A mill gear big enough to seat 100 people, naval shipbuilding for the Australian Government, buoyancy solutions for drills that work five kilometres below the ocean’s surface, and bespoke mining equipment that collects and transmits information from underground –  all being manufactured in Perth.

The Australian Advanced Manufacturing Council guided a group of senior Treasury officials last week through five advanced manufacturers: Hofmann Engineering; Ausdrill; DTA Robit; Austal; and Matrix.

These companies are all home-grown. Two started in small workshop garages in Perth suburbs and now boast substantial facilities, employ thousands, and house many millions of dollars of equipment.

All the companies are significant exporters, despite being a long way from many of their markets: north west Australia, the United States, South Korea, Malaysia, Oman, Peru, China, India, Chile, Ghana, Bukina Faso, Mali, Senegal. And all support an extensive international range of suppliers.

Physical isolation, high labour costs, and high component costs have meant these companies compete on quality and value rather than price.  Their goal is to be the best in their field.  This means innovation and better technology are their competitive edge.  It also drives a keen interest in robotics and automation, and efficient production.

A number of issues with policy implications were raised during the visits:

• A view that Anti Money Laundering and Counter Terrorism Financing legislation was stopping Australian banks from dealing with banks in Iran, while German banks did not face the same impediments;
  [1]
• Research and Development grants and incentives were well received by the companies. All of the manufacturers quoted intensities of well over 10%;
• Some companies indicated that cutting company tax would be good;
• A view that the sophisticated technology associated with the Government’s large defence procurement program should be manufactured domestically, and that Australia should do what it can to ensure local industry is engaged and developed;
• A reticence about collaborating with universities, for two reasons: there is a strong perception that collaboration would endanger their intellectual property, a prime asset for these firms, and; secondly, the research priorities of the companies and the universities often don’t line up.
• A view that the mines don’t train, they poach. So significant investments in manufacturing apprentices sometimes don’t pay off;
• The current approach to liquidation means that accountants and lawyers often make the decisions about winding up engineering firms, rather than people with sophisticated technical expertise, who may see future value.

Treasury commented, following the visit: “The five companies were extremely generous with their time and their knowledge.  It was a valuable experience that will add to our depth of understanding of the real economy. Our thanks to the AAMC and each of these extremely creative and determined companies.”

Read more on AAMC outreach program here.

[1] The U.S. still designates Iran a State Sponsor of Terrorism, which blocks loans to the country by international banks with ties to the U.S.