Although everything has been stacked against Australian manufacturing in recent years, there is still hope for a vibrant sector, according to Innes Willox, CEO, Australian Industry Group.
The decline of manufacturing in Australia is not inevitable, he said, but its survival does hinge on a few key factors.
Willox, who was speaking at the Australian Institute of Packaging's National Technical Forums, co-located at AUSPACK, said 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.
According to Willox, Australia’s worker productivity has actually fallen over the past decade due to shrinking manufacturing investment in skills and capital.
“Our workers will produce more with newer or more advanced equipment and the training to use it,” he says.
Willox said Australia’s industrial relations system has also failed to encourage flexibility and productivity, which needs to be addressed in the current productivity commission enquiry into the workplace relations system.
“The reality is that labour productivity is central to our hopes and chances of maintaining and growing Australian prosperity,“ he said.
Cheaper energy is also a must. Currently, Australian manufacturers pay twice as much for electricity now than they did in 2004 and their gas bills are on a similar trajectory.
Willox says 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.
“Australia 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 said.
Willox also said every manufacturer has potential to become an advanced manufacturer through investment and innovation, and to this end, manufacturers must leverage technological advances in automation, robotics and information technology.
This, he said, 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.
Willox said this type of agility also hinges on stronger links between research and manufacturing.
“Research collaboration is particularly urgent to improve because a lack of pipeline innovation can seriously disadvantage Australian industry for years to come.”
According to Willox, ABS data suggests that fewer than one in ten Australian manufacturers currently collaborate with research organisations, and 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,” he said.
“At every turn there are signs of opportunity for Australian manufacturing,” he concluded.
