In August David Chuter, CEO and managing director of the Innovative Manufacturing CRC, had the privilege of participating in the inaugural conference of the Industry 4.0 Advanced Manufacturing Forum. One of the highlights was the Forum’s panel discussion about ‘Industry 4.0 Foresight’ in which he highlighted the imperative for Australian manufacturers to join the Industry 4.0 movement.
Despite its focus on advanced and cutting-edge technologies, the fourth industrial revolution (‘Industry 4.0’) is far from new – just ask anyone from the auto industry. But those on the Industry 4.0 journey, including many who attended the Forum, are now, more than ever, experiencing the rapid innovation and growth that comes with embracing new business models and new digital technologies.
And it’s easy to see why. To start with, technology is now widely and commercially available rather than industry-specific.
The pace of change is more exponential than linear.
Costs and barriers to entry have tumbled.
And new business models are making it possible to compete differently through finding unique ways to solve customer and consumer problems.
So, with all these positive developments and opportunities, what is preventing more Australian manufacturers from joining the revolution, and how do we accelerate the uptake of new technologies and associated business models to drive growth?
Australia’s barriers to Industry 4.0
The challenge we have in Australia is a highly fragmented manufacturing sector, with nearly 90% of manufacturers employing fewer than 20 people.
Only 15% of manufacturers are turning over more than $2 million per annum.
And we are typically poor at almost every form of collaboration.
The key for our sector to more rapidly adopt Industry 4.0-led technology and business models lies in enabling small and medium enterprises (SMEs) to be well-enough informed to make smart investment decisions in a global context.
And to encourage effective collaboration to create scale, know-how, strength and capability.
New skills are needed – at all levels, and especially at leadership level.
Research we have conducted at IMCRC through our futuremap® process indicates more than half the SMEs with whom we have engaged are aware of Industry 4.0 but less than 10% have a well-defined digital strategy as part of an overall strategic plan. Digital on its own is not going to fix a thing unless investments are made with a purpose – being clear on the ‘why’ and the ‘how’ before investing in the ‘what’.
Australian business is certainly on the Industry 4.0 journey, however investment to date has been focused on improving performance, productivity and lowering costs. To overcome the barriers, business must instead focus on developing the leadership skills, collaboration, strategy and resilience to fully benefit from the opportunities Industry 4.0 provides.
Removing Industry 4.0 barriers through collaboration
IMCRC’s primary objective is to catalyse investment by companies in manufacturing, and Industry 4.0 research and development (R&D), with Australian universities and the CSIRO.
We look for transformative projects that will create real world commercial outcomes to take products and services from Australia to the world.
The CRC Program and IMCRC have together invested more than $200 million in Commonwealth cash over the past 2–3 years with around 120 companies. The industry and state governments have further investment programs.
Just within the IMCRC, our grant funding has catalysed more than $150 million investment so far in manufacturing R&D largely with Australian owned SMEs – and the seeds have been sown for a much larger downstream economic impact.
We have collaborated with Germany’s Fraunhofer Institutes and have engagement and license agreements in place to create a flow into Australia of Industry 4.0 best-practice and industry engagement models.
We have partnered with New Zealand’s Callaghan Innovation to take Australian companies to the US and Germany to learn from exemplars.
At home we are connecting industry, universities, CSIRO, other CRCs and Industry Growth Centres to maximise the support we can provide to SMEs and encourage collaboration.
Building a bench of future industry champions
Our foresight is that collectively this will build the bench of future and much needed industry champions.
We have great Australian companies such as Bluescope, Cochlear, Textor, Resmed, Marand, ANCA, Sutton Tools, B&R Enclosures, Visy and others.
I mean no disrespect whatsoever when I say this shortlist hasn’t changed enough in my 20 years in the Australian manufacturing sector.
It is well overdue to build a much larger bench.
That is the opportunity we have right now through this fourth industrial revolution.
Where can we find more foresight? The CSIRO’s recently released Australian National Outlook (ANO) for 2060 showed a massive and unprecedented opportunity for manufacturing in Australia – the outlook vision proposes that manufacturing’s contribution to GDP growth is more than 2.5 times that of any other sector.
We often complain we have no long-term vision and strategy in Australia. Read the ANO – you might be pleasantly surprised and hopefully inspired.
If we are to achieve this vision for Australia, it will be largely led – and needs to be led – by our sector.
If it is to be, it’s up to us.
This article originally appeared here. It has been reproduced with permission.
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