IMAGINE a Hunter manufacturing region with an international reputation for quality, reliability, design and customer service, where firms are hooked into diverse global value chains.
A region where collaborations and partnerships between firms, research and training hubs generate a culture of innovation and a highly skilled workforce, which underpins the Hunter’s sustainable economy.
This is the future that the Hunter Research Foundation and a range of regional stakeholders are working together to create.
Imagining a better future for Hunter manufacturing is necessary and important. The foundation has released the results of the Manufacturing Our Future research project, the first focus of the foundation’s regional competitiveness economics program.
Stage 1 of our research reviewed recent studies on the future of manufacturing and the keys to sustaining the industry. It showed that manufacturing is not only an important industry sector in terms of employment but is also critical to the future economic success of the Hunter and the nation. Manufacturing contributes 25per cent of Australia’s business research and development (R&D) spend and one-third of our national merchandise exports.
With the future of our economy clearly in services more than products, Australia’s fastest growing advanced services exports are in engineering services. Manufacturing is also a training ground for many of the practical skills underpinning Australia’s economy, ranging from technical skills to industrial design and advanced engineering capabilities.
With the support of our advisory group members, including AiGroup and HunterNet, the foundation then identified and interviewed nine Hunter firms that have adapted to some of the competitive challenges. This confirmed that the international trends shaping the future of manufacturing, and providing the keys to success, apply equally in the Hunter. However, understanding the future trends and the best ways to adapt to them is not enough without also understanding the barriers many manufacturers face in making changes to the way they operate, and in developing strategies to become more competitive in a global market.
A major focus of Stage 2 of the project was to identify these barriers to competitiveness for Hunter manufacturers. To do this, we had in-depth discussions with 45typical manufacturers about their business. More than half the firms we spoke to were experiencing falls in profitability and two-thirds had reduced their workforce in the past 12-18 months. The barriers to increased competitiveness and access to broader markets for Hunter manufacturers are interrelated. They include operating in isolation, lack of information about how to implement a recognised need for change, lack of strategic or business planning, and exclusion from global supply chains. There is a strong link between declining profitability and not having a formalised strategic business planning process and not being part of a global supply chain or exporting.
Hunter manufacturers’ response to the challenges varied across a spectrum – at one end are mostly small firms with a narrow and declining market (mining, rail or defence), then those with more diverse markets that are on the road to meeting challenges, and to the more successful end where strategic planning is guiding a change in markets, products and/or services. To improve competitiveness requires a raft of solutions.
The foundation’s Manufacturing Our Future project has provided a ‘‘grass roots’’ view of the issues and yielded suggested regional initiatives that closely parallel those developed by the key stakeholders through the Manufacturing and Engineering Futures Summit in Newcastle.
There were three areas of alignment between suggestions from manufacturers (bottom up) and suggestions from the summit and other stakeholder groups (top down):
■Initiatives to attract major infrastructure and large contracts (including government) to the Hunter, eg, establish the Hunter as an advanced manufacturing ‘‘zone’’.
■Initiatives to attract investment to support start-ups.
■Initiatives to support/increase innovation (and commercialisation) including collaboration between firms and universities to establish research hubs and publicising these effectively.
The full Manufacturing Our Future report is available at hrf.com.au.
Jenny Williams is a senior research fellow at the Hunter Research Foundation and project leader for Manufacturing Our Future.
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