customers.
The full report is here.