In an office on the corner of Pelham Street and Barry Street in Carlton Professor of Economics Jeff Borland runs his hand along a graph that he has produced. It shows the number of Australians employed in manufacturing since the 1960s, the zenith of Australian manufacturing, when a quarter of the workforce were employed in this emotive sector. But from that period on the graph tumbles to show that just under 10 per cent of total Australian employment currently hails from manufacturing.
“The decline in manufacturing has been going on for a long time. It’s not something that has just happened in this downturn, during this period of a high exchange rate. It has been declining since the early 1970s,” says Professor Borland, who recently conducted an analysis of Australia’s manufacturing sector.
“At every major downturn Australia has experienced we have lost jobs in manufacturing. Yes we have lost a lot of jobs recently but this loss of jobs in manufacturing has being occurring steadily for the past 40 years.
“To a large degree this reflects the difficulties that manufacturing faces in Australia compared with countries like the United States and Japan,” says Professor Borland. “Manufacturing in the 20th century has been about large-scale production to gain economies of scale. With our small population and distance from the richer world markets we have never had access to the size of market that is needed to underpin large-scale production.”
Fast forward to today and Professor Borland’s analysis of Australian manufacturing provides interesting insights about the changing balance of Australia’s industrial base. The ‘rust belt’ states of South Australia and Victoria are commonly considered the manufacturing heartlands of Australia but that has changed, and we’re witnessing a convergence of manufacturing jobs across all Australian states.
“In 1985 one in five jobs in Victoria was in manufacturing and only one in 10 in manufacturing jobs were in Queensland, but today basically every state has the same share of its jobs in manufacturing industry. So while there is a lot of focus on the decline in Victoria and South Australia, in fact all states’ fortunes depend to pretty much an equal degree on manufacturing.”
While manufacturing has declined in the proportion of the workforce it employs, its death has been highly exaggerated, according to Professor of Management Danny Samson, who has been observing and teaching, researching and advising businesses on matters related to manufacturing and operations strategy for 25 years.
While Professor Samson agrees the challenges have never been greater, brought on by the forces of globalisation, high local currency, and diminishing scale in some industries, the fact is that some manufacturers are thriving. Professor Samson has shown that while ‘cost leadership’ and scale economies are particularly difficult for local firms as a basis for competing, there are still many niche strategies, where companies can specialise, and in which Australian manufacturers can be sustainably profitable and successful.
Professor Samson recently conducted a series of case studies and a large survey of local manufacturing firms, large and small and the results were compelling. The successful firms innovated in a few different ways, ranging from their leading-edge product designs, their process innovations, and even to their marketing methods and business models.
“In a generally declining sector, we have shining beacons of success, still profitably and sustainably manufacturing everything from machine tools, electronics, textiles, plastics, food, trucks, and a host of other things,” Professor Samson says. “These fine firms have found a point of difference.”
Ensuring Australia’s existing manufacturers, particularly our Small and Medium Enterprises (SMEs), benefit from improving their leadership capabilities is a key focus of the recently established Centre for Workplace Leadership (CWL) at the University of Melbourne.
“Academic research has shown those businesses which implement high performance work practices improve their profits by 13 per cent,” says Centre Director Professor Peter Gahan.
“Improving the quality of leadership in Australian workplaces is an often neglected issue in the debate on competitiveness. We’re working with businesses large and small to show them how to improve leadership that motivates employees, leads to less staff turnover and ultimately drives growth in their business. There is significant unrealised potential within Australia’s manufacturing industry and we are here to help Australian business realise that potential,” Professor Gahan says.
The CWL is currently rolling out a study for the Australian Government Department of Industry with Australian SMEs to better understand the challenges they face so that informed policy can be implemented.
“It is now 20 years since the Karpin Report was released. This ground-breaking report, entitled Enterprising Nation, identified a number of critical challenges facing Australian managers as Australia entered the ‘Asian century’. It’s time to take stock of these new challenges and the ability of Australia’s business leaders and managers to meet them.”
Read more about the Centre for Workplace Leadership at: http://voice.unimelb.edu.au/volume-10/number-2/what-makes-good-workplace
Read more: http://www.theage.com.au/national/education/voice/where-to-now-for-australian-manufacturing-20140414-36ncz.html#ixzz3kd2uiSJt
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