By Professor Geoff Brooks Pro Vice-Chancellor (Future Manufacturing).
This article first appeared in the Engineers Australia newsletter.
The Australian manufacturing industry has undergone dramatic upheavals in the last decade, as the effects of a high Australian dollar and globalisation have seen many industries struggle. The imminent closure of major car plans and flow on effects to the automotive components industry is the best known example of these trends, but other less publicised industries have also been deeply affected. For example, the Electrolux refrigerator plant in Orange is due to close later this year with a loss of 500 jobs. Making whitegoods in Australia is no longer profitable.
Of course, new industries and businesses have also risen during this time, for example in bio-devices and medical technology. There has also been growth in mining equipment and specialised areas of agriculture. In Victoria, new industries have been developed around carbon fibre reinforced composite materials, with aircraft and wheel manufacturing facilities rapidly developing over the last decade.
What isn’t clear is whether these new industries and products will provide mass scale, long term employment opportunities and wealth generation for the nation.
In Geelong, the Alcoa Aluminium smelter operated quite profitably for most of its 50 year history, providing steady work and cash flow into the region. The closure of the smelter in 2014 represented a significant setback to the people of the region and it remains to be seen whether emerging new industries in the area can fill the void created by this and other closures.
There is general agreement among industry experts that for Australia to have future success in manufacturing there needs to be an emphasis on high value products and innovation. Simply put, we can’t compete with China in producing everyday goods and we need to develop products that are special and highly valued with external and domestic markets.
MiniFab in the outer east of Melbourne is a good example of this approach.
MiniFab began as a spin off from Swinburne University of Technology over a decade ago. It uses laser technology to create microfluidic devices for biochemical and medical devices. The expertise of the company is not easily duplicated and it now successfully exports around the world. The company continues to develop new products through research and development built on a foundation of specialised knowhow.
Australia needs many ‘MiniFabs’, if we are to develop the type of advanced manufacturing industries we desire.
What role should government play in developing new industries of this type?
If you dig deeper into the history of MiniFab you will find significant government and private investment in laser and surface engineering technology at Swinburne and other research institutions over a long period has contributed to their success. A new biodevice research centre at Swinburne, founded by the Australian Research Council and a number of SME’s, is commencing operation in 2015, looking to create new product s and produce another generation of companies like MniFab. In this case, the government id directly stimulating collaboration between industry and research providers through co-investment with industry and the research provider.
For the last twenty years, the government has used the Co-operative Research Centre (CRS) program to develop these kinds of synergies. These programs have worked on seven year commitments where industry, research providers and the government co-invest in areas selected to be of national interest. Hundreds of millions of dollars have been invested in the many CRCs created since the program started in the early 1990s. There are significant success stories associated with CRCs but there is also frustration and some companies that research in CRCs is dominated by academic interests and not responsive enough to industry needs. There is a general call for more industry led innovation and a greater focus on industrial research at universities.
The CRC program is currently under review by the government and the outcome of this review is likely to have a profound effect on how the current government invests in manufacturing research. They have already announced an Industry Growth Centre in Advanced Manufacturing that is currently taking shape but is is unclear how industry led innovation will work in these new structures and whether CRCs will be merged into these new growth centres or be phased out.
In this uncertain environment, I would make the following points:
- The current measures used to rank universities don’t place significant emphasis on industrial engagement. The government should develop appropriate measures and reward universities for directly assisting industry. Other countries have recently grappled with the dilemma of how to measure success with industry and we should learn from these examples.
- Industry should probably take more direct interest and provide input into the fundamental research going on in our universities. History has shown that many new industries have been created form what was initially thought to be quite theoretical research. Only supporting and paying attention to applied research is ignoring many exciting possibilities.
- Industry led innovation is an attractive concept but it needs to be better defined and greater attention paid to how competing industrial needs can be turned into well thought out research programs. CRCs have, of course, been struggling with these issues for years and much can be learned from the experiences of the most successful CRCs. I also think that the industrial research programs in Germany and other northern European countries are worth studying and adapting to our needs.
- The CRC program has delivered many excellent outcomes. It may need adjustments, such as shorter project timelines that match business cycles and greater focus on specifically delivering direct outcomes to the industry partners, but stopping the program entirely would seem to be an overreaction to these legi5timate concerns.
The next phase of the government’s implementation of industry policy will be critical to lifting innovation in Australian industry. Wise heads and some determination will be required to build a more innovative manufacturing sector.