tag:theconversation.com,2011:/fr/topics/manufacturing-taskforce-3604/articlesmanufacturing taskforce – The Conversation2013-02-19T19:25:24Ztag:theconversation.com,2011:article/123022013-02-19T19:25:24Z2013-02-19T19:25:24ZLabor’s innovation plan provides hope for Australian manufacturing<figure><img src="https://images.theconversation.com/files/20408/original/rq5xv2wg-1361262911.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Gillard government's Industry and Innovation Statement aims to revive an ailing manufacturing sector and address Australia's flagging productivity.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>While its launch in the heat of election battle was hardly propitious, the federal government’s new Industry and Innovation Statement, <a href="http://aussiejobs.innovation.gov.au/Pages/default.aspx">A Plan for Australian Jobs</a>, is the long-awaited result of a serious and measured consideration of the challenge facing Australia’s trade exposed industries, especially manufacturing.</p>
<p>This challenge, which was highlighted in <a href="http://www.innovation.gov.au/Industry/Manufacturing/Taskforce/Pages/default.aspx">last year’s report</a> by the Non-Government Members of the Prime Minister’s Manufacturing Taskforce, is to achieve nothing less than a transformation in the competitiveness and productivity of manufacturing firms in the context of an increasingly high-cost economy.</p>
<p>The significance of manufacturing is that it drives technological innovation, accounting for more than a quarter of Australia’s R&D spending by companies, and in doing so provides high-skilled jobs not just within the manufacturing sector itself but in related services and infrastructure. In addition, it contributes to the external account, enabling us to pay for imports that we could not otherwise afford.</p>
<p>It is already apparent that this challenge has been intensified by the simultaneous action of three separate but related forces on the economy.</p>
<p>First, as a number of commentators have warned, the terms of trade effect associated with rising commodity prices, which has contributed around half of the growth of Australia’s national income in recent years, is <a href="http://www.abc.net.au/rural/news/content/201301/s3666522.htm">beginning to taper off</a>. This means that other sources of growth must be found to rebalance the economy, with the emphasis on boosting our productivity performance.</p>
<p>Second, despite a welcome improvement in productivity growth over the past year, the trend over the 2000s has been downward by comparison with the 1990s. Without agile policy intervention, it is <a href="https://theconversation.com/australias-choice-the-high-road-to-productivity-or-a-race-to-the-bottom-10695">hard to imagine that Australia’s productivity performance will recover sufficiently</a> in the foreseeable future to compensate for the further anticipated decline in the terms of trade.</p>
<p>Third, whereas in the 1980s such a decline was accompanied by a significant fall in the value of the Australian dollar, the dollar has now become a “safe haven” currency and remains stubbornly high due to <a href="http://www.theaustralian.com.au/business/markets/russia-ready-to-start-buying-aussie-dollar/story-e6frg94o-1226254724684">purchases by overseas financial institutions</a>, particularly the Swiss and Russian central banks. Clearly, this makes the competitiveness challenge even more demanding, but not impossible.</p>
<p>The government’s industry statement recognises that other countries have faced this challenge and addressed it successfully. For example, despite the constraints of Eurozone macroeconomic policy, Germany and the Nordic countries emerged in better shape than most from the global financial crisis due to relentless innovation and a focus on creating high skill, high productivity jobs, and President Obama’s administration has similarly begun a major effort to reinvigorate the ailing US manufacturing sector.</p>
<p>The industry statement builds on the long-term strategy set out in <a href="http://asiancentury.dpmc.gov.au/">Australia in the Asian Century</a> to propose an essentially optimistic vision of “a more productive, dynamic and globally connected Australian economy” with “an innovation system in the top 10 globally by 2025”. However, it is disappointing that the government intends to do so by <a href="http://www.smartcompany.com.au/tax/054214-government-cuts-r-d-tax-break-for-big-business-to-provide-1-billion-boost-to-smes.html">funding its new initiatives from the R&D tax credits</a> available to some of Australia’s largest and most innovative companies.</p>
<p>This cutback continues the misplaced obsession with achieving a budget surplus at all costs, and it strikes a jarring note for a country with low public debt and access to low interest borrowing for investment in future growth. It was never suggested in previous changes to the tax regime, which were meant to eliminate waste and malpractice, that such tax credits could be dispensed with altogether.</p>
<p>Whatever might be said about this budget neutral approach to funding, the new initiatives announced in the industry statement are overwhelmingly positive and forward-looking. While most public attention has been directed to the expanded opportunities for Australian companies to tender for major resources projects, the real novelty of the statement lies elsewhere, particularly in the proposal for 10 world class “innovation precincts”.</p>
<p>International research and experience has demonstrated over many years the competitive advantage that can be generated for firms through geographically concentrated “clusters” of expertise and capability in deep collaboration with universities and public research organisations. Some clusters like Silicon Valley have become well known, but there are myriad others from Minneapolis to Munich.</p>
<p>The defining characteristics of successful clusters and precincts around the world include “smart specialisation” in key enabling technologies, strong connections to global networks and supply chains and an understanding and application of non-technological forms of innovation such as new business models, design thinking and systems integration. They are usually supported by substantial public research funding and “soft infrastructure”.</p>
<p>Australia’s first nominated innovation precincts to receive public support will be in manufacturing and food, with others to follow on the basis of collaborative bids by industry, universities and public research organisations, including the CSIRO and NICTA. The resources available for these precincts will incorporate funding previously allocated to the <a href="http://www.arc.gov.au/ncgp/itrp/hubs_default.htm">Industrial Transformation Hubs</a> program and the <a href="http://minister.innovation.gov.au/gregcombet/MediaReleases/Pages/NewInnovationCentreToHelpPowerAustralianManufacturing.aspx">Manufacturing Technology Innovation Centre</a>.</p>
<p>Clearly, innovation precincts are not something that can be artificially imposed, though this has not stopped some countries from trying, often with dismal results. No one would expect Australia, with only 2% of the world’s R&D, to be excellent at everything, but it does make obvious sense for us to mobilise our limited resources around established and emerging capabilities with potential for critical mass in global markets and production systems.</p>
<p>Some of these capabilities will no doubt be in manufacturing-related areas, such as robotics and automation, materials science and environmental technologies, but others may be in areas such as the digital and creative industries which are evolving organically in our major cities. An example is the vibrant cluster of large and small businesses, including many entrepreneurial start-ups, around the University of Technology Sydney.</p>
<p>Whether or not companies participate in precinct activities, the drive to improve productivity performance will be further assisted by an increase in the scale and scope of services provided by the highly effective <a href="http://www.enterpriseconnect.gov.au/Pages/Home.aspx">Enterprise Connect program</a>. In addition, a new <a href="http://deewr.gov.au/centre-workplace-leadership">Centre for Workplace Leadership</a> will help organisations to build management and innovation capability, with an emphasis on engaging the talent and creativity of workforces.</p>
<p>The value of any industry statement will be judged by its impact, and this will require a sustained implementation strategy across not just one term of government but several. It is to be hoped that the next government, whatever its political hue, will be able to pursue such a strategy as part of a shared vision of our competitiveness and productivity challenge.</p><img src="https://counter.theconversation.com/content/12302/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Professor Roy Green is Dean of the UTS Business School and a member of the Manufacturing Leaders Group.</span></em></p>While its launch in the heat of election battle was hardly propitious, the federal government’s new Industry and Innovation Statement, A Plan for Australian Jobs, is the long-awaited result of a serious…Roy Green, Dean of UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/116662013-01-17T03:30:38Z2013-01-17T03:30:38Z2013: The battle between the taxpayers and the manuocrats<figure><img src="https://images.theconversation.com/files/19304/original/ct3yzssd-1358384669.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prepare for more handouts: the taxpayer is the meat in the sandwich between politicians and manuocrats - those who believe the source of all our wealth is manufacturing.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>The battleground between business, taxpayers and government for 2013 is taking shape. It is manufacturing and jobs.</p>
<p>On Wednesday, building materials company Boral <a href="http://www.smh.com.au/business/boral-cuts-700-jobs-to-avert-costs-tragedy-20130116-2ctqr.html">announced</a> at least 700 job cuts in Australia.</p>
<p>This followed <a href="http://www.smh.com.au/business/bluescope-starts-year-with-job-cuts-20130114-2co7y.html">Bluescope’s</a> announcement on Monday that it was cutting 170 jobs at its Western Port plant in Victoria.</p>
<p>The reaction from various vested interests has been swift and predictable. Paul Howes, the secretary of the Australian Workers Union <a href="http://www.businessspectator.com.au/bs.nsf/Article/Labor-behind-Boral-job-losses-Mirabella-3Z32B?OpenDocument&src=hp2">stated</a>, “Australian manufacturing is being hit for six”. Opposition parties at both federal and state level have blamed their relevant governments.</p>
<p>The Federal government has said that it will respond in the near future. And that is where the battle will heat up.</p>
<p>Formally, the government will respond to the report issued by non-government members of the Prime Ministers <a href="http://www.innovation.gov.au/Industry/Manufacturing/Taskforce/Documents/SmarterManufacturing.pdf">Manufacturing Taskforce</a> in August last year.</p>
<p>This report is a mixed bag. Indeed, it is exactly what you would expect from a group of representatives from business, unions and academia who have a vested interest in the manufacturing sector. It suggests reducing business tax, regulation and red tape (p.60). </p>
<p>It calls for increased government investment albeit on a “targeted” (i.e. picking winners) basis (p.61). To keep the academics happy, it calls for a (government supported) program that “will fund Industrial Transformation Research Hubs and Industrial Transformation” (p.68). Bizarrely, given recent overseas experience of housing bubbles, it calls for “measures to stimulate residential and commercial construction” (p.61).</p>
<p>Of course there is plenty of room for “incentivisation” (that is, handouts). Indeed, recommendation 2 (p.89) states that:</p>
<blockquote>
<p>“The non-government members of the Taskforce recommend that a package of short-term measures be considered to help counter the cyclical factors confronting key manufacturing subsectors as set out in this report.”</p>
</blockquote>
<p>Based on recent history, the government’s response to the report is likely to focus on short-term handouts. Recent examples include $42 million to <a href="http://www.geelongadvertiser.com.au/article/2012/06/28/334861_news.html">Alcoa</a>, and with the help of the Victorian and South Australian government, $275 million to <a href="http://www.leadingcompany.com.au/news/$275m-holden-lifeline-not-a-handout%E2%80%9D-gillard/20120322398">General Motors</a>.</p>
<p>Of course, they won’t be called handouts but rather, “strategic investment that will boost our economy, foster innovation, build new business opportunities and promote adoption of new … technologies”.</p>
<p>Call them what you will, they are funds from the taxpayers’ purse into the profits of private interests.</p>
<p>And in an election year, with the shadow of further job losses hanging over the government, the car industry is already lining up for its 2013 <a href="http://finance.ninemsn.com.au/newsbusiness/motley/8594166/car-makers-ask-for-more">“strategic investment”</a>.</p>
<p>But are these handouts bad?</p>
<p>Yes – because they ignore how and why modern economies like Australia are changing.</p>
<p>Manufacturing is only a minor part of the Australian economy. The report shows that services account for around 80% of Australia’s output, manufacturing and mining about 8% each, and the rest, agriculture. Manufacturing’s share of output has been steadily declining over the past century. And this pattern is observed in all developed economies.</p>
<p>Why has this occurred? Two European researchers, Schettkat and Yocarini <a href="http://ftp.iza.org/dp964.pdf">reviewed</a> the economics literature on the shift to services about a decade ago.</p>
<p>Their report, which covers studies back to the 1930s, suggests three inter-related reasons:</p>
<ul>
<li><p>As we grow richer, we demand relatively more services (e.g. high quality health care) and relatively less manufactured output;</p></li>
<li><p>Changes in the way business is organised has seen manufacturing employees contracted out and reclassified as service employees, despite them doing the same tasks;</p></li>
<li><p>Productivity has risen faster in non-service sectors so we need fewer employees in manufacturing and agriculture to have the same – or even more - output.</p></li>
</ul>
<p>While we can argue about which of these reasons is more or less important, they all lead in the same direction. The manufacturing sector has shrunk and will continue to shrink relative to the service sector. And this is a good thing. It means more people in better, safer, more stimulating jobs producing the things that consumers want.</p>
<p>Our obsession with manufacturing is reminiscent of the <a href="http://en.wikipedia.org/wiki/Physiocracy">physiocrats</a>, a group of 18th century economists who believed that agriculture was the source of all wealth.</p>
<p>While I suspect the National Party may still harbour some physiocrats, it is clear that our current politicians are largely “manuocrats”, people who believe that the source of all our wealth is manufacturing. Just like the physiocrats of three centuries ago, today’s manuocrats are wrong.</p>
<p>However, none of this helps the government. The temptation to hand out taxpayer funds to prop up dying jobs in manufacturing is strong. So expect to see more handouts in 2013 as the manuocrats and vested interests in manufacturing argue that, without them, we will all be ruined. And the taxpayers will have to fight back with their only weapon – their ballots at the federal election.</p><img src="https://counter.theconversation.com/content/11666/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen King does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The battleground between business, taxpayers and government for 2013 is taking shape. It is manufacturing and jobs. On Wednesday, building materials company Boral announced at least 700 job cuts in Australia…Stephen King, Professor, Department of Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/112952012-12-19T19:51:01Z2012-12-19T19:51:01ZMoving the car industry debate beyond a squabble over subsidies<figure><img src="https://images.theconversation.com/files/18615/original/wq7f9vkc-1355294666.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Instead of relying on unconditional government largess, car companies in Australia should be asked to provide guarantees.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>A famous quote from Albert Einstein states that doing the same thing over and over again and expecting different results is insanity. </p>
<p>Yet this is exactly what has occurred in the car industry which has formed a crucial part of Australia’s industry policy. </p>
<p>For decades, governments have developed a hotchpotch of plans and practices, allocating generous funding via blunt instruments that are implicit in traditional protectionist policies and industry assistance.</p>
<p>Companies like Holden and Ford receiving government support or bail outs repeatedly promise that – this time - the industry will become robust and self reliant. They then renege on these promises. For a number of reasons (including pressure from the high Australian dollar and low demand), jobs are lost and the industry struggles on. Debates continue about the cost and benefits of supporting a car industry: opposition to propping up a declining industry versus the need to protect jobs and acknowledging the flow-on value to other manufacturing sub-sectors. </p>
<p>We need to move beyond these debates. The problem is not whether industry policy should keep ailing industries from going to the wall, but rather how to pursue productivity and longer-term economic investment.</p>
<p>Industry policy’s key objective is to encourage long-term strategies encompassing innovation, research and design, updating production and control over distribution networks and responding to shifts in global demand. </p>
<p>Everyone knows that to be successful, firms need to produce quality goods and services and develop a competitive advantage through brand identification, good service and market strength.</p>
<p>A lack of direction, cohesion and vision has led to short-term, uncoordinated policy responses. Therefore, it is worth considering the usefulness of a coordinated industry policy as a way of avoiding unsuccessful strategies embraced in the past. </p>
<p>Recognising the interconnections of problems and the inappropriateness of existing silos is a start to addressing the issues.</p>
<p>Coordination involves a whole of government approach that works across portfolios, offering the opportunity to develop an integrated response and focusing on policy development and implementation. Industry policy is interdependent with other polices such as fiscal and monetary policy, environmental sustainability, training and skills development and industrial relations. </p>
<p>Apart from the public sector and economic policy public servants, a rigorous consultation process would engage different players including representatives from the car companies, the trade unions, environmental and consumer groups. It is important that governments develop constructive relations with key firms and industry groups, developing shared policy goals and priorities on matters such as technological improvement, “green” cars, design capacity and workplace relations. It is also important to collaborate on developing environmental regulations which are based on either a self- or co-regulatory basis to achieve compliance and control environmental externalities.</p>
<p>Another challenge to address is that there is little accountability and transparency. Governments consistently offer bail outs to the car companies which then limp along for a little longer before announcing the next bout of job redundancies. This type of assistance is a reactive, political fix which placates the industry for a while, but contributes little towards longer term industry restructuring or viability.</p>
<p>As part of a better planning package and closer coordination between industry and policy makers, firms should have to provide guarantees for improved performance.</p>
<p>Despite huge amounts of public funding, car manufacturers have not been answerable for poor production and profitability outcomes. The provision of funding with hardly any strings attached is not new. There have been no effective instruments for identifying or correcting failures which has merely resulted in additional uncertainty. </p>
<p>The Department of Industry administers approximately $3.4 billion to Toyota, Ford, General Motors and their suppliers. The public regularly receives announcements about staff cuts as well as further subsidies for various manufacturing plants. After Holden threatened to close its manufacturing base in Australia, the Gillard government declared that its $275 million deal to the company was “not a hand out” but “a strategic investment”. Holden would commit to continuing operations in Australia until 2022 and <a href="http://www.theaustralian.com.au/national-affairs/state-politics/baillieu-dragged-feet-on-275m-holden-rescue-deal/story-e6frgczx-1226307690172">promised</a> it would invest $1 billion. Notwithstanding these assurances, there was no guarantee that there would not be any forced redundancies, consequently employment remains vulnerable.</p>
<p>Australia needs an industry policy which advances overall performance in the automotive industry and avoids wasteful interventions and the benign neglect of the past. </p>
<p>If there is unwillingness to move beyond the “same old, same old”, or incapacity to reconsider industry policy via strategies such as better coordination, the government should stop propping up the declining car industry. We cannot afford to squander millions of dollars of public money on inefficient and ineffective car industry policies.</p><img src="https://counter.theconversation.com/content/11295/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Liz van Acker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A famous quote from Albert Einstein states that doing the same thing over and over again and expecting different results is insanity. Yet this is exactly what has occurred in the car industry which has…Liz van Acker, Senior Lecturer, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/105032012-11-04T19:30:11Z2012-11-04T19:30:11ZConcentrating on the costs of the car industry means we are failing to see the benefits<figure><img src="https://images.theconversation.com/files/17218/original/q698znx6-1351832232.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">With the government embroiled in an argument about how the level of car subsidies it pays, it's time for a cost-benefit analysis that factors in the industry's economic flow-on effects.</span> </figcaption></figure><p>There are four facts we have all become aware of in the past few days – if not months – regarding car manufacturing subsidies. </p>
<p>Fact 1: A lot of money has been given to Australian car manufacturers over the past decade. </p>
<p>Fact 2: Despite great financial assistance, the future of the sector looks bleak. </p>
<p>Fact 3: Job losses in manufacturing are increasing. One out of ten manufacturing jobs disappeared over the last four years (estimates suggest more than 100,000 jobs) with the Federal Government projecting the loss of another 85,000 over the next five years. </p>
<p>Fact 4: There is a great divide regarding the long-term effect of car subsidies. Some view it as “good economics”; others see it money down the drain. </p>
<p>Then there is also the matter of transparency, with the Australian Financial Review and the Department of Industry entangled in a legal dispute over whether sensitive commercial details of the subsidies - released unredacted by mistake to the AFR in response to an FOI request - should be made public.</p>
<p>It would seem this debate is more about politics and a union membership base rather a true assessment of the cost and benefits. </p>
<p>But an important and less-discussed issue is the flow-on effects from the car manufacturing industry to other manufacturing sub-sectors.</p>
<p>According to 2010 figures from the Federation of Automotive Products Manufacturers, companies involved in Australia’s automotive supply chain manufactured and exported over $1.51 billion worth of components, and sold over $3.71 billion of components. </p>
<p>The report also says that between 2007 to 2011, the sector as a whole added manufacturing innovation to the value of $4.5 billion. The car industry also accounts for about 7% of total manufacturing turnover and 5% of value-added manufacturing.</p>
<p>Significantly, the car industry provides the base-load demand to justify the installation of production facilities in other industries. The demands it makes of its suppliers for high quality products have had significant spill-over benefits in other industries.</p>
<p>This includes the development of light-weight components such as carbon-fibre composites and the use of titanium and aluminium, to reduce the mass of vehicles and improve fuel economy and reduce emissions. </p>
<p>And this “multiplier effect” extends well beyond the car industry and its associated sectors. </p>
<p>As part of our research into Management Practices in Australian Manufacturing at Macquarie University we met with a senior executive of one of Australia’s most successful medical manufacturers, who explained how his company has been using a firm in Melbourne previous engaged in the automotive industry as one of their suppliers. </p>
<p>Without them, his company would have had to outsource the production of that particular part of their product to overseas manufacturers.</p>
<p>This knock-on effect has not been sufficiently explored in the public debate around the future of the car industry. </p>
<p>We agree an independent and rational assessment of the car industry needs to be made and that such an assessment needs to be transparent. Recent events may have tainted any attempts to that end.</p>
<p>However, such much-needed assessment cannot simply focus on car manufacturers alone, their productivity,their sales or their labour costs. Any cost-benefit analysis should contain measures that can value the impact the automotive industry has had and can have on other manufacturers. </p>
<p>Objectively examining the automotive industry, including the measures mentioned above, we believe, can add value in two ways: first, find ways to help manufacturers producing high value manufactured products such as medical and pharmaceutical products, which according to the report written by <a href="https://theconversation.com/the-blueprint-for-a-smarter-australia-starts-with-manufacturing-8900">Prime Minister’s manufacturing taskforce</a> have had “the largest increase in real exports”.</p>
<p>Second, in the same way we can identify how to keep employed the hundreds of thousands of Australian employees that are currently working, directly or indirectly, for Australian car manufacturers.</p>
<p>Australians have always taken pride in their local manufacturing; recently however, the sector is being portrayed as in a terminal decline. </p>
<p>Isn’t it time we focused on the opportunities ahead, rather then focus on a long lost industry? Q</p><img src="https://counter.theconversation.com/content/10503/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are four facts we have all become aware of in the past few days – if not months – regarding car manufacturing subsidies. Fact 1: A lot of money has been given to Australian car manufacturers over…Paul Gollan, Associate Dean, Research and Professor of Management, Faculty of Business and Economics, Macquarie UniversitySenia Kalfa, Research Fellow, Management Practices Project Coordinator, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/89092012-08-17T04:41:28Z2012-08-17T04:41:28ZSome big ideas for manufacturing, but will they happen?<figure><img src="https://images.theconversation.com/files/14370/original/b44f87cm-1345174185.jpg?ixlib=rb-1.1.0&rect=35%2C107%2C1955%2C1206&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Manufacturing Taskforce has delivered 41 recommendations across all levels of of the economy: but the sheer breadth may prove hardest to implement.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>The recently released <a href="http://www.innovation.gov.au/Industry/Manufacturing/Taskforce/Documents/SmarterManufacturing.pdf">Report of the Non-Government Members of the Prime Minister’s Manufacturing Task Force</a> provides a comprehensive and well-considered blueprint for the future of Australia’s manufacturing sector. </p>
<p>However, the sheer breadth of its scope may pose some significant challenges in seeing its recommendations fully implemented.</p>
<h2>What’s in the report</h2>
<p>Manufacturing employs around 950,000 people and is an important part of the national innovation system. But around 100,000 jobs have been lost since the global financial crisis of 2008-2009, in spite of the otherwise robust growth of Australia’s minerals and energy sector over the same period. With around 71% of all manufacturing employment located in Australia’s non-resource rich states, it helps to explain why we have been experiencing a two-speed economy.</p>
<p>The report’s first recommendation is a call for the federal government to make a clear statement on the importance of manufacturing to Australia’s economic future. In doing so it seeks a policy response to the current challenges facing many manufacturing firms in the two-speed economy.</p>
<p>In conjunction with this long-term vision is a request for a package of short-term measures to help alleviate the pressure currently being experienced by Australia’s manufacturers. </p>
<p>Other key recommendations are enhanced federal government investment in infrastructure projects, and measures to stimulate residential and commercial construction. </p>
<p>The report also recommends a “buy-local” policy, anti-dumping measures and more support for SMEs and job skills development. It asks for the Council of Australian Governments (COAG) to take action to enhance the built environment and social and community infrastructure in mining communities.</p>
<p>This package of short-term stimulus is reminiscent of the federal government’s response to the GFC. It is understandable why the Taskforce has recommended these measures. However, it is questionable whether Prime Minister Julia Gillard will be willing to implement them. Her desire to produce a modest budget surplus and counter the Opposition’s claims of excessive spending in the lead-up to an election might turn such short term action into a political football. Time will tell.</p>
<h2>Macro-level economic reform</h2>
<p>The report calls for more consultation with industry in relation to the impact of regulatory changes, plus more coordination of state and federal legislation and regulations. Taxation gets attention with a desire to see lower company tax rates and more R&D tax incentives. Given the recent noises coming from the federal government’s <a href="http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/123.htm&pageID=003&min=wms&Year=">Business Tax Working Group</a> this is an area for significant debate.</p>
<p>There are also recommendations for greater investment in national transport infrastructure with more multi-modal transport systems. The need for enhanced investment in information and communications technologies (ICT) is raised, with a focus on upgrading the capacity of small to medium enterprises (SMEs). Such areas are long overdue for attention and despite the National Broadband Network (NBN), Australia’s transportation infrastructure is need of substantial investment.</p>
<p>Among the more politically contentious recommendations is the need to reform Australia’s energy markets to reduce energy costs, as well as reducing overlaps between state and federal carbon reduction schemes. </p>
<p>The report suggests that Australia’s carbon reduction programs should be linked to international schemes. However, it also wants the impact of the carbon pricing scheme to be ameliorated for energy intensive businesses. The <a href="http://www.ausindustry.gov.au/programs/cleantechnology/cleantechnologyinvestment/Pages/default.aspx">Clean Energy Technology Investment Program</a> is strongly supported by the report.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14371/original/r9b4ymng-1345175178.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Clean energy technology is strongly supported in the report.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>Other recommendations include investigating the creation of a sovereign wealth fund (a recommendation the government has already said it will not support) and the adoption of a conformity marking scheme similar to the <a href="http://ec.europa.eu/enterprise/policies/single-market-goods/cemarking/">CE Marking system</a> used in the European Union (EU). </p>
<p>CE Marking was introduced in 1993 and is a compulsory requirement for all products sold in the EU. It guarantees that the manufacturer complies with appropriate EU regulations and compliances. Although not a quality mark, the CE Marking has become a form of quality assurance branding and signals that products are made to acceptable standards.</p>
<p>Such a scheme would appear to have merit, particularly if it could be developed in conjunction with New Zealand as a Trans-Tasman initiative within our free-trade agreement. By benchmarking such a CE Marking process against EU standards it would provide a potentially useful mechanism for enhancing the overall quality and reputation of Australia’s manufactured products.</p>
<h2>Mid-level reform</h2>
<p>At the meso-level, the Taskforce recommends establishing a small number of “Smarter Australia Precincts” and a larger number of smaller scale “innovation hubs”. The idea of industry clusters and innovation precincts has been around since the 1980s. It lies at the heart of government strategies around the world in which science parks and technology precincts are co-located near to universities and provided with technology incubators. Sadly, the success of many of these initiatives has been much less than was hoped for by the governments who fostered them.</p>
<p>What is important in clusters is often the presence of major “focal” firms that serve as key actors within production systems. In car manufacturing, these are companies such as Ford, General Motors or Toyota. In an ideal world these focal firms will be exporting their products and fostering international best practice ideas and innovation amongst their network of suppliers and related and supporting industries.</p>
<p>Currently, Australia has a globally competitive minerals and energy sector that has fostered some highly innovative clusters in areas such as iron ore or liquid natural gas (LNG) production. What is needed is for a similar industry cluster to be formed around manufacturing industries. However, too much of Australia’s major manufacturing base has been created for a primarily domestic market. While this worked during the days of high tariff barriers, it is not sustainable in the future.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14372/original/wq92skhf-1345175178.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The clustering of industries only works around focal firms - such major car manufacturers.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<h2>The role of the university sector</h2>
<p>The role of Australia’s university and publicly funded research agencies gets special mention. The report recommends that a committee be established to review how universities and other organisations (such as the Australian Research Council, CSIRO and Cooperative Research Centres) facilitate applied innovation and technology transfer. The creation of a “digital nervous system” for Australia’s national innovation system is recommended. A key part of this are measures to foster formal and on-going dialogue between industry and the research and education sector.</p>
<p>What lies behind these recommendations is a fundamental plank of the concept of a <a href="http://www.oecd.org/science/innovationinsciencetechnologyandindustry/2101733.pdf">National Innovation System</a> (NIS). This concept emerged in the 1980s, with research undertaken into the economic growth of Japan. An important element in the NIS is the role played by publicly funded research institutions such as universities. Government investment in these institutions is meant to provide dividends in the form of technology transfer that will help to boost the innovation and global competitiveness of the national industries.</p>
<p>Although this role for universities sounds reasonable in theory, it is fraught with practical problems. These are associated with getting technology transfer and commercialisation out of universities. For example, the reward and recognition systems that apply to academics favour peer reviewed publication not applied industry engagement. Universities are also not structured as commercial R&D centres and often cannot respond in the time-frames demanded by industry. They are also not financially or organisationally set-up to take on commercial risk.</p>
<p>Australia’s universities are currently tasked to provide high quality education and the pursuit of fundamental research. Resources are stretched and any significant engagement into applied R&D and commercial project work will require significant funding. Such funding will require more contribution from both government and industry.</p>
<h2>The importance of design</h2>
<p>One of the more interesting but important recommendations in the report is the call for the recognition of the role of design. This correctly identifies the key role that design plays in innovation and competitive manufacturing. A longer term goal is to see design thinking become an integral part of Australia’s manufacturing industries and to include design as part of future leadership programs.</p>
<p>Without doubt, design plays a key role in the development of competitive products. It includes not only product design, but the associated graphic and related design including interior and architectural design. Australia’s designers are amongst some of the best in the world. However, there is a lack of appreciation of design amongst many managers. There is a need for better integration of design education with engineering and business management courses within our universities.</p>
<h2>Smarter SMEs and workplaces</h2>
<p>The final recommendations of the report deal with how to enhance the SMEs who make up the majority of manufacturing firms, and how to foster high performance workplaces. Here, there are some valuable ideas. One of these is the adoption of the Small Business Innovation Research Program (SBIR) developed by the US Small Business Administration. This program sets aside federal funding to support R&D within SMEs that have fewer than 500 employees. The SBIR provides grants for early and intermediate stage R&D and commercialisation projects for SMEs.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=902&fit=crop&dpr=1 600w, https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=902&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=902&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1133&fit=crop&dpr=1 754w, https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1133&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/14373/original/xc2s4dx9-1345175701.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1133&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">AIG chief Innes Willox with Prime Minister Julia Gillard.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>There is a strong call for enhancing the role of <a href="http://www.enterpriseconnect.gov.au/Pages/Home.aspx">Enterprise Connect</a> and <a href="http://www.commercialisationaustralia.gov.au/Pages/Home.aspx">Commercialisation Australia</a> in order to assist SMEs to grow and innovate. The provision of “innovation vouchers” and the expansion of the Researchers in Business Program are also part of the report’s proposals. </p>
<p>However, the recommendation to make Enterprise Connect the “one front door” for SME support in Australia raises some concerns over how this can be undertaken without addressing federal and state overlaps.</p>
<p>Support for SMEs is clearly an important issue and any initiatives that can provide assistance are welcome. SMEs need more than just tax breaks and broadband. One of the most critical areas for attention should be the development of managerial competencies via education, training and networking programs. Currently there are far too many overlapping and often competing SME support initiatives across Australia.</p>
<p>Enterprise Connect, despite it being a worthwhile scheme in broad concept, has suffered from some significant implementation problems at the local level. It generally does not work that closely with existing state and territory SME support programs and there are clearly some unfortunate overlaps. Any future development of Enterprise Connect should involve COAG and the various Small Business Commissioners working towards a more integrated approach to SME support rather than having multiple agencies that often duplicate each other’s work.</p>
<p>Finally, the report acknowledges that innovation is not just about high technology. It recognises the importance of innovation within low to mid-tech industries (e.g. furniture, food processing, clothing, electrical goods, and motor vehicles). This is important for the SME sector.</p>
<h2>Building a globally competitive manufacturing sector</h2>
<p>The Taskforce report is ambitious, although it is broadly consistent with the findings of the US Council on Competitiveness and Deloitte <a href="http://www.deloitte.com/view/en_GX/global/industries/manufacturing/a1a52c646d069210VgnVCM200000bb42f00aRCRD.htm">Global Manufacturing Competitiveness Index</a> study. </p>
<p>The Prime Minister will now be under scrutiny over whether she accepts or rejects its recommendations. There are some big ideas in the report that Julia Gillard or any future Prime Minister could and probably should draw upon to reshape the future of Australia industry. The question is: will she?</p><img src="https://counter.theconversation.com/content/8909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Mazzarol receives funding from the Australian Research Council, Co-operative Bulk Handling Ltd, Capricorn Society Ltd, Ravensdown Co-operative Ltd, and the Department of Finance WA, </span></em></p>The recently released Report of the Non-Government Members of the Prime Minister’s Manufacturing Task Force provides a comprehensive and well-considered blueprint for the future of Australia’s manufacturing…Tim Mazzarol, Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy , The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/89002012-08-17T00:57:21Z2012-08-17T00:57:21ZThe blueprint for a smarter Australia starts with manufacturing<figure><img src="https://images.theconversation.com/files/14327/original/tdcwh9x7-1345101186.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Manufacturing has a future in Australia - but only if it can reposition itself up the global value chain.</span> </figcaption></figure><p>Can anything new be said about the future of manufacturing in Australia?</p>
<p>Yesterday’s report, <a href="http://www.innovation.gov.au/Industry/Manufacturing/Taskforce/Documents/SmarterManufacturing.pdf">Smarter Manufacturing for a Smarter Australia</a> submitted yesterday to Prime Minister Julia Gillard, is a detailed and comprehensive attempt to do so, and to propose practical ways forward for government in collaboration with industry, trade unions and public research organisations.</p>
<p>While there has been considerable discussion of the problems facing manufacturing in an increasingly high cost environment, driven by Australia’s terms of trade and high dollar, too little attention has been given to the opportunities to reposition our manufacturing for competitive advantage in global markets and supply chains.</p>
<p>This is the purpose of the report by the non-government members of the Prime Minister’s Manufacturing Taskforce. The Taskforce was established last year as job losses began to accelerate in manufacturing and the threat of closure loomed over major production facilities, especially in the automotive industry. It comprises 12 key industry and trade union leaders and three independent experts, and is supported by a secretariat from the Department of Industry, Innovation, Science, Research and Tertiary Education.</p>
<p>The Taskforce took seriously its terms of reference to “establish a shared vision for the future of the manufacturing sector”, and drew on examples of competitive high skill, high productivity manufacturing in northern Europe and the United States to demonstrate its continuing viability in advanced economies, which have withstood and in some cases reversed the trend to offshoring production activities.</p>
<p>The report makes the case for a strong manufacturing sector in Australia in the context of a huge but precarious commodity boom, whose terms of trade effects may soon have run their course, only to refocus policy on the need for a balanced and diversified economy with a renewed emphasis on productivity improvement. Manufacturing is an essential component of such an economy as it drives technological change and innovation and contributes to our external trade position.</p>
<p>However, the report also recognises that while technology innovation is closely linked to manufacturing success, particularly in high tech industries, non-technological innovation is just as important if not more so for low and medium tech industries, which make up the bulk of manufacturing in advanced economies, including Australia.</p>
<p>Non-technological innovation can take a variety of forms. For example, business model innovation deploys existing technologies in new combinations for new markets. Design innovation enables strategic reinvention and creates new customer experiences. And organisational innovation promotes high performance work and management practices. These forms of innovation are not as well understood in Australia as they should be.</p>
<p>Consequently, while some of the proposals in the report are familiar, others are relatively new to the public policy debate. The Taskforce proposes far-reaching new policy directions in the following five areas.</p>
<p>First, to address the short-term challenges facing Australian manufacturers, and the very real danger of large losses of jobs and capabilities, measures are proposed to boost the public and private investment pipeline, strengthen value capture from large projects in the current pipeline and help businesses, workers and communities manage change.</p>
<p>Second, to reinvigorate economy-wide productivity growth, encourage investment and reduce the costs of doing business, the Taskforce proposes a targeted stimulus to demand and initiatives in transport, broadband, energy, regulation and taxation.</p>
<p>Third, to address Australia’s underlying competitiveness, deeper collaboration is proposed not only to generate, but also to disseminate and apply knowledge. As part of a medium to longer term strategy, the Taskforce advocates the development of globally-oriented innovation hubs and precincts that build critical mass around our comparative advantages, as well as a new “Smarter Australia Network” linking businesses and research organisations.</p>
<p>Fourth, to address the multiple barriers facing small and medium enterprises (SMEs), and to help more SMEs grow into the innovative, global mid-sized firms Australia lacks, the Taskforce proposes that Enterprise Connect be expanded and that new measures are put in place to address the weak contributions researchers and governments make to SME innovation, to lift the capacity of SMEs to absorb new knowledge, to introduce and embed a greater focus on design and to improve access to finance.</p>
<p>Fifth, to sustain productivity growth into the future with continuous innovation in managerial and workforce skills and practices, a new national conversation and partnership between industry, unions and government around “Smarter Workplaces” is proposed. This will involve a sustained commitment from the partners to build the innovation culture and capabilities that high performance workplaces demand.</p>
<p>The Taskforce believes that manufacturing has a future in Australia, but only if it is able to innovate and reposition up the global value chain. It is now the turn of government to respond in an industry statement later in the year to the proposed policy measures, which provide a coherent framework for implementing this shared vision.</p><img src="https://counter.theconversation.com/content/8900/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roy Green is dean of the UTS Business School and a member of the Prime Minister’s Manufacturing Taskforce.</span></em></p>Can anything new be said about the future of manufacturing in Australia? Yesterday’s report, Smarter Manufacturing for a Smarter Australia submitted yesterday to Prime Minister Julia Gillard, is a detailed…Roy Green, Dean of UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.