UTS:BUSINESS

Australia’s manufacturing future

Roy GreenManufacturing & Engineering SummitNewcastle July 29 2014

UTS:BUSINESS

Flat world... or spiky

Investment in knowledge

% of GDP

6.8%

6.1%

5.5%

4.7%

4.1%

Manufacturing matters

R&D

SKILLS

TRADE

Population Manufacturing*Scandinavia 23 million 5 companiesAustralia 23 million 0 companies

Manufacturing companies in the Fortune Global 500, 2011 annual ranking

Future manufacturing> Global production networks and value chains are

key drivers of future manufacturing> ‘Micromultinationals’ capture value through ‘smart

specialisation’ and clustering> Competitive advantage not just new technologies

but non-technological innovation> business model innovation, design and systems

integration, high performance work and management practices

> Such innovation must go beyond continuous improvement and become transformative.

Productivity challenge

Contributions to average incomes growth: Treasury

Labour Productivity Growth

1960s 1970s 1980s 1990s

OECD 24 AverageAustralia

Source: The Conference Board Total Economy Database and Treasury

Labour Productivity Growth

1960s 1970s 1980s 1990s 2000s

OECD 24 AverageAustralia

Source: The Conference Board Total Economy Database and Treasury

Unit Labour Cost Comparisons

COUNTRY CPI % CHANGE

Average Annual % Change 2000-2009

MANUFACTURING HOURLY LABOUR PRODUCTIVITY

Average Annual % Change 2000-2010

UNIT LABOUR COST

Average Annual % Change 2000-2010

UNITED STATES 2.50% 5.18% -1.41%

SWEDEN 3.00% 4.42% -1.01%

FINLAND 1.82% 4.54% -0.99%

GERMANY 1.60% 1.82% 0.23%

CANADA 2.00% 0.89 1.63%

AUSTRALIA 3.00% 1.93% 2.48%

Source: US Bureau of Labor Statistics: Employers Total Costs of Labor Including Direct Pay and All On Costs

Multifactor Productivity (MFP) Growth

1990s2000s

Source: The Conference Board Total Economy Database and Treasury.

Germany

Australia

UK

USA

Italy

Canada

France

Japan

OECD MANUFACTURING COMPETIVENESS INDEX: AUSTRALIA VS USA AND EURO AREA 1993-2010 (INDEX 2005=100 WHERE AN INCREASE IN THE INDEX VALUE REPRESENTS A DECLINE IN COMPETITIVENESS )

60.0

70.0

80.0

90.0

100.0

110.0

120.0

AUSTRALIA

UNITED STATES

EURO AREA

Source: OECD Manufacturing Competitiveness Index: Australia vs USA and Euro Area, 1993-2010 (2005=100); increase in index represents decline

Competitiveness challenge

National innovation systemGovernment

and public agencies  

Finance and

venture capital

Research and education institutions

 

Enterprises and workplaces

Business-university interaction contributing to innovation (% firms)

“Improving management practice is associated with large increases in productivity and output.”

3.32

3.19

3.19

3.18

3.15

3.02

3.01

2.99

2.98

2.90

2.79

2.77

2.68

2.67

2.66

2.64

2.6 2.8 3 3.2 3.4management scores

USSweden

JapanGermany

CanadaAustralia

FranceGreat Britain

ItalyPoland

PortugalIrelandBrazilIndia

GreeceChina

Not statistically different *

*

Global management performance

Source: Data collected from interviews conducted by the Australian Management Practices Project Team

3.32

3.19

3.19

3.18

3.15

3.02

3.01

2.99

2.98

2.90

2.79

2.77

2.68

2.67

2.66

2.64

2.6 2.8 3 3.2 3.4management scores

USSweden

JapanGermany

CanadaAustralia

FranceGreat Britain

ItalyPoland

PortugalIrelandBrazilIndia

GreeceChina

Not statistically different *

*

Global management performance

Source: Data collected from interviews conducted by the Australian Management Practices Project Team

Large, global companies

Significant plant autonomy

High levels of skill &

education

Better management is associated with:

Australian management performance gaps

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

OperationsMetrics

PerformanceMetrics

PeopleMetrics

Australia

Global best

Australian management performance gaps

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

OperationsMetrics

PerformanceMetrics

PeopleMetrics

Australia

Global best

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

‘Instilling a talent mindset’

“Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century.”

Australia in the

Asian Century, 2012

Key policy stepsIdentify areas of existing and potential

competitive advantage (Knowledge Foresight)Support SME participation in global markets and

value chains (Micromultinationals)Invest in knowledge creation, exchange and

engagement (Innovation Ecosystem)Promote design, technology and business model

innovation (Business Transformation)Upgrade management capability and integration

of workforce talent (Creative Leadership)