The Can Do Attitude

The fundamental three businesses that produce wealth in the world are the businesses that harvest, the ones that mine and the ones that make things. Every other business is a catalyst or facilitator to these three that are the creators of wealth.

Dr Bob Brown in a paper called “Australian Made” wrote: “Australia has had a ‘love-hate’ relationship with manufacturing. Before the advent of white man just over 200 years ago, some very unique products, such as the boomerang, the woomera and the didgeridoo were developed and made by hand crafting. As the colony developed, inventors and innovators arose to the challenge of farming in harsh and variable conditions. Items such as windmills, the stump-jump plough, the sugar cane harvester, barbed wire and other agricultural devices were invented and fabricated. The community saw these developments as little more than side-line activities”.

Yet the Victor lawnmower, rainwater tanks, and the Hills hoist featured in Australia’s 2000 Olympics parade to the world.

Too many people believe that we cannot manufacture competitively in Australia and so, continuously, new Hills hoists, new Victor mowers, new Cochlear ears, are lost to overseas production because of this belief.

Sure, when repetition and quantity become large numbers then the Asian manufacturers become competitive. But before the decision is made to transfer the manufacturing to China etc. one should take into account, actual quantities required for the market, technological capability, materials quality, product quality, proprietary design protection, transport costs, quality assurance and reject percentage.

Take the last Holden Monaro. It has been recognized worldwide by the Automobile Industry that this quality, world vehicle was designed and built from scratch in the shortest run numbers ever and at a profit and then closed down before competition caught up.

This was a project other car manufacturers worldwide have freely admitted they could not perform. Sadly, Holden never realized their opportunity to continue to build clever special vehicles in short runs, here in Australia, for the world market. In the Monaro, the use of smart design and creative production methods for quality
short run manufacturing was almost due to one man and they packed him off to the USA and went back to the original production plan and methods.

Holden were recently asked to provide specially armored vehicles for the Government fleet and reneged (see Attachment A) so the order went to BMW. Whilst I don’t know the details it seems to me, from history, that they don’t even understand the concept of specialized vehicle short runs even though they partner Holden Special Vehicles (HSV) and this company is producing short run specialist vehicles all the time. There is another company in Australia building leading edge armored vehicles for the defense forces, successfully, in short runs.

One of the reasons Ford and Holden failed here is because they built the same product that Asia could build cheaper, using the same long term plans and processes. They didn’t understand that they must have a point of difference, a strategic advantage. These companies have neither. So the only difference in the market place is price and they can’t compete.

In almost every major construction project around the world the project management team contains a large percentage of Australians. Construction is one off production, the shortest manufacturing run possible. Why Australians? Because these Aussies are decision makers, they are problem solvers, they work out the sequence of processes that provide the means to successful construction (production).

Where does this in-grown talent, this skill set come from? I have a theory. From a very young age, Australian children grew up with “plenty of space” different to our international counterparts. The backyard was our theatre. We could hide away from others to be Robin Hood, Captain Kid, or Jet Jackson. We played make believe and we believed. We built tree houses, pirate ships and space ships. We grew up and whilst we no longer played the games, (some still do) we did not lose the ability to make decisions, develop ideas, construct processes and problem solve. These are the talents honed throughout childhood and the ones that are needed in creative manufacturing.

Education

Almost all of our manufacturers who started their own business did so from a skill set or a trade and without any formal business training. People usually “fall into” manufacturing and to most people it is looked upon as the last resort in a job, much less a career. Yet many of our manufacturers compete successfully worldwide, so imagine how better they would be if they had received, or could receive some formal training.

Whilst Australia has one of the greatest and most diversified education systems in the world and we have courses in everything from brain surgery to under water crochet lessons there is no formal education in manufacturing as a career. In fact in the business of manufacturing apart from the general business skills, it is imperative to have training or experience in the following subjects:

 research and development,
 product development,
 product and job costing,
 price point,
 product quality,
 service and warranty,
 process methods,
 tool and jig making,
 materials selection and control,
 purchasing and logistics,
 trades and skill sets,
 labour selection, training and planning,
 subcontracting,
 production and plant capacity,
 machinery operation and engineering,
 plant and machinery maintenance.

The New Paradigm

Manufacturing methods are changing and Australia can be a world leader.
The pace of technology growth is increasing to a point where in a lot of cases it does not pay to build sophisticated tooling used on the largest machines producing vast amounts of product over a number of years. The risk is too high because a change in technology leaves these manufacturers holding old tooling and committed to large stock runs, therefore unable to keep up with the changes or taking the hit and spending huge money to make the changes necessary to compete.

New additive manufacturing methods incorporating 3D Printers are revolutionizing production capability by providing for very short runs of components at economical prices. (Read the changes these machines will make to world production in the attached McKinsey Quarterly report in Attachment (A))

Previously unfashionable production methods for short runs like sand casting, vacuum, blow and rotational plastic molding (only a few of the more economical methods of production) will see a new life in short run manufacturing.
As technology growth speeds up, the consumer will continue to demand the latest fashion product and that will only last until the next product arrives.

We will change the way we establish our factories and our production methods. The new factory will be highly flexible, able to change production methods quickly, limiting the spending on tooling and combining other specialist contractors in the mix to produce that new product quickly and for a short production period, at a minimum startup cost.

This revolution and it will be, will require a smart and creative design management team who will not only design the products but also design the production processes quickly. It will need a smart “on the floor” production team who have the ability to adopt changes and production methods rapidly as well as produce high quality products in smaller numbers with more personal skilled involvement. Australian production teams have this capability and are far better educated and skilled than Asian teams.

Australians can be world leaders, given the opportunity and definitely out perform Asia in this new world of manufacturing.

Facts on Australian Manufacturing

 In 2009–10: Manufacturing businesses paid $52 billion in wages, generated $381 billion of sales and service income and created $97 billion of industry value added (IVA),
 In 2010–11: Manufacturing industry employed 9% (991,800) of all people employed in Australia,
 Manufacturing industry accounted for 34% of total exports in 2010–11 The value of manufacturing exports was 12% higher in 2010–11 than in 2005–06.
 The Manufacturing industry contributed 25% to total business expenditure on R&D in both 2008–09 and 2009–10,
 “In 1995, small high-technology companies were responsible for a 45% increase in employment, and contributed 41% to the growth of the national economy.”*

*Apple “Trade Union Investment research document 97/98

We can do it.

Australia can be a leader in this new era and led by the small business sector can quickly embrace this new manufacturing revolution. But it needs a “Whole of Nation” support to recognize this new challenge and support those who take this initiative.

It requires Tertiary Institutions to provide manufacturing business education and qualifications as well as training in the latest machinery and manufacturing methods.

Government needs to provide incentives and the relaxation of regulation. (see attachment (B) Excerpts of the paper “Saving Small Business”).

It also requires the Unions to work collaboratively with the Employers in a much more flexible working environment
and it requires Australian retailers and consumers to purchase the products. (see attachment (C) in Excerpts of the paper “Saving Small Business”).

The Northern Territory Plan (Proposed by Lionel Barden, now the Policy Chair
Small Business Association of Australia)

In 2006 with the support of the Northern Territory (N.T.) Government and the Northern Territory Business Enterprise Centre I commenced a submission to the Federal Government to fund the establishment of an Advanced Manufacturing Business Training Centre under an Ausindustry grants program for incubators. This Centre was to be based in Darwin. The Federal Small Business Minister of the day decided in her wisdom that the incubator program would be cancelled and so our submission never received an opportunity of scrutiny.

(A Power Point Presentation and a copy of the submission are available on request)

I have left out the names of the people and companies who were involved at the time, as I would have to reestablish connection and possibly introduce new partners, if it was decided to re-submit the program, which I do not see as difficult.

Following the adage that an idea is only as good as it’s time, the time is certainly right to establish this training centre in Darwin. Why?

1. There is bipartisan support in Federal Government for the development of Northern Australia but a lack of understanding as to how.
2. There is positive N.T. Government support for such a project.
3. The manufacturing sector in the N.T. has the lowest rate of Gross State Product in Australia therefore because Darwin is almost a green field in manufacturing it will be easier to introduce our plan than trying to change old ways in established territories.
4. There is a huge need for local manufacturing support to the gas and oil industry as well as to defense maintenance.
5. Darwin is the most strategically placed location for export than any other region of Australia.

I am a true believer in the competitiveness of clever Australian manufacturers in the world market and am passionate about helping manufacturers build their capabilities in this new manufacturing revolution.

Attachment (A)

3-D printing takes shape *

3-D printing, or additive manufacturing can not only handle materials ranging from titanium to human cartilage but also produce fully functional components, including complex mechanisms, batteries, transistors, and LEDs.

The technology would transform manufacturing flexibility, allowing companies to slash development time, eliminate tooling costs, and simplify production runs—while making it possible to create complex shapes and structures that weren’t feasible before. Moreover, additive manufacturing would help companies improve the productivity of materials by eliminating the waste that accrues in traditional (subtractive) manufacturing.

The economic implications of 3-D printing are significant: McKinsey Global Institute research suggests that it could have an impact of up to $550 billion a year by 2025.

Reducing time in product development was a key benefit of the first 3-D printing machines, which were designed to speed the creation of product prototypes (and in some cases helped reduce turnaround times to a matter of hours, from days or weeks).

The ability to make prototypes without tooling lets companies quickly test multiple configurations to determine customer preferences, thus reducing product-launch risk and time to market.

As of 2011, only about 25 percent of the additive-manufacturing market involved the direct manufacture of end products. With a 60 percent annual growth rate, however, that is the industry’s fastest-growing segment. As costs continue to fall and the

capabilities of 3-D printers increase, the range of parts that can be economically manufactured using additive techniques will broaden dramatically.

Indeed, reducing the reliance on hard tooling (which facilitates the manufacture of thousands of identical items) creates an opportunity to offer customized or bespoke designs at lower cost—and to a far broader range of customers.

A key challenge in traditional aftermarket supply chains, for example, is managing appropriate inventories of spare parts, particularly for older, legacy products. The ability to manufacture replacement parts on demand using 3-D printers could transform the economics of aftermarket service and the structure of industries. Relatively small facilities with on-site additive-manufacturing capabilities could replace large regional ware-houses.

The most successful players will understand these challenges. Some are already creating centers of excellence and hiring engineers with strong experience in additive manufacturing.