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Australia’s manufacturing future

2 April 2013

Manufacturing tool

There is a compelling case for a concerted, government-led approach to the development of industry policy priorities, including support for the building of management and innovation capability in the manufacturing sector, Professor Roy Green and Professor Göran Roos say in Australia’s Manufacturing Future, a discussion paper prepared for the Labor Government’s Manufacturing Taskforce.

“Left to the market, it is highly unlikely that such capability will be developed in the areas and to the extent that is required,” they say. “Building innovation capability and performance must be a central ‘delivery mechanism’ by which Australia’s industry policy framework contributes to the development of a dynamic, knowledge-based manufacturing sector.”

Professor Roy Green is Dean of UTS Business School, where Göran Roos is an Adjunct Professor.
 
In Australia's Manufacturing Future they say there is no central focus in government for determining national and sectoral priorities and for overseeing their implementation: “There is insufficient ‘joined up’ thinking across government.”
 
A new or revamped body is needed to provide a central focus on policy advice and coordination and to liaise with the industry  innovation councils as well as “delivery” agencies such as Commercialisation Australia, they say. “It could foster collaboration across the system, including with research and education institutions, reduce duplication, monitor the allocation of resources between policy priorities and, above all, it could build momentum for technological change and innovation as an essential element of industry policy.”

Consideration should also be given to the more comprehensive and more agile delivery of development and support services to manufacturing, building on the success of Enterprise Connect. “This is the ‘industry activist’ model most commonly adopted overseas, including by Enterprise Ireland and Finland’s Tekes,” the report says.

In addition, given the poor standard of management capability and performance in many manufacturing firms, the opportunity should be taken to develop a new program around the ‘workplace of the future’, it says. “This may be part of a government agency … or, perhaps more viably in the long term, an independent program with a strong stakeholder input and a mission to improve management performance and employee engagement.”

In addition, international experience shows that "cluster" activity is a powerful attraction to foreign direct investment in manufacturing and incorporation of firms into global supply chains, the report notes. There has been some work in this area “but, again, connectivity and scale are lacking in these programs due to limited resources”, it says.

“There are also significant program gaps, such as targeted support for the integration of firms and clusters into global supply chains as well as domestic ones. Other countries have made this a policy priority, particularly for manufacturing SMEs.” They have also made much more use of their professional expatriate communities, it says.

“It is critical that our manufacturing SMEs have realistic opportunities to become part of integrated global production systems, either on their own account or in collaboration with multinational companies, with cost-effective program support,” the report says.

As for engagement with research institutions, Australia rates poorly in international comparative studies not just on collaboration between firms in networks and clusters but also with research and education institutions, the report says. Schemes to encourage greater collaboration between business and academia should have a higher priority for public funding and matched funding from industry, it says.

Finally, there is an important role for public procurement as part of industry policy.  “A country that has used its public purchasing power most comprehensively – arguably as its key instrument of industry policy – is the US, with targeted but now largely non-discriminatory policies at federal and state levels … There is no reason why such policies should not be implemented on a significant scale in Australia, without breaching World Treaty Organisation obligations,” the report says.

The case for a concerted approach to the development of industry policy priorities, their implementation, and particularly to building management and innovation capability in our manufacturing firms, organisations and networks, is compelling, the authors conclude.

Left to the market, it is highly unlikely that such capability will be developed in the areas and to the extent that is required.

“Building innovation capability and performance must be a central ‘delivery mechanism’ by which Australia’s industry policy framework contributes to the development of a dynamic, knowledge-based manufacturing sector.”

To read the full report, click here:  Australia's_Manufacturing_Future.pdf