Future of Manufacturing in Australia: Die. Survive. Thrive.
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1 Future of Manufacturing in Australia: Die. Survive. Thrive.
2 Jeff Phillips Varley Group Managing Director since 1995 Chairman since 2000 Qualified Electrical Engineer Varley established 1886 Employs 650 people across multiple sites in Australia and overseas
3 What is Manufacturing? Making goods or wares by manual labour or machinery. Macquarie Dictionary Transformation of material into new products. ABS Industry Classification The full cycle of activities from research and development, through design, production, logistics and services, to end of life management. University of Cambridge's Institute for Manufacturing Manufacturing is a broad term that covers many technologies, all materials and can be applied to one-off builds or mass reproduction. Too broad to be easily communicated
4 DIE Who cares if we have a manufacturing sector in Australia?
5 The Image of Manufacturing
6 Do we need Manufacturing in Australia? Australia has always been a primary sector economy Globalization has commoditised consumer products and created regions of technical expertise Manufacturing continues to shrink % % Australia s high cost base both labour & materials, regulatory costs, tax, transport Low R&D and risk adverse seed capital Buying local is considered uneconomical
7 Australia is in the wrong location Exporting is more difficult to achieve marketing, transport, travel time No land connected neighbours & low internal population Not on any major trade route
8 The Rise of China China has capacity to manufacture for the whole world China has abundant cheap labour & material China is investing heavily in education & machinery
9 But Manufacturing remains Important to Australia ABS 2013 has Manufacturing - 4 th largest component of the Australian economy - 4 th largest employer in Australia - 3rd largest export from Australia at $41b - the largest R&D spend at $4.5b The highest multiplier effect of all sectors at 1.43 (US Research Report, Manufacturing: An Economic Driver for Jobs and Florida s Future. August 2011.) Promotes high levels of workforce education China cannot control the world s distribution channels
10 SURVIVE How do we stay alive as a manufacturer in Australia?
11 Manufacturing must have a positive perception Negative talk does not endear supporters
12 Leadership must have the Will to Exist Passion for the business & determination to exist Adaptability & perseverance to the changing regulatory, economic & technological landscape Operate with cash reserves & never become reliant upon government assistance Unlikely to compete with a global product but easier to survive in niche markets Business will need to be blended offer a broad spread of products or complementary services
13 Be Close to your Customer Customization - Identify, design, develop, make and sell products and services that your customer needs! Have effective after sale warranty, spares & service Make the customer feel important
14 Exploit your Strengths Extremely high labour efficiency Well educated free thinking workforce Capitalize on unconventional opportunities Remain agile for quick change Globally high acceptance of Australian made goods
15 THRIVE How to outgrow Australia?
16 Super Smart or Super Cheap Control or own desired technology (IP) - local or global Be a quantum step cheaper in production costs constantly strive for zero production costs Ensure that these advantages cannot be easily replicated Utilize multiple smarter partners to create a new offering
17 Foresee the Future Closely observe your market trends & pick most likely future requirements Be disciplined with strategic business planning Exploit market downturns to position for explosive growth in the boom market Continuously adopt new technologies and materials Keep business structures that can react quick to disruptive change Invest in innovation
18 Borderless Manufacturing Will Additive Manufacturing transform the world?
19 How will 3D Printing transform Manufacturing? Product development can occur in Australia while the manufacture will be done in the country of the customer Focus will switch to design development & ownership of this IP Manufacturing costs will have greater consistency around the world - Energy cost become more significant - Labour & transport less significant - Material costs should equalise Manuf. Cost = raw mat. + machine time + comms Greatly increase speed to market with limitless customization
20 Is this really Manufacturing? Removes country of destination import duties/tariffs & meets local content requirements Negates the need for FTA s on manufactured goods By the ABS Definition of Manufacturing this will not be classified as manufacturing Expedites the shift from physical labour to brain power So has Australian Manufacturing thrived or died?
21 THANK YOU
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