Competing on cost is not an option for South Australian manufacturers in the Asian Century, according to the State Government’s strategy for high value manufacturing in SA, Manufacturing Works.
Instead, the challenge is to compete on value, transforming raw materials into high value products using the most advanced manufacturing methods available. Technology alone won’t deliver a secure future for manufacturers. Much of the competitive advantage we need to survive in a rapidly industrialising world will come from innovations in the way we work and the organisation of workplaces. Manufacturing Works reminds us that while technological innovation is vital to improving performance, modernising our workplaces is the key. At the heart of the performance improvement agenda is enlightened leadership, an engaged workforce and a culture of creativity and innovation. This is easy to say but hard to deliver.
The temptation in Australian workplaces has been to look for the next technological fix to drive productivity and profit growth. Great gains will continue to be made from this but not in the absence of transforming the way our workplaces operate, breaking down hierarchical command and control workplace management systems and replacing them with more participative and collaborative ones.
Studies have demonstrated that workplace innovations can improve output and productivity by around 30 percent. The adoption of team-work, job rotation, job redesign along with investments in training and creating a culture of innovation and creativity can deliver enormous benefits. This all takes time and commitment, a reason why many firms look for a quick fix as an alternative to systemic change.
Fortunately Manufacturing Works recognises this, advocating a range of so-called high performance workplace initiatives. Australia is no stranger to these sorts of programs but we have never managed to conceptualise and implement it as well as the Scandinavians have, particularly Finland, which is widely regarded as the gold standard in workplace innovation. While Australia is not Scandinavia and shouldn’t slavishly adhere to practices imported from other nations, we would be foolish to ignore the results of their efforts. Relatively small economies in that part of the world have achieved impressive economic outcomes through smart workplace innovations linked to interventionist industry and investment policies – policies that government, industry and unions have built a consensus around over many years.
Manufacturing Works has been inspired by this experience and our own successes over the years through programs such as the Australian Best Practice Demonstration Program and 20 years of industry cluster and networking initiatives. These efforts fragmented with the imposition of WorkChoices, a policy that reinforced managerial prerogative at a time when we needed to be pursing enlightened industrial democracy. Today we are witnessing the re-emergence of a more democratic model of industrial and workplace development in Australia. While the Fair Work Act laid a legislative foundation for this, great challenges remain, particularly integrating industry and workforce/workplace development policies.
Manufacturing Works is an important piece of the policy puzzle, generating a welcome debate about the need for technological innovation in manufacturing to be accompanied by workplace innovation, not privileging one over the other but regarding them as mutually reinforcing objectives.
Manufacturing has played a central role in South Australia’s economic and social development. Without it we would not enjoy such a high standard of living. It is a driver of economy wide innovation through high levels of research and development that benefit other sectors. Manufacturing will remain a driver if we are open to transforming it through adoption of advanced manufacturing methods and processes, including high performance workplace practices.
Manufacturing Works focuses attention on extracting a higher manufacturing dividend from mining, consolidating and leveraging benefits from major defence projects, harnessing the opportunities that can flow from new technologies such as 3D printing, nanotechnology and biotechnology. All of these have the potential to revolutionise production, presentation and packaging of manufactured goods.
The automotive sector remains precariously positioned in Australia so we must remain alert to the possibility that more of it will move offshore. However, there is a danger that this will become a self-fulfilling prophecy if we are not careful. It is extremely valuable to have a company like GMH operating in South Australia. Wisely, Manufacturing Works recognises this and seeks to work closely with the Australian Government to help make the automotive sector more resilient to global pressures. Assisting GMH suppliers to diversify into other sectors is an insurance policy against a worse case outcome should a closure be imposed by the parent company.
Substantially boosting value adding in the forestry sector is a key objective of Manufacturing Works. The challenge is to transform the abundant supply of cellulose fibre available from trees into a wide range of products using new manufacturing technologies. Perhaps one of the greatest opportunities for manufacturing sector growth will come from the imperative to reduce our carbon footprint through the development of the so called Cleantech sector, a particular focus of the Tonsley Park rejuvenation project. Billions of dollars are available to support this nationally, driving innovation in low carbon production methods, energy generation and efficiency.
Few of us think about manufacturing as a service provider but it increasingly is. Knowledge and skills available in manufacturing firms are sold as a service to many other firms, creating new markets for manufacturers. Manufacturing Works views this as an enormous opportunity for South Australian manufacturers to diversify and grow, particularly in relation to key strengths in modeling and simulation. The ‘servitisation’ of manufacturing firms may well be the key to survival for some or our manufacturers.
Among the 20 initiatives outlined in Manufacturing Works are the introduction of an Industry Innovation Voucher Scheme to provide funding to link manufacturers with expertise to address problems; a range of innovation programs focusing on the potential applications of advanced manufacturing technologies; the establishment of a Manufacturing Leaders Network; a High Performance Workplace initiative and a skills development and workforce training initiative.
Manufacturing Works is a timely policy statement that is likely to attract broad support. Importantly it will help to position South Australia to attract the support it needs from the Australian Government to scale up its initiatives. At the end of the day there is only so much a State Government can do to help transform manufacturing in the difficult environment we are in. What we know from experience is that it is not good enough to leave the future of manufacturing to the whims of a mythical ‘free market’ – markets are political and economic constructs. Left to the influence of those who benefit most from the absence of regulation, they are neither fair nor free. Governments that recognise this, wisely act in our collective interest. Manufacturing Works is a smart starting point.
Associate Professor John Spoehr is the Executive Director of the Australian Workplace Innovation and Social Research Centre at the University of Adelaide