While big manufacturers like Ford and Bonds have moved offshore, SMEs are expected to reap the benefits of reduced competition in the manufacturing space. Here's how they will likely succeed where bigger competitors have failed.
The recent Innovation and Automation in Australian Manufacturing Industries roundtable discussion in Sydney highlighted the challenges and opportunities in the sector.
Among the speakers were Peter Roberts, founder of the Australian Manufacturing Forum, Jason Furness, CEO of Manufacturship and ex-general manager of Holden, Shermine Gotfredsen, general manager of Universal Robots for Oceania and south-east Asia, and Matthew Murphy, production manager of family-owned SME Prysm Industries.
Where does Australian manufacturing stand?
“The story of how the nation began was with … big companies ... but Australia has changed from those days,” said Mr Roberts, suggesting that SMEs will increasingly fill the void left by the departure of large manufacturers.
According to Mr Roberts, there is plenty of room for local manufacturers to boost the scale of their business and enhance their contribution to national economic growth.
“The problem with manufacturing is it's not playing its part in providing a resilient and diverse economy ... [and] we're all waiting for a shock to affect the Australian economy,” he said.
“The current … deficit in manufacturing is $100 billion, so we're importing ... more than we are exporting.”
Speaking on the size of the opportunity for Australian producers, Mr Roberts said the sector could “double in size just to cover the manufacturing deficit”.
“This is a very big problem, because someone has to pay for the import of these products, and while we have at the moment cash flow from minerals and so on, if that dried up … it puts us in a very difficult position, because someone's got to pay for these imports, or we just can't afford them.”
However, despite painting a relatively gloomy picture of the current industry, Mr Roberts views SMEs as the saving grace.
“We're relying more and more on our SMEs ... which are right there investing, certainly looking to expand and not taking on board this negative view of the world,” he said.
Automation in the manufacturing sector
Mr Furness broke the current state of automation in manufacturing industries down into three aspects – robotic arms, integrated systems and back-end automation.
“One is the application of the traditional robotics aisle arm, and one of the things that's holding them back is the perception they have about how every job they've got is different – and many of them are, [but businesses aren’t] actually even looking down that path yet, when they could,” he explained.
“The second one we're looking at is the all-singing and -dancing ... integrated system, where there are some [businesses] who are down that path and getting good wins out of it, but most of them have got this shortcoming of one person or two people only know how to use it, and almost none of them are using it to its full capabilities.
“It's like you've got 100 different fonts on Microsoft Word, but we only use about two. With most of this equipment, there's a lot more use out of it than the two fonts on Word.”
Mr Furness said the third aspect is probably the one with which most SMEs are already somewhat familiar.
“[That] is automation in their back-end processes. So, the automation of creating the programming, doing the design work ... There's still the scope in all those areas to take cost out, [enter] new markets by having a better precision result, and dramatically shorten their lead time,” he said.
“I agree with [Mr Roberts] completely; the future is the SME.”
Mr Murphy suggested that far from being frightened of automation doing away with manufacturing businesses, SMEs in the sector should proactively embrace automation.
As well as maintaining competitiveness, he said, in some instances automated SMEs can even get ahead of larger competitors.
“I wanted to be able to be competitive against some of the larger contract manufacturers,” Mr Murphy said.
“There are manufacturers out there … who've been doing it for 30 years and they've got the same machines they had 20 years ago; they haven't changed.
“The trigger for me [was] when ... I saw a company that I got invited to walk through, and I was just amazed at how … efficient the company ran ... just through robots and conveyors.
“I just thought, 'Well, if that's the top, we're a long way off at the moment' ... as robots become a lot more affordable and more of them come out, if you don't jump on board and start taking advantage of that, you're going to find yourselves priced out pretty quickly.”