This is according to key findings from the most extensive study conducted into the future of the manufacturing sector in Australia in almost a decade.
The Australian Industry Group (AiG) report, Manufacturing Futures: Achieving Global FitnessManufacturing Futures: Achieving Global Fitness, based on a national survey of more than 800 manufacturers, provides an honest and revealing insight into what manufacturers think of the industry’s future.
A clear message from the report is that manufacturers are rethinking and, in most cases, renewing their businesses in the face of global challenges and opportunities.
“The future of Australian manufacturing will be strongly influenced by the degree to which we are able to integrate into the international economy and keep pace with the necessary actions and investments to achieve global fitness,” Australian Industry Group chief executive Heather Ridout said.
For many manufacturers, this will mean that they need to globalise their operations and forge new growth opportunities to ensure their future survival. Strategic government action to remove obstacles and to encourage innovation and improvements in competitiveness is essential and will complement businesses own efforts in this regard.
“We’ll be looking to capitalise on China, particularly through developing higher quality products as its consumers become more sophisticated. Our strategies are now incorporating low cost inputs being sourced from China, as well as investing in developing a Chinese market for exports,” a Melbourne-based food and beverage manufacturer quoted in the report.
A Geelong-based food processor quoted in the report highlighted key concerns among manufacturers generally about competition from low-cost countries and insufficient domestic growth:
“Exports are limited because a lot of the countries that we have to compete against have protection barriers still in place… We’ve gone to the extent now of actually shifting part of our production to Spain in order to get away from that. And we’ve done some of it in Thailand, and well, quite frankly, if it’s the only way that companies are going to be able to survive, I think that’s where we are going to go.”
A Bendigo-based food processor highlighted another major concern among manufacturers about the inability to secure skilled staff and insufficient labour flexibility: “There are going to be some real problems in that area (skills shortages) as we move forward into high levels of technology. It’s going to increasingly become difficult for us. Hence a propensity to actually sign up maintenance contracts with the suppliers of the equipment rather than to even deal with your own workforce.”
To be ‘manufacturing fit’ you will need to have:
· a belief in their capacity to compete against overseas companies in Australia and overseas
· a global outlook to their business with a desire to be world class operators
· a focus on on-going business improvement, with every effort being made to be lean, strip out wasteful operations and improve productivity
· a focus on building the capital intensity of production through automation and the rapid adoption of new technology
· an emphasis upon lifting the skills capabilities of staff, through both apprenticeships and training to up-skill
· a well developed supply chain, seeking out the most competitive suppliers whether they be, for example, in Australia, Mexico or China
· a focus on product design and innovation that will deliver quality products at world competitive prices
· a focus on developing niche markets supported by strong customer relations and after-care services