The Australian manufacturing industry is ripe for positive disruption
So how can you benefit from this?
The global economic impact of COVID-19 has changed the Australian manufacturing industry forever. This is the first time in modern manufacturing history that demand, supply, and workforce availability are affected at the same time globally.
Australian manufacturing has fallen from 30 percent of GDP to approximately six percent in 30 years. Almost all of Australia’s supply chains rely on imported components and materials, the pandemic exposed Australia’s reliance on other economies. The crisis has spotlighted the importance of increasing local manufacturing for critical industries, further compounded by growing unemployment and consumers' desire to support local business.
The rapid adaptability of existing manufacturers proves that Australia can ramp up the sector. The manufacturing industries that have remained in Australia have proven vital in the crisis, stepping up to the challenge of catering to the country's needs. Ford Australia, for instance, has shifted some of its workforce to produce more than 50,000 face shields for frontline workers. "A month ago, these gentlemen were building Mustangs. Now they have applied themselves to making these really fantastic shields to help other people. I think they are fantastic to swing so quickly and do this with high skill. It's great to see," Chief Engineer at Ford Australia, Steve Crosby.
Current manufacturing already supports hundreds of thousands of other jobs throughout the economy, thanks to its long and complex supply chain. Billions of dollars’ worth of supplies and inputs are purchased by manufacturers, which in turn supports many other sectors of the economy. Boosting the sector can only have a positive effect on employment and the economy. “It’s becoming clearer by the day that manufacturing is key to our economic survival and will be key to Australia’s economic recovery.” Innes Willox, Chief Executive AiGroup.
Apart from job creation, the practical advantages of ramping up local manufacturing are many:
Securing and stabilizing the supply chain
Reducing the length of the supply chain between production and customers
Less inventory in the supply chain, less handling, less storage facilities
Faster movement through the supply chain, faster delivery
Removing time differences, speeding up communication and problem resolution
Improving environmental factors with less product miles, better controls, and infrastructure for managing by-products and waste
Upgrading processes, combining moving to new facilities with
Investment in robotics, automation, or other capital equipment
Training and re-organisation of the workforce
Reducing waste in the processes
If you are a leader in your company how can you move forward and take advantage of this current opportunity in the manufacturing sector? Since March 2020, many organisations are reviewing their target markets, collaborating with other manufacturing companies and adding new products and services.
The Advanced Manufacturing Growth Centres report for 2020 summarise it very well in this image below; showing the 10 ways to grow your manufacturing as we head out of 2020 and towards 2021.
Production will no longer be as globalised but regionally based as the revolution will tend to focus on domestic consumer consumption. This will be especially true for advanced manufacturing which can supplement local operations with technology such as 3D printing, high-tech automation and robotics. This will drive significant investment in process automation, centralised asset monitoring and diagnostics, and cloud-based collaboration tools. Industry 4.0, the fourth manufacturing revolution is starting to create a huge macroeconomic shift. Local Australian manufacturers are becoming more flexible to fit a world of small-scale customisation that produces products for individual consumers. This small-scale customisation means factories will return home.
To support and promote local manufacturers, the recently formed Federal Government’s Manufacturing Taskforce has been tasked with making Australia more self-reliant by expanding its manufacturing base. The Taskforce has identified areas for growth in eight industries – food manufacturing, mining technology, defence, renewable energy, healthcare and biotechnology, recycling and packaging, advance manufacturing and aerospace. Two of the main incentive programs are a $107.2 million Supply Chain Resilience Initiative to identify areas where Australia needs a domestic capability for emergencies, a problem exposed in medical products during the pandemic and a $1.3 billion Modern Manufacturing Initiative, which will open in the first half of next year to offer grants for major projects. Businesses in the key areas have been encouraged to take advantage of these initiatives to propel their manufacturing practices forward, fast tracking innovation, job creation and growth. There are no business size requirements.
You know what you want to achieve, your team is great, but you need to boost your capabilities to get the result you are after. At Performance Drivers we start with a conversation that focuses on understanding your business and what you need to achieve, then we find the right member or members of our team to make that a reality. For more information on how our Grey Haired Gurus can help to optimise your manufacturing process please contact us.