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Closing the innovation gap is the key to the survival of manufacturing

The future health of Australian manufacturing depends on bridging the gap between research organisations and business. AAP

As we are only too aware, manufacturing in Australia is currently under a great deal of pressure, operating in a relatively high cost environment, facing significant international competition and taking the brunt of a high Australian dollar.

There is general consensus that to remain sustainable and competitive, one clear and proven path for firms to increase competitiveness is innovation.

However, there are significant innovation gaps in how Australian firms access new knowledge and collaborate with the research sector or between firms.

Plugging this “innovation gap” is crucial to Australia’s future manufacturing success - but the challenge is how to connect the dots.

We need to build more bridges between research organisations and industry. This point was reinforced in the 2011 Innovations Systems Report, which showed less than 5% of businesses had obtained information about new technologies from research organisations or universities.

Other countries are making it work. Germany is an example of how greater connections between research organisations and manufacturers can produce highly competitive and innovative products for export markets.

The Fraunhofer Gesellshaft is a case in point. Its success is partially down to the recruitment and development of high-quality graduates which go on to be employed by industry – a great method for technology transfer and up-skilling.

Australia can learn from this, but our manufacturing landscape is fundamentally very different. Australian manufacturing is dominated by relatively small companies, often without sufficient resources or expertise to dedicate to innovation programs, be it business process innovation or research and development.

Many companies do not have sufficient “absorptive capacity” - that is, the ability to recognise, exploit and integrate external knowledge for its own use.

The first step to closing the innovation gap is for small to medium enterprises (SMEs) and research organisations to accept that this issue is a two-way street. Research organisations will not be able to respond to market needs unless they have access to market knowledge and understand industry needs. Conversely, SME’s will never realise the true value of research innovation until they see evidence of market-relevant research.

It is commonly accepted that increasing connectivity improves innovation, but how this is done is a much wider debate. In my experience at CSIRO, there is no silver bullet solution to this problem. Increasing connectivity takes time and crucially involves building trust with companies who may not understand the true value of R&D, or may even greet it with a degree of scepticism.

A specific program that seeks to do this is the Federal Government’s Enterprise Connect Researcher in Business program. CSIRO has been part of the program since 2009 working with SMEs to bridge the gap between industry needs and research skills by placing research scientists directly into companies.

For instance, CSIRO is helping Textor Technologies, a producer of hygiene products, to grow their business by developing competitive advantage for their product range while giving CSIRO a greater understanding of the global hygiene market and its associated technologies.

As an example of a one-to-one interaction, such programs are successful. However, to successfully bridge the innovation gap in Australia, we need to also do more in cultivating one-to-many interactions, and ultimately firm-to-firm collaboration up the supply chain.

CSIRO has seen such successes via our participation in technology clusters and consortia, which formally bring firms and research organisations together with common goals and the creation of mutually beneficial technologies in mind.

These include the Victorian Direct Manufacturing Technology Centre, a cluster where eight Victorian manufacturing firms are working with CSIRO and university partners to meet their innovation needs by accessing platform technologies in direct manufacturing.

The Victorian Organic Solar Cell Consortium (VICOSC) is an example of a consortia establishing an industry supply chain to produce low cost printed solar cells, for various applications, using technology similar to that applied to print our polymer banknotes.

There is no doubt that the opportunity for Australia, both here and overseas, is immense. We do not lack the expertise and we clearly understand the link between innovation and competitiveness, but plugging Australia’s innovation gap will take time, effort and commitment.

Ultimately, what it will come down to is a meeting of minds. Research organisations will need to make knowledge more accessible, better understand industry needs and industry will need to increase its capacity to absorb new knowledge and its ability to put it into practice.

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