A new deal for manufacturing - building blocks for a promising future by Jeff Lang

The Australian Manufacturing Forum and @AuManufacturing’s campaign to crowd source a new deal plan for manufacturing post Covid-19 is now in its final week. Here Jeff Lang looks at lessons learned and the building blocks for a promising future.

Australia has a rare opportunity to use the COVID-19 pandemic to reform our economy – the potential silver lining in what’s a massive human tragedy.

The establishment of the $500 million Australian Business Growth Fund, which will get a $100 million Federal Government injection, with the major banks expected to match that commitment, is a critical first step. But it’s just that – a first step.

For years, there has often been heated discussion about Australia’s significant overseas supply chain risk, our over-dependency on China, the critical need to develop sovereign capabilities in certain industries, how to realise the true value of our natural resources, and to refocus education on reskilling and upskilling our young people for the fourth Industrial Revolution (Industry 4.0).

But all that talk has come to naught. The “she’ll be right mate” syndrome, graphically epitomised in Donald Horne’s 1964 classic, “A Lucky Country”, still largely pervades our thinking across government, industry, academia, and the wider community.

Although Australia did benefit from the reforming zeal of the Hawke-Keating Labor governments and the early Howard governments, those policy initiatives are a distant memory.

The 2008-09 Global Financial Crisis should have prompted a rethink, but a resurgent China, with an insatiable appetite for iron ore and coal and then educational services, put off the day of reckoning. Once again Australia got lucky.

Today, we no longer have that option. Hard policy decisions need to be made if we are to have a cohesive, national approach to reset Australia’s economy. Whether its technology, trade, industry development, environmental sustainability, or education, we need to build new foundations for economic growth.

We are well placed to do so. To take just one example, Australia is perfectly poised, with its abundant natural resources of wind and solar energy, to steal the march in a world looking for solutions to climate change. But to take advantage of our natural resources, whether they be clean energy or minerals, as well as fully utilising our workforce so they can enjoy well-paid and secure jobs, root-and-branch reform is urgently needed.

Taking a leaf out of Norway’s book, we need to align education, Government and industry policy. Tragically, in this country we believe that being cooperative is anti-competitive.

But the evidence shows that those countries successfully transitioning to Industry 4.0 are being helped, in no small part, by government initiatives that offer funding, collaboration opportunities and other financial and commercial incentives. In many countries, these programs involve larger companies assisting smaller companies enter the market, appreciating these collaborative efforts will enhance the bottom line of all.

There is a precedent for this in Australia. The Government’s initiative to break down the silos between medical research and front-line health professionals via its globally respected and well-funded Medical Research Future Fund has not only exceeded expectations but provides a blueprint for a similar strategic approach to Industry 4.0.

Universities need to be driven by the pursuit of practical excellence – not profit – so students are “job ready” on graduation.

This is critical if we are to exploit the employment opportunities that Industry 4.0 offers. It means developing advanced technology curriculums to prepare students to work in fields such as digital robotics, AI and the material sciences and engineering, requiring universities to be much more industry focused.

Establishing sustainable funding channels via investment, grants and tax incentives to support emerging technologies and companies during their incubation years is critical.

Australia also needs to radically rethink R&D. Today, too much of this scarce funding is being spent on niche projects that won’t deliver the large-scale, nation-building projects so desperately needed. Another initiative is nurturing incubator hubs that will foster corporate co-development and collaboration.

Finally, we need to end our dependency on China, whether it be cheap imports, immigration, students, or mineral exports. If COVID-19 does nothing more that force our policy makers to recognise this economic reality, and readjust the relationship accordingly, then it will have achieved some good.

In my opinion this includes re-examining the Free Trade Agreement with China, to question whether it has delivered the benefits it promised, and if not be prepared to walk away from it. Our national sovereignty demands no less.

The value of such an economic reform package is self-evident. For example, by building a sustainable value chain around Australia’s access to critical metals to export a higher-valued product will dramatically enhance Australia’s sovereign capability and improve our balance of trade by billions of dollars.

We estimate Australia could have generated an extra $13.5 billion in export revenue in 2018 from titanium mineral sands by adding just one more stage of production.

Globally, Australia is recognised for its resources, primary and secondary, education system, and, encouragingly, its early-stage technologies.

But we have the intellectual capital, the skills, the entrepreneurial acumen, to be so much more. We just need a new foundation – and post COVID-19 it’s time to start building it.

Jeff Lang is founder and managing director of industrial scale additive manufacturing company Titomic Ltd. He has extensive experience in developing new materials and manufacturing processes for sport, marine and industrial products, and has been instrumental in the development of a number of innovative companies in Australia and China.

Picture: Jeff Lang

@AuManufacturing’s new deal plan for manufacturing is brought to you with the support of Bosch Australia Manufacturing Solutions