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Manufacturing as the new Engine of Growth

Session One featured our Keynote speaker, Francisco Betti who is the World Economic Forum’s Head of Shaping the Future of Advanced Manufacturing and Production.

He pegged Australia’s performance as ‘good but lagging’ behind manufacturing leaders Germany, the US, and Japan. He sees Australia as a low scale with high potential as we have many of the foundational elements are already in place.

He defined the key drivers of production every nation should invest in for manufacturing as follows:

  • technology & innovation
  • human capital
  • global trade and investment
  • institutional framework
  • sustainable resources and a
  • strong demand environment.

Sustainability is becoming a key pillar in decision making. The circular economy will be driven by manufacturers, not necessarily the government, and companies need to become more aware of waste not being acceptable.

Franciso says we are entering a ‘perfect storm of mega trends’ for which manufacturing needs to adapt as they affect both supply and demand. These are

  • Climate change forcing change – driven by consumers and regulators. Also, just the ‘right thing to do’.
  • Slowdown of global economy with trade tensions.  Local eco systems being reinforced.
  • COVID-19 – impact and recover. Stress test for many companies.

COVID challenges in many supply chains have also opened up manufacturing opportunities on both a regional and global basis.  He said it is important to leverage competitive advantage and to invest in innovation. The pandemic has also highlighted a key weakness in the Australian manufacturing landscape, a lack of collaboration or ‘framework’ for collaboration to cater for technologies and build resilience together.

As manufacturing represents less than 1% in Australia it is imperative that Australian companies integrate into global markets to expand demand. Francisco also encouraged us to explore local opportunities to re-shore back into Australia for economic viability and an opportunity for investment in technology and innovation in markets. Should we select sectors in which we have had a historical presence i.e., automotive and look at it in a new context i.e., pharmaceutical?

Francisco flagged that we already know what the next big issue is on everyone’s radar, and it is climate change. There will be more climate change issues and crises on a more regular basis, so the need to build resilience is critical now.

He shared some strategies to help improve resilience may include:

  • Supply chains
  • Flexibility and agility
  • Suppliers of suppliers and
  • Public private collaboration to gain access into other regions vs purely global.

Francisco encouraged everyone to review the World Economic Forum’s Lighthouse network and see if there is an opportunity to get involved.  Of this network of 69 Businesses, some 70% were exploring Industry 4.0 but were stuck in pilot programs and struggling to deploy. He did flag however that those who had adopted advanced manufacturing policies had been able to better face the crisis.

Our panel for this session, chaired by Lindy Hughson who is the Managing Editor & Publisher PKN Packaging News and Food & Drink Business had some key messages

Brooke Donnelly – CEO Australian Packaging Covenant Organisation (APCO)

  • Recyclability does not equal sustainability
  • Sustainable packaging is the future and represents opportunities for circular economy.
  • All businesses need to step up and not wait
  • You cannot think about the future of production without being sustainable

Dr Jens Goennemann – Managing Director Advanced Manufacturing Growth Centre (AMGC)

  • Manufacturing is not just Production, but actually consists of 7 steps… 3 before and 3 after production
  • Australia needs more middle-sized companies, to be the heroes and backbone of manufacturing

Tom Lunn General Manager – Sustainability and Innovation Detmold Group

  • Progression is happening here on many levels – government legislation and industry starting to align
  • Challenge to get the value proposition right when people and clients won’t pay above 15% for localisation

Dr Peter Burn – Chief Policy Advisor Ai Group

  • Successful expansion into other countries using innovation is a growth path for many Australian companies due to our relatively small population size.