A message from Jens Goennemann
A sense of urgency transpires when my team and I connect with manufacturers as we continue to meet businesses across Australia as part of our national program.
So far, our Australian Manufacturing Matters Roadshow took us to Perth, Melbourne, Adelaide, and Brisbane. We will be continuing the Australian Manufacturing Matters Roadshow with our Sydney event locked in for 20 February 2024.
At each event, the discussion has been consistent and clear: targeted government assistance to scale manufacturing capability is greatly appreciated – and without alternative if we want to see such capability progress.
This was evidenced by hearing from many manufacturers in the rooms who had co-invested with government through one of four AMGC’s project funds. These investments, strategically aligned with the government priorities of the day, have helped businesses scale and team up with leading research institutions along the way.
Australia has slightly advanced in making more complex and diverse products onshore. Our mantra to compete on value not on cost and to embrace the broader manufacturing value chain is starting to make an impact. Yet, we are far from reaching the finish line.
Each year, Harvard Kennedy School Growth Lab releases its latest Complexity Index that ranks 133 countries. This long running data set captures products countries trade on a global scale and in doing so builds a picture of how complex, diverse, and globally competitive a country is relative to its peers.
Australia ranks 93rd between Uganda and Pakistan. The lowest of any OECD nation by 15 positions, behind the second lowest, and significantly lower than what our level of collective wealth suggests. The more disturbing fact is that this position is the lowest we have ranked since Harvard started the study back in 1995. Back then, Australia and China were neighbours on the index. Now China is ranked 18th, hence there is little reason to look down on “Made in China.”
The ability to manufacture complex and diverse products offers a solution to many things, which has been proven time and again by nations such as Germany, Japan, South Korea, Sweden, Austria, and numerous others. Making things are not only a pathway to maintain our prosperity (which will otherwise dwindle) but can tackle the challenges of the day and of the future. How about decarbonising iron ore onshore and to our highest Australian standards rather than leaving this to other countries which are, let’s say, ‘a bit more robust’ in processing such commodities?
Competitive manufacturing capability offers a country the ability to give its citizens better, more interesting jobs, and higher wages. Countries do not grow by producing more of the same. Countries do not grow equally – there is a pattern that they follow, and manufacturing is central to a nation’s advancement. That is why manufacturing is not just a sector. It is a capability – a capability Australia must learn to value more.
Beyond the headline Harvard ECI figure of 93rd, Australia’s industrial capability is sparse, and widely distributed, and where it is not sparse, it is sub-scale which is another impediment to growth. Countries that can diversify do so by moving into nearby, or related products that require similar know-how to build on their already existing capabilities.
Australia’s opportunities to diversify are sparse – just like the makeup of its manufacturing industry, however, there are solutions. Take for example AMGC’s project lead Omni Tanker in South-West Sydney which has diversified from composite road tankers to hydrogen pressure vessels for space. Omni Tanker was able to build on its core capabilities because it saw an adjacent industry opportunity and tapped into one of AMGC’s programs to turn its idea into a commercial outcome.
For Australia to grow its global influence, to diversify its capabilities, and to make more complex things, we must, as Harvard recommends, ‘take a strategic bets approach and back it in with solid policy and initiatives’.
The silver lining here is that unlike many industrial powerhouses, Australia has most of the raw materials we need on our doorstep – and nothing but opportunity to add value to them onshore to make more complex things we and the rest of the world needs.
Even better, we have a reasonable idea as to where these ‘strategic bets’ should take place with the Australian Government’s seven priority areas (previously six National Manufacturing Priorities) setting the direction with: renewable and low emissions technologies, medical science, transport, value add in agriculture, forestry and fisheries, value add in resources, defence capability and enabling capabilities key focus areas.
These seven priorities signal to manufacturers and the market more broadly that this is where we should be focusing our efforts, investments, capabilities, and energies because, as Harvard puts it, “few nearby opportunities call for coordinated long jumps into strategic areas with future diversification potential”.
I believe this year holds promise that we can start to take some long jumps – or strategic bets – with the assistance of substantial initiatives such as the $15 billion National Reconstruction Fund and the $392 million Industry Growth Program, targeted squarely at small-to-medium manufacturers.
Why don’t you join us at our Road Show in Sydney and learn more about the Industry Growth Program and how to best access it? Being a member with AMGC won’t hurt either.