Analysis and Commentary


A decade later, how well does McKinsey/BCA advice hold up?

Analysis and Commentary




By Dr Jens Goennemann

The passage of time can be unkind. As with any year, you could easily dig up artefacts from 2014 that haven’t aged well.

However, the Compete to Prosper report, prepared by McKinsey for the Business Council of Australia, has not aged badly at all. In my view, it remains a relevant document.

Its message that Australia would do well by focusing on what it already excels at – coupled with embracing digital transformation, opportunities presented by international trade, and the ability to make things — remains vital.

If you read about manufacturing during 2014, then you were hard pressed to find anything positive. Many articles focused on certain foreign-controlled companies winding down local operations with flow-on effects for a host of their subscale suppliers.

Meanwhile, an under-examined collection of niche players were beating the world, and Compete to Prosper reminded readers of their existence and promise.

The report was not focused exclusively on manufacturing, rather it advised where the next waves of economic growth might come from.

Its message, heard by the government of the day, was that Australia should pursue export-oriented growth where we have an “actual or latent advantage”.

In the latent advantage group was food manufacturing as well as niches, “including pockets of advanced manufacturing” and specialised inputs to global supply chains “like design and engineering services”.

The response from the then-government was to establish five Growth Centres, including the Advanced Manufacturing Growth Centre (AMGC), to help tap into, with a modest budget, the actual or latent economic opportunities.

Then as now, huffs of “picking winners” could be heard. Then as now, a bipartisan and enduring position is that all resources are finite and they’re best deployed where they’re likely to yield results.

In a nutshell, the message was ambitious but eminently reasonable. Australia, including its advanced manufacturing community, should double down on areas of strength, acknowledge the “remarkable opportunities” in being good enough to be in demand internationally, and embrace the benefits of emerging technologies: “These forces can either be harnessed as opportunities or endured as threats… they create the opportunity for another period of sustained growth.”

AMGC was formed the year after Compete to Prosper as a result of its influence and has aged pretty well. Since its establishment, the AMGC team likes to see its most impactful contribution, in addition to putting manufacturing back on the map, to be our industry-led co-investment strategy, and we are always happy to remind people of its results. These outcomes kept us relevant, across changes of government at the federal, state, and territory levels.

On a related note, we have just hired a new State Director Western Australia to help us drive manufacturing outcomes as the State has engaged us to help grow its wind turbine industry. You can look further in this newsletter to learn more about Matthew Cronin.

I invite you to revisit Compete to Prosper. Let us know how it holds up.

Dr Jens Goennemann is Managing Director of the Advanced Manufacturing Growth Centre. This article originally appeared in AMGC’s Industry Edge newsletter and has been reproduced with permission.



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