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Australian Manufacturing Not Dead, But In Transition, Industry Players Say

posted 18 Aug 2013, 05:21 by Mpelembe   [ updated 18 Aug 2013, 05:22 ]

Those in Australia's manufacturing sector says the success of some of Sydney's young hi-tech companies is proof that reports of the death of Australian manufacturing are exaggerated.

MELBOURNEAUSTRALIA (NINE NETWORK) -  In Rode Microphone's bright, airy factory in Sydney's outer suburbs, large automated machines are quietly hissing as they create motherboards for stereo video mics that will be exported around the world.

A few miles down the road, the long arm of a robotic machine at QuickstepHoldings Ltd is shaping a carbon fibre composite car panel for trials with auto manufacturers including Germany's Audi.

Quickstep and privately-held Rode are just two companies that prove reports of the death of Australian manufacturing are greatly exaggerated.

They are among a host of companies which have defied gloomy headlines sparked by car manufacturer Ford Motor Co's. plan to close its Australian car plants from 2016, and by General Motors Co threats to also close manufacturing operations unless it receives more government support.

But manufacturing still accounts for around seven percent of Australia's GDP and employs more people than the mining industry, according to the Australian Industry Group.

The sector is, however, going through a prolonged transition, from the big auto and white goods manufacturers of the past into smaller niche and highly-skilled manufacturers who are focused on supplying global markets, according to industry analysts.

Rode manufactures more than 90 percent of the 36,000 microphones it sells every month at its factory in Silverwater, a part-industrial, part-residential suburb in westSydney. west.

The company's founder and managing director, Peter Freedman, initially started production in China in the 1990s, lured by low costs, before realising the benefits of manufacturing at home.

"I started doing a lot of stuff in China early on and I could see the writing on the wall. The prices were going up and also the Chinese manufacturers themselves were watching what everybody was doing and I was thinking 'man they're going to try take my business," Freedman said

Freedman instead invested heavily in Silverwater, steadily building up a state-of-the art factory that is a far cry from the old-school industrial sites such as those earmarked for closure by Ford and Holden.

He now exports his products, which range from lapel and smart phonemicrophones to industry standard camera mics, back to China and the rest of the world.

"I was in China three weeks ago and you see them operating quite old gear with five people on it, earning very little money and I laughed because my gear has got nobody running it, so good luck they have got nothing to offer and it's such a huge barrier to entry to take me on," he said.

Quickstep, a manufacturer of advanced composites including parts for Northrop Grumman Corp's F-35 Joint Strike Fighter and the Boeing C-130J, is leading a project supported by a A$2.5 million ($2.29 million USD) federal government grant and Audi to develop new manufacturing techniques for the cost effective volume production of composite automotive parts.

Quickstep is currently using its Resin Spray Transfer technology, which utilises a science-fiction style remote-controlled long-armed robot, for trials of spray doors.

Even Ford, which earlier this year announced the closure of its two Australian auto plants in October 2016, has reinforced its commitment to its research and development streams in Australia, where it has spent A$1.9 billion on design and engineering over the past six years.

"We wanted to make sure that all consumers and our dealers, our stake-holders, knew what our plan was going forward that we are really re-doubling our effort here in Australia and New Zealand and outlining where we're going as a company, betting on sport utilities, adding new smart cars and a full line of vehicles and new technology to our showroom so that people know that we're an exciting vibrant brand," said Ford's Executive Vice President Global Marketing Sales Jim Farley.

But Australia's shift to a high-tech manufacturing centre faces some headwinds.

The strong Australian dollar continues to make business tough for many small enterprises, although Freedman said watching the currency go to parity with the U.S. dollar and beyond also provided opportunities.

"We released new products that was based on those new prices and I just said to the sales guys, 'you have to sell more,' and we have to be more efficient. It pushed us to be super-efficient, getting into lean manufacturing, buying better and just doing better quality," Freedman said.

Another major problem is Australia's weak record in science education.

Australia's chief government scientist, Paul Chubb, noted in a speech recently that only around 20 percent of Australian students graduated with sciences, technology, engineering and mathematics-related degrees. That contrasted with around 52 percent in China, 64 percent in Japan and 41 percent in South Korea.