Global manufacturing is undergoing not only product and process transformation, but business model transformation as industrial firms adjust to the digital age, Chairman of the Australian Advanced Manufacturing Council John Pollaers says.
“That is the difference between this period in our technological and digital history and earlier watershed moments,” Mr Pollaers told attendees at National Manufacturing Week (NMW).
“There are certainly changes occurring in process and product technology – for example Caterpillar might consider the question, “How do you make a tractor?” But the hype – the substantial change we are seeing – is in the question “How do you sell a tractor as a service?”
Delivering the Opening Keynote Address at NMW, Australia’s only fully integrated annual manufacturing exhibition and the largest national gathering of industry decision-makers, Mr Pollaers noted that AAMC leading member GE is investing heavily in building software and wireless capability to connect machines like wind turbines, trains, and jet engines.
Siemens has been investing in efficiency-accelerating technologies such as flexible service models and advanced PLM software, he said.
“The past 2-4 years have seen important changes not only in the way Australians think about manufacturing but in the way we see the world. There is a major shift in understanding about what is possible – that Australia can compete – in high value products and using innovative processes. And we can win,” Mr Pollaers says.
As the world becomes the market, Australia will enjoy a “greater ability to co-locate research, design and manufacturing, accelerating the innovation process,” he said.
The AAMC is a major supporting partner of National Manufacturing Week, which ran from 9 – 12 May at the Melbourne Convention and Exhibition Centre and featured 200 exhibiting companies, live demonstrations of the latest innovations and eleven specialist product zones.
For Australia, the most significant opportunities are in B2B – in high value products and processes, Mr Pollaers said in his speech “Scaling up Australian manufacturing – what will it take?”
Digitally connected safety equipment in manufacturing, for example, or in remote mining technology, and also in the convergence of the life sciences with the data sciences.
Industry 4.0, a fourth industrial revolution, places the world on the cusp of more significant change than we have ever seen before. The basic principle is that by connecting machines, work pieces and systems, businesses are creating intelligent networks along the entire value chain.
“The remarkable technological developments of the recent past will be dwarfed by this next generation of change. In 10 years’ time, the number of machine-connected devices will be at least three times the number of human-connected devices,” Mr Pollaers said.
“The idea of 50 billion plus connected devices – and the question of how companies can leverage that technology – is reshaping the way global companies are thinking about their businesses. What we are seeing is not only product and process transformation, but business model transformation. That is the difference between this period in our technological and digital history and earlier watershed moments.”
Australia is still a minor player in global production sharing but Australia has a competitive edge in parts and components specialisation in several product categories including aircraft parts and associated equipment, parts of earth moving and mineral processing machines, and specialised automotive parts.
The achievements of Australian manufacturing in the new dynamic areas of global production sharing have done much to dispel the prevailing perception of the ‘death of manufacturing’ in Australia.
The fact is many Australian manufacturers are not only surviving, but prospering.
“A recent study from the Office of the Chief Economist has validated what the AAMC has been arguing for the past 4 years: This gloomy perception of manufacturing – aside from being false – has created a hurdle for manufacturing firms to recruit and retain talent, to attract potential customers, and to unlock potential opportunities by policy makers,” said Mr Pollaers.
Australia has room for improvement in gaining access to export markets and the global supply chains of multinationals. The ‘tyranny of distance’ is not a binding constraint on exporting specialised parts and components, and some final assembly goods from Australia.
With advancements in technology, there is a greater ability to take lower value production closer to markets to optimise the production chain against factors like transport costs or local content requirements.
Mr Pollaers says that the big challenge is to see a concentration of funding around technologies where we have great prospects – where the investments will have impact – for example, in nanotechnology, in carbon fibre, and in the digitalisation of manufacturing – to name just three contenders.
AAMC Chairman also spoke before a high level audience of procurement specialists at The Faculty’s 10th Annual Asia Pacific CPO Forum on May 18. Read more here.