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Federal minister urges local parts-makers to modernise

Modern take: The federal industry, science and technology minister Karen Andrews wants Australian manufacturers to embrace digital technology, which will allow them to better compete with overseas suppliers on value rather than cost.

Auto suppliers must embrace digital tech and diversify to stay competitive: minister

19 Nov 2019

THE Australian automotive parts manufacturing sector has made a good recovery in the two years since Holden and Toyota pulled out of local vehicle production, but must keep up with technology to become competitive on the global stage, according to federal industry, science and technology minister Karen Andrews.


Speaking with GoAuto last week at Holden Special Vehicles (HSV) headquarters at Clayton South in suburban Melbourne, where HSV presented its new hi-tech government-backed IT system developed by Siemens, Ms Andrews urged all Australian automotive suppliers to move to a position where they could compete on value, rather than try to compete with low labour-cost countries on price.


“We want to modernise manufacturing in Australia,” she said.


“During the election campaign we announced the $160 million Manufacturing Modernisation Fund that’s in the process of being rolled out.


“It is critical that our manufacturers do modernise, that they look at new technology, they look at new systems to help them become more competitive.


“We don’t have to be all things to all people, but we should be looking where we have a competitive advantage and doing all that we can to maximise those opportunities.


“Embracing digital technology allows Australian manufacturers to compete on value, not on cost, which is so important to their ongoing success and will allow them to grow and create new local jobs.”


Ms Andrews said the Morrison government was still tracking the automotive sector specifically, rather than just looking at it as part of manufacturing generally now that the major car-makers had all pulled out.


“We look at the automotive sector directly. Over 80 per cent of automotive workers formerly in direct production have now transitioned into other industries, so we are looking at how we grow that employment,” she said.


“In South Australia, for example, there are a number of businesses that were supplying the automotive industry in South Australia that have now created a new business in the defence and space industries.


“So there are opportunities for our automotive sector to continue to diversify, but there’s also what’s happening here at HSV, where they have identified a niche for themselves, which is effectively the conversion of left-hand drive vehicles to right-hand drive and everything that goes with that.”


Ms Andrews conceded it was unlikely the automotive sector would ever replace the more than $2 billion in annual exports that Toyota achieved, but she was confident some of the loss could be made up.


“We might not be able to do it exclusively from the automotive sector, but I am very keen to grow our manufacturing sector as a whole here in Australia and I think the likes of HSV are sourcing more of their materials locally, which is great, so there is an opportunity for us to develop that supply chain,” she said.


The minister added that the federal government was continuing to look at how the parts-makers could broaden their range of operations so they can supply key parts to other industries as well as automotive.


“So, where we are particularly good is at advanced manufacturing, especially 3D printing. We will be looking at what new technologies we can bring to support that, what new materials we can look at injecting in so that we are building, using 3D technology, the parts that are needed in various areas,” she said.


The minister said that, in manufacturing, more value was added in product design and production than in the final assembly phase, which is why the government was taking steps to help relatively small Australian manufacturers develop new products.


“What we want to do, and this is another very good example here at HSV, is we want to connect industry with our researchers and our universities,” she said.


“We know that if we can get our research and development capacity lifted, particularly by business, and if we can connect our small businesses with our universities so that they are innovating and developing new products, they’re likely to be more successful and they’ll have greater longevity.


“That is going to be a key part, the collaboration between researchers and industry.”


HSV’s latest round of funding came through the federal government-backed Advanced Manufacturing Growth Centre (AMGC), and AMGC managing director Jens Goennemann similarly emphasised that Australian manufacturing could still compete with low-cost countries, but not on cost.


Australia needed to compete by offering better value, he said.


In addition, he said the advance of robotisation was working in Australia’s favour as manufacturers could then bring production back home from low labour-cost countries.


“There is another myth about automation, that automation takes jobs away. It’s actually the opposite. Because of automation, we can bring work we have outsourced to low labour-cost countries back to Australia,” Dr Goennemann told us.


“This work is being executed by robots in a highly automated process but with a higher skilled workforce programming and maintaining the robots.


“That’s what we need. We need to create higher-paid and higher-skilled jobs in Australia.


“Robots are expensive and they require sophistication and programming. So if you can replace low-cost labour through automation and have a higher skilled workforce to program and run these robots, everybody wins.


“We bring work back to Australia and increase the sophistication of the workforce.”


Ms Andrews visited the HSV site last week to see how HSV had revamped its entire IT framework.


The company now uses the Siemens Teamcenter system to oversee all digital operations, right from the design of a part, through liaison with suppliers, on the production line, supplying vehicles to dealers and knowing where spare parts are in the dealer network.

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