Manufacturing has changed the world
and is itself changing, more fundamentally than at any time since the
industrial revolution. Despite of impediments the manufacturing sector of
Australia is still an important pillar of its economy and infinite opportunities
for growth and diversification, particularly in global value chains.
It is predicted that by the end of
2018, manufacturing employment will fall by another 40,000, with the end of car
assembly. But, that many jobs that are integral to manufacturing are classified
as services. These jobs include engineering, design, marketing and other
professional and technical services. Rather than thinking of manufacturing as
being in decline, it is more accurately depicted as part of a value chain where
value creation is outsourced or acquired elsewhere.
There are more than 80,000
manufacturing businesses in Australia, mostly under 100 employees, with the
larger ones accounting for more than a quarter of the economy’s total R&D
expenditure. Even after that a sharp decline in manufacturing investment from a
peak of $14.4 billion in 2005/06 to $8.8 billion in 2013/14 has occurred. This
is the lowest level in 12 years, as profit margins fall behind other sectors,
at a time when global opportunities are at their greatest.
Around the world, large vertically
integrated manufacturing operations are being superseded by smaller,
interdependent production units which supply specialised products and services,
often intermingled, to global markets and value chains. Sometimes they are
outsourced components of the larger operation, but mostly they are clusters or
networks of small and medium enterprises (SMEs) that have become known as
“micromultinationals”. These globalised SMEs are characterized by relentless
innovation, which includes but goes beyond technology development and
adaptation. They also pursue non-technological innovations.
In Germany, this new approach to
manufacturing and its integration with services is called “Industry 4.0”. It is
driven by a well-funded “innovation ecosystem” of large and small firms,
universities, Fraunhofer Institutes and government, supported by strong
workforce and management capability and informed by sophisticated “technology
foresights” which mark out areas of future as well as established competitive
advantage.
Other countries are also adopting
this approach, most recently the UK which has invested heavily in its “Catapult
Centres”, as well as the Netherlands with its “top sectors” strategy and the US
with a network of National Manufacturing Institutes. Australia has exemplars in
its small number of high performing manufacturing micromultinationals, but a
lot to learn about building a competitive knowledge-based economy.
source : http://theconversation.com/