@AuManufacturing’s “technologies and tools” series continues with a frank look at skill shortage issues from Philip Ewen, an experienced SME executive.
I founded a very successful automated food machinery design and manufacturing company that I sold to a Nasdaq-listed firm in 2006.
Our constant struggle was acquiring skilled people. Now, with the immigration walls up, that problem is going to be worse.
Literally over half of my 40-odd staff were immigrants, and they held all the key positions. 80 per cent of our production in Sydney we exported to the United States, but we worked all over the world.
Frankly, one of the main reasons I sold the company was the constant struggle of getting the right people.
This is really where the problem lies: there were always plenty of applicants with the relevant technical qualifications, however, for your typical SME, most require too many resources from already overburdened managers to train and assimilate them into the company.
They had previously worked in larger companies, with carefully pigeonholed tasks, and lacked versatility, or they simply had no practical experience whatsoever.
In my view, the best way to support manufacturing is to “steal” talent from other countries.
For instance, last year we stayed with some friends (a couple) in Berkeley, CA. They both worked in tech companies just around the corner. The whole town was buzzing with progressive, highly-skilled engineers. That just does not happen in Australia; we do not have that sort of access to a broad set of highly-skilled individuals.
I have also given thought to automation.
I always kept my business running on a large cash balance to ensure if orders fell away for a period, we could cut overtime and just make stuff for stock.
Manufacturing automation is very expensive kit, especially if you are building small-run production machines, as we were. Compromising the cash security of the business to buy expensive automated tools was not, at least at the time, something we entertained.
Sure, we could have leased equipment, and perhaps now in 2020 there is gear that offers a lot of versatility, like 3D printers and automated welding equipment, but it is still a very big capital cost.
Then the other side of this is there are few sub-contract workshops that a machine building company has available to them, unlike, say, in Europe or the USA.
So I am probably not telling you anything you do not know, however, the challenges are immense, and the government incentive programs are totally inadequate.
And you can’t just outright subsidise the industry, lest you fall into international trade potholes, but we can steal talent.
In summary, the immigration framework for skilled workers needs a complete rethink, and immigrants really need to be vetted by industry — not only bureaucrats.
Secondly, there needs to be an industry-wide structural framework, and incentives for component manufacturers. We tried making components in China, with limited success due to low quantities. The far better alternative would be a broader network of component manufacturers in Australia and New Zealand. That is perhaps where tax breaks and incentives need to be directed, so these companies can invest in the best automation has to offer today.
A vertically-integrated SME manufacturer is dead in the water. If we are going to build shit in Australia, we need to follow others, like the Germans. The end product manufacturer cannot be bogged down in trying to make everything themselves.
The time to sort out our immigration issues is now. And Australia is an even more attractive destination this minute, considering the mess the rest of the world is in right now.
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