Don’t just revive ‘old’ manufacturing, revive competitiveness

It is increasingly obvious Australia’s economic competitiveness is fading, but where to from here – Australian Manufacturing Forum member viewpoint by Iain Wicking.

Focusing on the historically slow rise and relatively fast fall of the Australia’s manufacturing sector is important, but it misses the point in today’s economic environment.

If the main objective is to revive Australia’s economic health and rebuild Australia’s economic competitiveness, then just trying to ‘revive’ Australian manufacturing simply equates to ‘fighting the last war’.

A historical analogy related to military conflicts and the lessons learnt illustrates the issues involved.

Throughout the previous century most nations fell into the trap of preparing for and then using the techniques and ideas of the previous war to fight the next war.

When it comes to rebuilding the economic competitiveness of a nation, many have fallen prey to similar thinking that is highly detrimental to a nation’s economic well being.

Over time, both by foolish design and by default, Australia and a number of other nations have divested themselves of their manufacturing base.

This then created a weakness that China and a number of other nations have exploited and will continue to exploit to their competitive advantage.

In response, there has been a growing call-for-action across the private and public sectors of a number of nations, including Australia, to rebuild manufacturing to its ‘past success’.

The strongly inferred but not always stated premise is that rebuilding a nation’s manufacturing base is the foundation of the nation’s economic competitiveness.

This, however, espouses an erroneous relationship that results in a serious ongoing missallocation of resources which inevitably depletes and weakens national competitiveness.

This is the real and unresolved issue that needs to be addressed.

If a weakness in an industry sector of a national economy were to be eliminated, China and others will then shift their focus to another industry sector and the economic health of that nation will continue its decline.

Even if a nation then shifts its focus to other industry sectors it will find itself endlessly ‘fighting the last war’ and losing.

The underlying cause of the decline in competitiveness of many nations and the source of today’s challenge with China is the fact that China engages other nations at the foundational level of all competitiveness.

China achieves this via the systematic development, acquisition (by any means) and utilisation of technology in all its forms to secure a competitive advantage.

Other nations like the United States, Australia and the United Kingdom are busy optimising the utilisation of finance and debt to fund R&D and Innovation.

At the same time China manoeuvres technologies both ‘offensively’ and ‘defensively’ on a global basis, like pieces on a chessboard, so as to continually maximise its’ competitive advantage while seeking to minimise that of its competitors.

China’s engagement at the ‘technology foundational level’ has enabled China, via a series of ‘national plans’, to rapidly industrialise over a few decades to become the dominant global competitor in manufacturing.

This approach will now enable China on a continual basis to consistently out-manoeuvre other nations across all industry sectors.

To rebuild national competitiveness, Australia must engage China and other similar competitors at the foundational level of all competitiveness – the development, acquisition and utilisation of technology.

This includes, but is far from limited to, indigenous innovation, to produce products and services that consistently excel at satisfying customer needs that result in a true competitive advantage.

The revival of manufacturing remains a key factor in terms of rebuilding a nation’s economic strength.

However, if all that is being done is to pour more money into Research and Developmen and Innovation it is no more than ‘fighting the last war’ and a nation doing this will emphatically ‘lose’.

Australia, therefore, urgently needs to put in place the capability to generate and use technology strategies as the foundation for all decision-making. This would then enable Australia to consistently out-manoeuvre all its competitors, including China, in the exploitation of technologies.

Iain has a management consulting background with a focus on procurement and supply chain operation. Iain’s other interests focus on the role technology has and will continue to play in the life-cycle of civilisations, nations and business success. His earlier @AuManufacturing viewpoint can be seen here. Contact Iain via Linkedin.

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