Despite the decline in Australian manufacturing since the 1960s, there have been many manufacturers that have thrived in certain sectors, in particular, low and medium enterprises.
These enterprises have successfully adapted to the declining manufacturing industry in several ways. The graph below shows the increasing proportion of people employed in service industries, and the gradual decline of production industries. Successful business have capitalised on this trend over the decades by incorporating services into their existing business models. . For example, R&D as a service has attracted a lot of interest. Not just because of the tax subsidies for small businesses, but because we need R&D to drive innovation.
Innovation in product designs and in the way we market and model our businesses is essential to keeping up with the global competition in nearly every industry. It is not enough to just compete on a price point, so manufacturers must find alternative avenues to compete on a global scale. This can be done by offering a service/process with local manufacturing support and feedback from skilled professionals.
In the time I have spent with local manufacturers, I have come to understand that instead of having to deliver their own unique services, they can utilise their relationships with other small enterprises that offer them. That is, instead of buying an expensive machine for the sake of saying ‘we offer that service too’, a small business can outsource. In doing so, they save on their venture capital and build an industry network to their advantage.
Another avenue manufacturers can take to compete is to change their target companies they manufacturer for. Instead of producing home wares, kitchen appliances, and cars, they can start targeting more specialized and unique industries. Industries such as defence, aerospace, medical, and innovation enterprises. These industries demand an exceptionally high level of quality, using the latest manufacturing techniques and equipment available, and innovating on these techniques to create unique processes that are patentable. Patented processes will protect and bring economic growth to the Australian manufacturing industry.
The future is finding these processes through R&D, talent management and innovation in business processes, models and branding. We need to capitalise on our service-industry and integrate it with our manufacturing industry to bridge the divide between them and create a more stable Australian manufacturing industry.
The future of Australian manufacturing, in my opinion can be tied to two key areas, marketing of Australian manufacturing on an international scale and targeting specialized markets using advanced manufacturing techniques.
This market focuses on low volume, just-in-time manufacturing, high cost goods that warrant high margin due to their specialty.