Despite the many rumours, Australian manufacturing is not dead!
It is, however, changing its focus from the automotive sector to the clean tech sector to build products that meet current and future market demands. This does not require behemoths with huge factories but rather lots of innovative, flexible companies designing and refining products that help increase resource efficiency and solve problems connected with energy, water and waste.
Whilst industry transition is never something that should be treated lightly due to its impact on individual workers and their families, the changing of what is made, where it is made and how this is done is in continual flux. That the car plants established 50 years or more ago in Australia are shutting down is no surprise. To be honest, it is amazing they have lasted so long.
Making cars used to require lots of skilled workers but as skill levels increase in developing countries and automation takes over much of the 'grunt' work, the requirement for high skills across a large workforce has decreased.
With the closure of these large production lines, it will free up lots of highly skilled workers to provide greater value to the economy and to work in more interesting, innovative and vibrant companies. Some workers will not make this transition and for them the changes will be hard, but many will thrive with the opportunities that present themselves.
The transition away from car making is another step up the economic development ladder. As the wealth of a country grows it moves through a recognised pattern of exports from textiles first through to advanced manufacturing. The decline of the automotive manufacturing sector in Australia may therefore not be something to bemoan but rather something to celebrate as we are now free to move up the ladder to products and production techniques that are at the next level.
The historic government support for the automotive sector was understandable but was probably just delaying the inevitable and postponing this important transition to the next stage of our country's development.
Without the pressure of Detroit dictating activity, innovative manufacturing companies can start utilising emergent technologies such as additive manufacturing, intelligent processing and assistive automation. The CSIRO's Advanced Manufacturing Flagship is leading the development of thinking in what these technologies can offer to industry.
The product selection can also be more forward looking. Rather than making large cars that few people want, all that great manufacturing effort can be focussed on growing sectors and products with increasing demand. In this way, Australia can carve a niche for global leadership in producing the products of the future in the most efficient manner.
Some examples of Australian companies developing technologies that are leading the world come from the annual Australian Clean Technologies Competition. The 2012 winner was a company called enLighten Australia, which produces very smart lighting systems that can reduce lighting energy costs by up to 93 per cent. The company is working with key commercial property clients such as Mirvac, AMP Capital, GPT and Colonial First State.
The 2011 winner, SMAC Technologies, has developed a retrofit commercial air-conditioning technology that will save building owners up to 80 per cent in energy costs. Since its win, SMAC is now installing the system into 90 hospitals in Thailand and has entered the US market.
Other leading competition entrants have included:
-- AquaHydrex – a finalist in 2011 that is developing a low cost hydrogen production technology and has sourced scarce venture capital investment from the US.
-- CINTEP – is developing a recycling shower that cuts energy and water usage by 70 per cent.
-- MaxSil – a Queensland-based company that has developed a silicon-based fertiliser from recycled glass.
-- TropiGlas – a 2012 Finalist that is developing a clear glass that is both insulating and can produce electricity. Once commercialised this could lead to looking for that sunny spot to park your car and recharge the batteries.
None of these companies will end up as big as Ford but all of them are developing products of the future in an innovative way that will allow Australia to evolve into its next industrial revolution. By replacing a large multinational with many thriving growing companies will end up with increased economic value being created whilst at the same time delivering improved environmental and societal benefits.
The transition of industry is never easy but, in hindsight, the death of automotive manufacturing in Australia will be seen as a necessary and highly beneficial change.
John O’Brien is Managing Director of Australian CleanTech, a research and broking firm that advises clean tech companies, investors and governments, works across Australia, China, Korea and Malaysia. Australian CleanTech manages the Australian Clean Technologies Competition on behalf of the Australian Department of Industry and Innovation. Entries for the 2013 competition close on June 3 – see www.cleantechcomp.com.au for more details.