Will science save manufacturing?

Macfarlane is pushing Australian businesses to embrace science as an engine for innovation.

Australia’s industry minister claims science initiatives will move manufacturers to a new stage.

Ask Australia’s federal industry minister Ian Macfarlane for examples of innovation that are boosting Australian manufacturing, and he cites a technology developed in Melbourne’s old industrial heartland – Fishermans Bend.

It is symbolic that the mouth of the Yarra River, known for its soon-to-be-closed General Motors Holden car plant, is also home to a Boeing factory making wing flaps for Boeing’s hi-tech 787 Dreamliner.

“It is probably the most advanced passenger aircraft in the world,” says Macfarlane, “and Boeing is sourcing components here because they have been successful in proving up a process for making them out of carbon composite.”

Yet Boeing is confronted with the same issues that beset other businesses in Australia – high wages, a strong currency and small local market.

It succeeds because its research and development (R&D) is closely integrated with its manufacturing operations.

For the 787, the Melbourne factory developed a resin infusion technology for making intricately shaped parts for its planes.

Wrapped into that are advances in robotics and energy efficient ovens that cook the composite parts more efficiently than older autoclaves. Plans are afoot to design parts for other Boeing aircraft.

The federal government has been criticised for refusing to bail out Australia’s faltering car industry, food processing operations and for stalling on new naval ship-building contracts, but it seems Macfarlane prefers initiatives to focus where Australia has a competitive edge.

“The imperative is to transition industry into a new phase,” he tells INTHEBLACK. “We are moving away from producing commodity-style products like motor cars, into niche products that have a high level of sophistication and technology associated with them.

"That is the transition that is going to have to continue if Australia wants to maintain its standard of living and level of wages. We can’t compete against other countries when they are paying their workers literally one-tenth of what we are paying. We have to pick areas where we can transition into industry too and assist in that process.”

Five areas have priority. Advanced manufacturing – which includes Boeing and also auto component companies that focus on exports – is one area.

Another is agriculture, not simply in food production but also to export farming expertise.

Macfarlane cites Cochlear, the hearing implant pioneer, as an example of innovation, so it’s no surprise that medical devices and pharmaceutical trials make his list. The other two areas of priority are mining and petroleum.
"It is a model that gets industries together and allows them to solve each other’s problems." – Ian MacFarlane

"There wouldn’t be too many mines anywhere in the world that wouldn’t have some Australian technology in them,” says the minister. Australia’s expertise at developing floating production platforms for liquefied natural gas explains the final area of promise.

In promoting these areas, Macfarlane says he is not picking winners.

“Getting small-to-medium enterprises (SMEs) to collaborate with universities and scientific organisations is not picking winners. Winners tend to pick themselves in that scenario.

“We provide the framework, while government and industry participants contribute funding. The British have been doing this with their Catapult model for a number of years and have had significant success, and so are the Americans and the Canadians through various structures. It is about allowing collaboration between researchers and SMEs, and also with large multinationals where they can put a product into a global supply chain as part of an overall product.”

He is confident that innovation will revitalise manufacturing.

His plan is being deliberately shaped on the UK’s Catapult Programme, where businesses, scientists and engineers work cooperatively on R&D with the aim of producing new products and services.

Its focus is on cell therapy, the digital economy, high value manufacturing, renewable energy, satellites and transport systems.

“We have had a number of discussions with the British about their model,” Macfarlane says.

“As recently as last week, in fact, we had the fellow who reviewed it in 2010 [technology entrepreneur Hermann Hauser] out here in Australia. It is a model that gets industries together and allows them to solve each other’s problems. By doing that, they can make products and open international opportunities. We have seen a little bit of that in Australia, but it has been ad hoc. We want to formalise that process.”

Hauser’s review found the UK had top-quality research, but was letting itself down by not translating that into new products and services.

One core finding was that large companies see innovation as being evolutionary in nature so they don’t push to develop new products. New ideas, therefore, were often best pushed into small start-ups led by a team of believers.

Macfarlane also is pushing Australian businesses to embrace science as an engine for innovation.

“If we are going to be competitive, we have to bring science into the middle of industry policy,” he says.

“The CSIRO is increasing its focus on that. After all, the I in CSIRO stands for Industry [its full name is the Commonwealth Scientific and Industrial Research Organisation]. That was their foundation. They are there to assist industry and innovation. If we have science-based products, then we are going to have a competitive edge in the global marketplace.”

This article is from the November 2014 issue of INTHEBLACK.

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