Professor Roy Green from UTS speaks on Australia's manufacturing strengths at the Hunter AiGroup Future of Manufacturing & Engineering Summit on 29 July 2014

1. UTS:
BUSINESS
Australia’s
manufacturing future
Roy Green
Manufacturing & Engineering Summit
Newcastle July 29 2014

2. UTS:
BUSINESS
Flat world...
or spiky

3. Investment in knowledge
% of GDP
6.8%
6.1%
5.5%
4.7%
4.1%

4. Manufacturing matters
R&D
SKILLS
TRADE

5. Population Manufacturing*
Scandinavia 23 million 5 companies
Australia 23 million 0 companies
Manufacturing
companies in
the Fortune
Global 500,
2011 annual
ranking

6. 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.

7. Productivity challenge
Contributions to average incomes growth: Treasury

8. Labour Productivity Growth
1960s 1970s 1980s 1990s
OECD 24 Average
Australia
Source:
The Conference Board
Total Economy Database
and Treasury

9. Labour Productivity Growth
1960s 1970s 1980s 1990s 2000s
OECD 24 Average
Australia
Source:
The Conference Board
Total Economy Database
and Treasury

10. 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

11. Multifactor Productivity (MFP) Growth
1990s
2000s
Source:
The Conference Board
Total Economy Database
and Treasury.

13. 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
1993
94
95
96
97
98
99
2000
1
2
3
4
5
6
7
8
9
2010
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

15. National innovation system
Government
and public agencies
Finance
and
venture
capital
Research and
education
institutions
Enterprises
and workplaces

16. Business-university interaction
contributing to innovation (% firms)

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

18. 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 3.4
management scores
US
Sweden
Japan
Germany
Canada
Australia
France
Great Britain
Italy
Poland
Portugal
Ireland
Brazil
India
Greece
China
Not statistically
different *
*
Global management performance
Source: Data collected from interviews conducted by the
Australian Management Practices Project Team

19. 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 3.4
management scores
US
Sweden
Japan
Germany
Canada
Australia
France
Great Britain
Italy
Poland
Portugal
Ireland
Brazil
India
Greece
China
Not statistically
different *
*
Global management performance
Source: Data collected from interviews conducted by the
Australian Management Practices Project Team

20. Large, global
companies
Significant plant
autonomy
High levels
of skill &
education
Better management
is associated with:

21. Australian management performance gaps
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Austra
Global
countr
Operations
Metrics
Performance
Metrics
People
Metrics
Australia
Global best

22. Australian management performance gaps
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Austra
Global
countr
Operations
Metrics
Performance
Metrics
People
Metrics
Australia
Global best
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Austra
Global
countr
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Austra
Global
countr
‘Instilling a talent
mindset’

23. “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

25. Key policy steps
Identify 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)