South Australia’s Manufacturing Future

Peter Roberts – Editor of ‘AuManufacturing’ in a recent article “South Australia – the State that gave up on manufacturing” laments the demise of Holden, Chrysler, Hills, Lightburn, Scott Bonnar, Perry Engineering, Horwood Bagshaw and Actil.

Motor vehicles, clothes hoists, lawn mowers, washing machines and textiles previously made by these companies are ‘Industrial-Age’ products and are now mass-produced in low-wage countries and based on design knowledge and manufacturing processes that are widely known.  Media reports of the exit of these high-profile companies has led to a belief in parts of our community that most or all locally-based manufacturing has ceased.

However, manufacturing in Adelaide is alive and prospering, but no longer with ‘Industrial-Age’ processes and products. Manufacturing flourishes in Adelaide’s well-established and profitable ‘Knowledge-Age’ manufacturing sectors including electronics, biotechnology, defence, medical devices and aerospace.

Manufacturing in these sectors succeeds in our high wage economy and local firms achieve premium prices for their products. This premium is a return on the controlled intellectual property (IP) employed in their design and manufacture and also embedded in the products. These mostly locally owned, small-medium enterprises also invest strongly in R&D with the proportion of their revenue invested in R&D by Adelaide electronics manufacturers many times higher than the investment of all other South Australian manufacturing industry. Some local electronics firms invest more than 10% of their annual revenue in R&D. The IP-based price premium is evident in the high productivity in the Adelaide electronics industry at more than $340,000 per employee. This is three times higher than the productivity of $113,000 per employee across all other SA manufacturing industry, where investment in R&D industry rarely exceeds one per cent of revenue.

Roberts notes changes in the ‘manufacturing’ and ‘industry’ sectors of the State Government. “Accepting all the recommendations of a Review of the SA Government’s International and Interstate Engagement Bodies and Functions by former NZ politician, Steven Joyce, the government abolished the department’s manufacturing section completely and also said goodbye to its director.”

Roberts adds “Many in Adelaide now ask me – has the SA government given up on manufacturing?  He notes that the State Government folded its advanced manufacturing section into the Department for Trade and Investment and now the State does not have a minister of manufacturing. “Today there are eight areas of activity of this department but not manufacturing.  And you have to ask yourself, has South Australia not just given up on manufacturing, but actually just, given up?”  The state that daily boasts about its wine industry and growing defence and technology sectors has no-one in the state’s bureaucracy whose role is focused on manufacturing.

State now does not have a department or a minister for industry. The former SA ‘Department for Industry and Skills’ was recently renamed ‘Department for Innovation and Skills’  (Ed.)

Full statement from the SA Government on their activation of manufacturers:

“The Department for Trade and Investment is providing support to South Australian companies through a range of initiatives and programs and is liaising directly with a number of industry associations, including Food SA, Business SA and relevant Chambers.

The Industry Capability Network (ICN) has developed a portal aimed at allowing suppliers to register their interest to provide key goods and services, and to enable ICN to identify gaps in the supply chains and what assistance is required to fill those gaps. The portal provides a mechanism to collate and address those needs, as well as linking suppliers with other forums that are seeking these capabilities.

The department is also acting as a conduit between government and industry to actively seek opportunities for businesses to diversify during the COVID-19 pandemic.

The establishment of the Export Support Recovery Taskforce is helping to preserve the export activities of South Australian businesses and is capturing new investment opportunities for companies seeking to supply PPE to health authorities, working closely with SA Health to identify needs and acting as a conduit between government and industry.

Furthermore, the Detmold Group has diversified its business to produce 145 million masks, employing an additional 160 South Australians and the Bickford’s Group is now producing 60,000 hand sanitiser bottles for Queensland Health.

Global in-market webinars are being held for South Australian exporters to provide an up to date situation analysis for key international markets, providing clarity for exporters and giving them the latest advice on freight logistics, sales and opportunities going forward.

The Department for Trade and Investment is working collaboratively with other South Australian Government and Federal Government agencies to provide financial assistance information to businesses, as well as supporting essential service companies through the border closures.”

From: https://www.aumanufacturing.com.au/south-australia-the-state-that-gave-up-on-manufacturing

South Australia: Growth State Plan

In late 2019 the State Government launched its 10-year: Growth State Plan:

“Growth State is a new partnership between government and industry where we are united in our goals of accelerating our economy and retaining and attracting the best and brightest to live and work in South Australia.” https://www.growthstate.sa.gov.au

“The government is actively engaging with the nine identified growth sectors to understand what they need in order to grow as they develop specific strategies for their respective sectors. Each sector strategy is owned and endorsed by industry.”  https://www.growthstate.sa.gov.au/sectors

• Tourism
• International education
• Defence industry
• Food, wine and agribusiness
• Hi-Tech
• Health and medical industries
• Energy and mining
• Space industry
• Creative industries

The focus of the Growth State Plan on the Defence industry is the $90 billion Australian defence projects including the $50 billion Future Submarine program and the $35 billion Future Frigates program.

The Growth State focus on the Space industry is the Australian Space Agency and the proposed mission control centre and discovery centre at Lot Fourteen and with its:  “. . . 80 organisations, companies and educational institutions and a workforce of approximately 800.”  

https://dti.sa.gov.au/investment/opportunities-for-industry/space-industries

Hi-Tech Sector

The Growth State Plan for the Hi-Tech Sector states: “Hi-tech in our state South Australia has a deep automotive and defence manufacturing history which is providing a solid platform for new and existing manufacturers to transition into advanced industries including automation, defence, photonics and frontier materials. South Australia also offers a sophisticated ecosystem and is Australia’s centre for cyber security and defence technology research. It is also the headquarters of Australia’s cyber and electronic warfare capabilities and research programs. South Australian researchers are leading the way in robotic vision powered by artificial intelligence, with the city of Adelaide being home to the Australian Institute for Machine Learning at the creation and innovation neighbourhood, Lot Fourteen. Adelaide’s growing connectivity includes the Ten Gigabit Adelaide network – a revolutionary fibre-optic network that enables businesses in the city centre to access 10Gbps data speeds at extremely low costs. This city-based infrastructure is complemented by the GigCity initiative, which is connecting startups, entrepreneurs and businesses in innovation precincts across metropolitan Adelaide and in the regions with highly affordable broadband speeds of up to 10Gbps.”  https://dti.sa.gov.au/upload/sectors/hi-tech/Hi-tech.pdf

It is noted that the technologies discussed above all rely heavily on electronics, so it is important that the Adelaide electronics industry is included in the Hi-Tech Sector.

The Hi-Tech Sector of the Growth State Plan includes:

Creative Industries

Defence

Space Industries

Energy and Minerals

Food, Wine and Agribusiness

Health and Medical Industries

International Education

Tourism

 

This graphic on the Growth State website shows the relationship between electronics and traditional Industry

 

 

Engagement with Industry

We are greatly encouraged by the statement:

“We are working closely with industry to develop their sector plan.”  https://www.growthstate.sa.gov.au/sectors

The process of engagement with industry included a discussion forum at:  https://yoursay.sa.gov.au/discussions/how-can-we-grow-the-hi-tech-sector-in-south-australia

This engagement process was open from 17 December 2019 to 28 February 2020.

The six posts on the Hi-Tech Sector site include two requesting the inclusion of the electronics and IT sectors in the Hi-Tech Sector of this Plan. The four other posts on the discussion site propose:

• Inclusion of South Australia’s regions
• Radioactive waste storage at Woomera
• Inclusion of the science industry
• A high speed rail link between Adelaide and Melbourne.

These posts were acknowledged: “Thank you for your input, which we will take into consideration when developing our Sector Plan”.

No announcement of the results of this consultation process has yet been seen.

Early in the Growth State Plan development process EIDA and leading State Government personnel met to establish the value and relevance of the Adelaide electronics industry to the Growth State Plan.

It is assumed that a meeting of industry representatives will be arranged to discuss and refine the definitions and dimensions and the sectors to be included in the Hi-Tech Sector and the implementation of the Plan. EIDA and its member companies are ready to contribute to the ongoing development and implementation of this visionary Plan.

The electronics industry appreciates that the pandemic will have delayed the ongoing development of the Growth State Plan and stands ready to provide our input.

At: https://yoursay.sa.gov.au/decisions/hi-tech-sector-strategy/consultation_process  the Hi-Tech Sector Discussion Paper opens a conversation on how we can grow the Hi-Tech sector in South Australia, which provides opportunities in the various sectors.

All of the industries listed in the Growth State Plan have a significant dependence on electronics for their ongoing operation and some are critically dependent.

The Growth State Plan emphasises “Leveraging the State’s Competitive Advantages”  at: https://www.growthstate.sa.gov.au/plan  Over a number of years electronics industry representatives have met with Ministers and senior department officials to provide information and data on the size, scope, capability and structure of the SA electronics industry with its $4 billion annual revenue and its 11,000 well-trained and well-paid South Australian employees. Coupled with its outstanding productivity and export record this industry has demonstrated its significant competitive advantage and should be fully represented in the Growth Stare Plan.

EIDA has also emphasised the role of the Adelaide electronics industry in the transition of the regional economy of Adelaide from its past dependence on ‘Industrial-Age’ manufacturing to its logical future as an education, research and ‘Knowledge-Age’ industry region. The high technology design and manufacturing knowledge, capability and resources of the Adelaide electronics industry are a critical factor in this transition.

EIDA Is ready to engage with the SA Government on the integration of the Adelaide electronics industry into the fabric or the Growth State Plan.

Electronics industry representatives are invited to submit additional industry data and information for the inclusion of our industry in the South Australian Growth State Plan.    info@eida.asn.au

Peter Roberts article:

‘South Australia – the State that gave up on manufacturing’  is at:

https://www.aumanufacturing.com.au/south-australia-the-state-that-gave-up-on-manufacturing

See aumanufacturing at: https://www.aumanufacturing.com.au/