Worldwide shutdowns and key transport hub bottlenecks during the pandemic made it clear that Australia needed to place increased emphasis on local rather than global supply chains to reinforce its sovereign manufacturing capabilities, Balluff Australia & New Zealand sales director Jim Wallace explains.
Sovereign capability refers to Australia’s ability to independently exercise control over key areas of interest and strategic importance. This includes the capacity to develop, produce, and maintain essential goods, services, technologies, or infrastructure without relying heavily on foreign suppliers.
Open IIoT, an initiative that includes SMC, KUKA, Beckhoff Automation, Balluff, NORD Drivesystems and ZI-Argus, aims to demystify Industry 4.0 and related concepts.
As a cohort of some of Australia’s most prominent automation brands, we are strongly invested in exploring how automation and other IIoT technologies can fast-track Australia’s sovereign manufacturing capabilities.
Sovereign capability yields a number of benefits, such as reducing dependence on foreign suppliers. It also makes local manufacturers less vulnerable to potential disruptions in the global supply chain. And, pertinently, it promotes the country's autonomy and pursuit of national interests.
Manufacturing supports other sovereign goals
According to research from Flinders University, manufacturing provides the requisite productive capabilities to all other sovereign goals:
• Value-adding to Australian raw materials;
• sustainable energy technologies;
• processing advanced materials for the future economy;
• critical inputs for other sectors (mining and energy, defence), and
• making pharmaceuticals and medical devices.
However, while manufacturing is integral to the quest for sovereign capability in Australia, our local manufacturing capabilities are limited due to a historical overreliance on global suppliers.
‘Reshoring’ and sovereign capability
The terms ‘reshoring’ and sovereign capability are occasionally used interchangeably, but actually refer to two distinct but related aspects of a country’s manufacturing and economic landscape.
Reshoring focuses on the physical relocation of manufacturing facilities and production activities. While reshoring can contribute to enhancing Australia’s manufacturing capacity and domestic economic growth, it does not necessarily imply the development of sovereign capability.
This is because reshoring can still involve a dependence on suppliers for raw materials or components, limiting Australia’s autonomy and control over critical aspects of the manufacturing process. Sovereign capability requires a more holistic approach that focuses on building domestic capability and fostering resilience in key sectors.
Where IoT and automation come in
Unfortunately, Australia faces significant challenges for both the reshoring and sovereign capability of manufacturing due to the high cost of labour, real estate and the raw materials necessary for production within the country.
This is where IoT technologies such as factory automation come in – requiring a significant initial investment but reducing the costs of labour and even raw materials in the long-run.
The primary benefit of using automation to enhance sovereign capability is increased productivity and efficiency. By automating repetitive tasks and streamlining processes, companies can produce goods more quickly, consistently, and at a lower cost. Increased productivity enables domestic manufacturers to compete globally, reducing their dependence on foreign suppliers.
Secondly, automation lowers the cost of production and reduces the wastage of raw materials due to increased precision and quality control. “By reducing defects and variations, manufacturers can meet higher quality standards and gain an edge over foreign competitors, as well as reducing costs.
Finally, automation assists with creating a more resilient supply chain – an essential component of achieving sovereign capability in Australia. By automating certain production processes, manufacturers can reduce their dependence on external suppliers for labour-intensive tasks, mitigate risks associated with supply chain disruptions, and enhance control over critical manufacturing stages. This reduces vulnerability to geopolitical or economic uncertainties and strengthens domestic manufacturing capabilities.
Finding a way forward
It’s important to note that if Australia wants to truly capitalise on the opportunities presented by automation and other IoT technologies to enhance sovereign capability, there needs to be a dedicated effort between both the private and public sectors to enhance our resources and skills.
The government will need to allocate resources to support R&D efforts in the manufacturing sector, including funding research institutions to drive innovation and develop new technologies. Infrastructure support is also crucial through the provision of physical buildings where this development can take place.
Ultimately, developing sovereign capability in Australia’s manufacturing sector requires a comprehensive and coordinated effort involving government support, private sector involvement, and a long-term strategic vision to foster innovation, skills development, infrastructure, and favourable policies.