Celebrating Australian sovereign capability – our hidden electronics industry by Ronald Grill

Our series – Celebrating Australian sovereign capability – has touched on the needs of the industries of tomorrow. Today Dr Ronald Grill warns us not to overlook enabling industry sectors such as electronics in our pursuit of glamour industries such as space. Here, he looks at the issue through the prism of Adelaide’s electronics sector.

The Adelaide electronics industry is a major employer and major contributor to its regional and national economies, but it is virtually unknown to its community and governments.

This integrated, high technology electronics design and manufacturing industry builds its in-house R&D into relatively small volumes of complex, customisable, high technology electronic products and systems for aerospace, agriculture, biotechnology, defence, environment, government, health, information technology, telecommunications and related sectors nationally, with exports to more than 130 other countries.

The sector does not produce personal computers, television, mobile phones or ‘consumer electronics’ products – these are mass-produced to standardised designs, typically in low labour cost countries.

Rather than retailing it sells directly to business, government and research, and does not advertise in the popular media – so its 300 firms, 11,000 well-trained and well-paid staff and $4 billion annual sales are unseen by its community and often ignored by government.

Recognition of this industry is obscured by vigorous government promotion of trendy new technologies: Artificial Intelligence, Machine Learning, Blockchain, Computer Vision, Cyber Security, Photonics, Quantum Computing, et al.

These technologies have significant future value, but they all rely on electronics to sense, store and process data to inform and to control these new technologies. Without electronics these emerging industries cannot function.

This ‘knowledge-age’ industry invests an average of six percent of annual revenue in R&D, and some Adelaide electronics firms exceed 10 percent in R&D investment.

All other Australian manufacturing industry rarely exceeds one percent investment in R&D.

Traditional ‘industrial-age’ manufacturing typically uses widely known design knowledge and high volume manufacturing of standardised products and competes on price.

The sustainable economic advantage of knowledge-age industry is the intellectual property from its vigorous R&D investment.

Electronics industry sustainability is underpinned by the technical complexity of its products that are difficult to copy while small production volumes make copying unrewarding.

Annual productivity of Adelaide’s electronics industry is over $360,000 revenue per employee, three times higher than all other manufacturing.

The premium revenues of the electronics industry are a return on the high levels of in-house R&D. High productivity is a factor in all knowledge-age manufacturing, which includes biotechnology, information technology and aerospace.

Businesses in the Adelaide electronics industry are mostly locally owned small/medium enterprises (SMEs) and these firms are anchored to the region. Examples include Codan, Entech, Maptek, Minelab, Myriota and Redarc.

Moreover the electronics industry receives and requires no Federal or State subsidies.

This industry has evolved through ‘self-organisation’ into a collaborative ‘cluster’ with firms concentrating on their specialty technology and subcontracting other critical tasks to trusted local cluster firms.

Electronics industry clustering reaches its highest levels of performance in only a limited number of global regions with Cambridge UK, Austin TX and Adelaide, the world’s best performing electronics clusters.

These relatively small cities are also distant from major populations and together these are critical cluster success factors.

Electronics technology and the electronics industry are critically important to the living standards in developed and developing communities and without electronic products, systems and services, current standards of living would be unsustainable.

The Adelaide electronics industry is leading the transition of its regional economy from a past dependence on industrial-age manufacturing to its logical future as Australia’s premier education, research and knowledge-age manufacturing region. Collaboration of industry and government could facilitate this beneficial transition.

Dr Ronald Grill is a scientist who holds a BSc, as well as a Masters of Science and Technology and a PhD from the University of Adelaide in the origin and development of global electronics industry clusters. He has run his own technology commercialisation consultancy since 1968 and is a former Director of the Electronics Industry Association and Managing Director of Technology Management Pty Ltd. Today he is a member of Electronics Industry Development Adelaide Inc (EIDA).

Picture: Dr Ronald Grill

@AuManufacturing’s editorial series – Celebrating Australian sovereign capability – is brought to you with the support of Nova Systems and Titomic.