Regions and Manufacturing

In today’s globally competitive environment, manufacturers need to be committed innovators, global supply chain managers and service providers.

In today’s globally competitive environment, manufacturers need to be committed innovators, global supply chain managers and service providers.

Wheels - Part 2: Beyond 'Old Automotive Business-as-Usual'

Automotive-Echoes--Thumbnail-XL_050917

Moving forwards with barely a glance in the rear-view mirror we wanted to de-commission in Part 1, it’s all about future prospects – and how not to sleep through the signals and previews. 

An opinion piece was syndicated looking at international developments and dynamics.

The full document can be accessed via:

http://www.leisuresolutions.com.au/wp-content/uploads/2015/02/Automotive-Echoes-MM-International-online_240616.pdf

or an email to Group@LowCarbonMobility.com will cause a transcription to self-park in your inbox.

Willing customers are the vital starting point, and not some inconvenient statistical factor in an otherwise inspirational narrative.”


Let’s stay with customers, collectively known as ‘markets’. Global demand for Light Duty Vehicles – cars, vans and derivatives such as utes – is on a 2.5 times growth trajectory 2002-2030 that will require ‘the industry’ (in whatever future form) to supply tens of millions of extra units every year.

The customer base is not shrinking – and 75% of this stellar growth is happening in non-OECD markets. ‘Commercial geographies’ – production operations, supply chains and channels-to-market – will be quite distinct from the modus operandi of the first automotive century.

It’s all about developing capabilities [industrialisation] for competitive positioning via capacity building [commercialisation] in exposed international markets – themselves experiencing much turbulence due to the antics of established players and the clock ticking on traditional fuels.    

Following ‘Is it worth it?’ there’s a section that addresses ‘Can we do it?’ that also explodes a few myths about assembly plants and supply chains of yesteryear: smart manufacturing for New Mobility – including onshore – no longer needs to exclude the regions.    .    

  • Accessible growth markets exist with volumes and dynamics we can realistically chase, as our geography can now be turned to our (competitive) advantage – we are neither too small nor too remote.
  • We have capabilities and untapped potential in key design and manufacturing areas: power- and drivetrain elements / advanced materials / lightweighting for volume production / 3D & AM, et al underpinning hype-free claims to ‘cutting-edge’ – mediocrity is never worth the trip!
  • Being at where we’re at is a 2-sided coin: old-style assembly locations are no longer set in stone, and new manufacturing technologies are recasting supply chains and cluster configurations as we speak.
  • The country that invented fast Wi-Fi and the black box Flight Data Recorder surely has great credentials as a pro-activist in the operating infrastructure for E-Mobility: hacker-proof ultra-connectivity, anyone?

 Chequered flag 02

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There’s a reason the glass area of the windscreen is much bigger than that of a rear-view mirror …

… the field of vison is much bigger, it’s in front of us and is therefore ‘future’ and can only be reached by moving forwards.

That’s a clue to what will be a recurring theme, namely that ‘relevant innovation’ is directional and delivers progress – however measured in a specific context. Anything else is either ’change’, which can move sideways or backwards, or just hyped-up complexity – and that fails the ‘progress delivery test’ big time, as well as soaking up financial and expert resources.

Back to the plot.  

   

Last year – fully cognisant of the clock ticking for a shrinking onshore ‘car industry’ – the Founders’ Group of MotM updated an earlier piece that had been the basis of a Government submission.


MotM New Automotive Future 2016

The full document can be accessed via:

http://www.leisuresolutions.com.au/wp-content/uploads/2015/02/MotM-Auto-updated-online_2016.pdf

or an email to Group@LowCarbonMobility.com will cause a transcription to park in your inbox.

 

Meanwhile, as a scene setter for BlogVolk on the run, page 2 highlights are reproduced here:  

Background to 2016 update

Members of the Manufacturing on the Move [MotM] Leadership Group collaborated early 2014 on the compilation of  ‘A New Automotive Industry Future for Australia’ – a sector supplement to the preceding work ’Securing Australia's Manufacturing Future‘ .

Much of the content released 24th February 2014 is still valid, such that we are republishing and adding this summary note on ‘2016 key factors’:

  • Fast forward from ‘old automotive business-as-usual’ the next place we land should be more than just ‘new automotive’; specifically, the target market on MotM’s Sectorscope™ is now identified as ‘Transportation & Mobility’. 

  • Electro-Mobility is becoming mainstream, with existing and new companies being taken very seriously.
  • It’s possible that a big Establishment player – cutting corners on emissions – has given the ramping up of E-Mobility an extra nudge, but the momentum was already building.
  • The customer base is not shrinking; it’s all about accessible growth markets and our geography can now be turned to our (competitive) advantage – we are neither too small nor too remote.
  • Commercial geographies’ – production operations, supply chains and channels-to-market – will be quite distinct from the modus operandi of the first automotive century.
  • Old-style assembly locations are no longer set in stone, and new manufacturing technologies are recasting supply chains and cluster configurations.
  • There is non-stop attention paid to ‘driverless’ or ‘autonomous cars’ as a kind of cure-all and/or entry strategy to mobility markets for tech giants without an old automotive heritage.
  • The technology challenges of ‘driverless’ may be do-able with currently available or near-term solutions, but the practicalities of ‘cyber-infrastructure’, mixed traffic systems and ‘liability baggage’ carried over from conventional automotive engineering mean that large-scale ‘autonomous’ is far from a done deal.  
  • That said, Australia having invented fast Wi-Fi and the black box Flight Data Recorder, surely has great credentials as a pro-activist in the operating infrastructure for E-Mobility: hacker-proof ultra-connectivity is coming.

    "The intent of this stream is not yet another industry post mortem – we’re at where we’re at, and it doesn’t have to be all bad. The next edition will shed some light on what’s out there in our new windscreen forward vision, down the highway to wherever." 

‘Wherever’ in this case is shorthand for ‘accessible growth markets’.

 Stay tuned!    

 

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Australian Advanced Manufacturing – Where are the Bright Spots?

As we move into 2017, the Australian Government is placing much faith into its Advanced Manufacturing Growth Centre (AMGC) which points to the success of a number of globally focused Australian advanced manufacturers. AMGC claim that “these companies employ a large number of scientists and collaborate heavily with universities and the CSIRO. Perhaps the best-known example is Cochlear, which designs, produces and supplies implants for the hearing-impaired in more than 100 countries. Other companies such as Cablex, Marand Precision Engineering and Sutton Tools may not be household names, yet each of these ‘quiet champions’ has established indelible places in global supply chains by contributing high-value tools and parts that other manufacturers convert into finished goods.”

That said, it needs to be recognised that prior to 2000, manufacturing was largely about the production of goods. Today, the boundary between manufacturing and services is disappearing - manufacturing is now the full cycle of activities from research and development, through design, production, logistics and services to end of life management.

In today's globally competitive environment, manufacturers are innovators, global supply chain managers and service providers who are engaged not only in production but in research, design and service provision. In other words, manufacturers are engaged in activities that develop, produce and deliver both goods and services to customers.

When a company claims to be a manufacturer, and in the case of larger firms, an 'original equipment manufacturer' (OEM), it is more than likely that the manufacturer is assembling a whole range of products made by other companies.

In the case of aerospace, automotive and defence OEMs, there is a supply chain relationship which extends through first, second and even third tier suppliers. It is this system that allows OEMs to leverage competition between various suppliers at each level in the system.

Some manufacturers (the former Australian owned HPM comes to mind in this regard) prefer to be totally vertically integrated. These firms more often than not and where they have the expertise, are disposed to make the machines that do the manufacturing and assembly of the various componentry. Although vertical integration is becoming less common as companies now tend to specialise at some point in the overall global system. Moreover, many of the truly advanced manufacturing economies are characterised by firms that specialise in making (increasingly) robotic manufacturing machinery.

Therefore today's global manufacturing system is part of a complex and highly integrated value chain, making it prone to fluctuations in global input costs and the Australian dollar. The value chain includes 'cutting edge' science and technology, innovation, skills, design, systems engineering, supply chain excellence, and a wide range of intelligent services. It also includes energy-efficient, sustainable and low-carbon manufacturing. In one sense the growth of additive manufacturing and digital manufacturing generally as well as robotics combined with artificial intelligence is driving this transformation. Moreover, Australia does have a rich tapestry of SMEs from software and product developers such as Planet Innovation and Grey Innovation through to key suppliers in the global value chain such as Micreo and Cap-XX.

In short, for the longer term benefit to Australia, advanced manufacturing needs to be understood as the establishment of industrial ecosystems where 'value add' can be maximised through the growth of technology-enabled firms which transform away from just assembling and/or integrating imported componentry.

The AMGC now concedes that much more work is needed to ensure that a new generation of Australian companies follow their success. Major items on the nation’s to-do list include skilling Australia’s workforce, fostering stronger research collaboration and offering greater capital funding for start-ups. Not surprisingly, the Growth Centre has claimed that "with the right blend of committed industry partnerships and government support, the future of advanced manufacturing in Australia is bright."

For its part, the Manufacturing on the Move (MotM) LinkedIn discussion group which is providing input to Reinvent Australia supports the AMGC view that there needs to be a strong focus on improve government support for business-led R&D and encourage industry–research collaboration. MotM also encourages the AMGC to keep an open dialogue with manufacturers, research institutions and industry associations and to encourage strong prospects to apply for and co-fund projects.

MotM is also arguing that there is an opportunity for the Australian Government to follow the lead of the UK and USA Governments to set aside a proportion of the substantial Defence procurement budgets (particularly relating to submarines and warships) for supply by Australian SMEs. Without a legislative framework designed to achieve this objective, there is a real concern that the large multinational primes will simply procure manufactured products and services through their offshore supply chains. Existing arrangements indicate that less than 3% of public funds spent on Defence procurement are channelled into Australian SMEs – this compares unfavourably with the situation in the UK where legislative requirements require 25% sourced locally. Surely, this approach can achieve bipartisan support right across the political spectrum!

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Recent Comments
Steve Zanon
Great summary Angus. Important point - "for the longer term benefit to Australia, advanced manufacturing needs to be understood as... Read More
Saturday, 18 March 2017 20:00
Richard Jefferies
On a very practical level, it's all about making our geography work for us. Untold 'cyber-column inches' are devoted to FTAs, FTA... Read More
Monday, 10 July 2017 17:47
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