Manufacturing in Australia: critical, not terminal

The Make It! campaign in 2003 continued efforts to convey an up-to-date realistic view of manufacturing industries. No longer does manufacturing provide only dirty and mindless jobs. Increasingly there is multi-skilling in the industry with higher levels of responsibility and problem solving needed by most workers, especially those who are operating the improved technological processes.

Yes, there is intense pressure from overseas manufacturers, and there are some areas where Australia may not be able to compete directly. In addition, Australia’s changing population demographic is adding pressure.

Estimates of population growth from the Department of Employment and Workplace Relations (2005, unpublished data) indicate that by 2011 the growth in the 45-64 age group will be 274,500 - with only 3,300 growth in the 25-34 group and 27,400 growth in the 15-24 cohort. They estimate (PDF 806KB) that Australia faces a potential shortfall of 195,000 workers in five years’ time, as a result of population ageing.

For all the attention being paid to encourage the uptake of apprenticeships by both young people and industry, which is commendable, the size of the available workforce is now significantly reduced and competition for workers will be intense. This shortage of workers applies across many sectors: note the recent campaigns for IT, the defence forces, accountancy, nursing, teaching, mining and so on.

Some companies are moving production offshore, presumably in an attempt to achieve lower costs and access labour. However, other companies are identifying strategies which focus on adaptation and innovation leading to successful differentiation from competitors.

Industry initiatives

Increased competition from overseas is not necessarily terminal for Australian manufacturing. Many manufacturers have moved forward with planning, innovation and commitment: not necessarily simple or easy processes. Innovation requires a commitment by management, of both time and money, to establish a culture where innovation is encouraged and taken seriously.

Innovation needs to be recognised as valuable across all systems of the organisation so that improvements can be achieved in administration, sales, production, maintenance, supply and distribution in addition to technology and product development.

Innovative approaches by some forward thinking organisations include:

• collaboration between manufacturers - where they might submit a joint bid in order to meet required production volume or to produce discrete components of the final product;
• product differentiation - by quality, branding, function or other variables;
• development of products for niche markets - which may include complex or intricate products and value adding by developing special features;
• improving responsiveness - for example, in adapting to client specifications and niche markets, in speed of delivery and the responsiveness to deliver small volume of speciality products; and
• improvements in efficiency - doing more and being clever with existing resources as a whole-of-organisation strategy (true “lean manufacturing”), and not just cutting costs and staff or cutting corners.

A related issue is the profile of manufacturing - or lack thereof - as a career option for the shrinking pool of young workers.

There is still a long way to go in getting up-to-date messages about the industry out to young people and their key influencers (predominantly parents and teachers). Ongoing marketing and communications campaigns are needed.

There are still areas, however, where industry can lift its game to provide a work place culture which respects young workers, seeks their input and provides for their needs and priorities. There are social researchers who can provide useful strategies here, for example, using team-based work structures which align to the value young people's place in relationships and community. (See, for example, Mark McCrindle’s work.)

Opportunities for challenge, learning and development are further attractions for young workers.

Investing in providing challenging job roles and using traineeships, apprenticeships and other skills development programs will provide benefits on many fronts. This can include addressing skills gaps so the right skills are available where and when they are needed. It can also assist in establishing a workforce which is skilled in identifying opportunities for innovation, more satisfied with their work experience and who consistently achieve targets in productivity, safety and quality.

Training and skills development

Skills development can and will play a part in the survival of manufacturing in Australia. For those companies who adopt the adaptation-innovation strategy there are several areas in which skills development of employees will play a key role:

• innovation - product and process design and process improvements, value adding by improving product performance (light weight materials, fireproofing, weatherproofing, improving environment performance);
• business skills - business planning, innovative business models, managing change;
• computer skills - increasingly technology will be used at all levels in the organisation so skills ranging from basic computer navigation and communications (email, Word, Excel, intranet) through to operating sophisticated process control panels (which require, for example, the ability to understand complex processes and conceptualise between actual production and computer interface) will be required by many workers;
• continuous improvement - to assist companies to become more responsive to demand and to achieve better productivity with existing resources; it also relies on technical and supervisory skills; lean or competitive manufacturing provides a system for improved efficiency;
• technical skills - such as advanced operator skills, tool and die making, machine set up and change over, planned maintenance to meet requirements for specialist and or complex products and to maintain currency with technological advances; and
• supervisory skills - including planning, monitoring, managing change, managing resources and people, technical and process skills which are needed to achieve innovations, improvements in processes, streamlining of work systems.

Government support

Governments can pay a role here as well and several state governments have established a manufacturing strategy to promote the growth and quality of manufacturing. A similar approach could be taken federally. The current focus on skills shortages and responses such as the drive for apprenticeships is commendable but does not cover the breadth of needs for manufacturing.

Additional support should take the form of:

• investment in promoting an updated image of manufacturing, showing the leading edge companies which are clean, lean and hi-tech. This will help to attract young people to take on traineeships and apprenticeships in the industry;
• ensuring adequate labour in the face of significant population change;
• financial support to industry for innovative and flexible skills programs (in addition to traineeships and apprenticeships);
• increased support for research and development (across the spectrum, not just technical);
• support for investment in innovation - by industry, by government and by investment companies;
• support for lean manufacturing overhauls and other restructuring; and
• support for industry networks to promote collaboration.