Making it in the west: opportunities for extraordinary growth
AMGC recently hosted Making it in the West — a round table discussion in Perth. Facilitated by Jens Goennemann, the event was attended by the Hon Roger Cook, Western Australia’s Deputy Premier and Minister for State Development, Jobs and Trade, Tourism, Commerce, Science, members of his team, representatives from the Department of Jobs, Tourism, Science and Innovation, and local AMGC members.
Long underpinned by its resources, energy and agricultural verticals, Western Australia’s economy would benefit from broaden its heavy reliance on traditional ‘dig it, grow it, sell it’, largely commodity-based economy. There is an exciting opportunity as the demand for cutting-edge, technology-intensive products from the resource and energy sectors in particular can facilitate the advancement of capabilities in research and development (R&D), technical and business services through manufacturing capability.
So then, it comes as no surprise then, that manufacturing in Western Australia has already begun to diversify – be it slowly. AMGC members are leading the charge in this transformation and are growing a technologically diverse ecosystem that includes technologies such as robotics, the Industrial Internet of Things, health, pharmaceuticals, additive manufacturing, electric vehicles, and more.
According to Minister Cook, manufacturing in Western Australia is on the cusp of extraordinary growth. The revised Diversify WA framework includes eight external-facing sectors: energy; tourism, events and creative industries; international education; defence industries; mining and mining equipment, technology and services; space industries; health and medical life sciences; and primary industries. The framework also recognises the importance of activities that will improve value and productivity across all the external-facing sectors, particularly supply chain development and the advancement of manufacturing capability.
The round table discussions focused on challenges that Western Australian manufacturers are facing, as well as opportunities for diversification and expansion.
A Challenging Environment
Skills & Training
It is clear from the round table discussions that Western Australia has significant skills and training needs. Manufacturers reported that finding qualified staff is extremely difficult, and the growing skills shortage is a barrier to commercialisation and scaling up.
To combat these skills shortages, a holistic plan focused on the short, medium and long-term action is required. Manufacturers need to be in charge but also call for schools, TAFEs and universities to collaborate with industry to ensure that formal education and training is relevant for real-world applications.
Industry understands the importance of investing in a skilled workforce themselves—businesses cannot rely on TAFEs and universities alone. Manufacturers need to play a leading role in building a state-wide manufacturing ecosystem in which experts and skilled staff can move freely between companies, strengthening the overall industry.
Procurement is a key area of concern for Western Australia manufacturers, with many of the round table attendees emphasising the challenges of current procurement restrictions. While ‘buy local’ policies and mandates for local content are growing in importance, this intent does not always translate into sales. This is compounded for many by tendering processes that have been found to be frustrating, expensive and time-consuming. All too often, companies are shortlisted as an approved or preferred supplier, but never receive any orders. This makes it very difficult to invest in the capital equipment needed to fulfill potential orders. In addition, the procurement decisions of primes and large corporates are often driven by their international head offices, which have little to no interest in research and development being undertaken in Australia.
Manufacturers emphasised the need for diversifying their income streams, with a balance of both government and private clients needed to shore up order pipeline certainty. Collaboration with clients and procurement teams was also discussed. Fostering a collaborative working relationship with clients can help highlight the true value of purchasing from a local Australian company, as compared to importing goods from overseas. For example, while the unit price may be higher, Australian products deliver greater value in areas like quality assurance, carbon footprint accounting, and after-sales service – a value-add that many overseas products sacrifice in order to reduce their prices.
Research & Development Gaps
Approximately 60% of R&D undertaken in Australia is classified at a Technical Readiness Level (TRL) of two (out of a possible nine, which is the full commercialisation of the product or service). This is an exceptionally unfortunate distribution of R&D dollars at an early TRL stage. TRLs are a method for understanding the technical maturity of a technology during its development phase. At TRL 2, initial practical applications are identified and the potential material or process to satisfy a technology need is confirmed.
Manufacturers noted that one of the reasons for this is that, while industry tends to focus on ‘research’, it is not quite so good at translating this into ‘development’ – known as a pathway to commercialisation. To overcome the ‘valley of death’, where programs stall due to difficultly raising capital or accessing the required skills, this focus needs to shift and access to capital needs to improve. The manufacturing industry wants researchers help solving industry problems— innovation needs to take a bottom-up, customer-focused approach, so that IP can be unlocked, rather than sit on the shelves of university libraries.
Round table attendees noted that there are four key components needed for successful innovation and commercialisation:
- Collaboration between manufacturing companies (both large and small) and research organisations, facilitated through culture change that fosters long-term working relationships
- Access to capital via informed sources through co-investment, debt guarantees or private investment
- R&D that unlocks IP
- Manufacturing companies that are equipped with experts in project management, product development, engineering, sales, marketing and the other capabilities needed to facilitate commercialisation