UTS:BUSINESS
Australia’s manufacturing future
Roy GreenManufacturing & Engineering SummitNewcastle July 29 2014
UTS:BUSINESS
Flat world... or spiky
Investment in knowledge
% of GDP
6.8%
6.1%
5.5%
4.7%
4.1%
Manufacturing matters
R&D
SKILLS
TRADE
Population Manufacturing*Scandinavia 23 million 5 companiesAustralia 23 million 0 companies
Manufacturing companies in the Fortune Global 500, 2011 annual ranking
Future manufacturing> Global production networks and value chains are
key drivers of future manufacturing> ‘Micromultinationals’ capture value through ‘smart
specialisation’ and clustering> Competitive advantage not just new technologies
but non-technological innovation> business model innovation, design and systems
integration, high performance work and management practices
> Such innovation must go beyond continuous improvement and become transformative.
Productivity challenge
Contributions to average incomes growth: Treasury
Labour Productivity Growth
1960s 1970s 1980s 1990s
OECD 24 AverageAustralia
Source: The Conference Board Total Economy Database and Treasury
Labour Productivity Growth
1960s 1970s 1980s 1990s 2000s
OECD 24 AverageAustralia
Source: The Conference Board Total Economy Database and Treasury
Unit Labour Cost Comparisons
COUNTRY CPI % CHANGE
Average Annual % Change 2000-2009
MANUFACTURING HOURLY LABOUR PRODUCTIVITY
Average Annual % Change 2000-2010
UNIT LABOUR COST
Average Annual % Change 2000-2010
UNITED STATES 2.50% 5.18% -1.41%
SWEDEN 3.00% 4.42% -1.01%
FINLAND 1.82% 4.54% -0.99%
GERMANY 1.60% 1.82% 0.23%
CANADA 2.00% 0.89 1.63%
AUSTRALIA 3.00% 1.93% 2.48%
Source: US Bureau of Labor Statistics: Employers Total Costs of Labor Including Direct Pay and All On Costs
Multifactor Productivity (MFP) Growth
1990s2000s
Source: The Conference Board Total Economy Database and Treasury.
Germany
Australia
UK
USA
Italy
Canada
France
Japan
OECD MANUFACTURING COMPETIVENESS INDEX: AUSTRALIA VS USA AND EURO AREA 1993-2010 (INDEX 2005=100 WHERE AN INCREASE IN THE INDEX VALUE REPRESENTS A DECLINE IN COMPETITIVENESS )
60.0
70.0
80.0
90.0
100.0
110.0
120.0
AUSTRALIA
UNITED STATES
EURO AREA
Source: OECD Manufacturing Competitiveness Index: Australia vs USA and Euro Area, 1993-2010 (2005=100); increase in index represents decline
Competitiveness challenge
National innovation systemGovernment
and public agencies
Finance and
venture capital
Research and education institutions
Enterprises and workplaces
Business-university interaction contributing to innovation (% firms)
“Improving management practice is associated with large increases in productivity and output.”
3.32
3.19
3.19
3.18
3.15
3.02
3.01
2.99
2.98
2.90
2.79
2.77
2.68
2.67
2.66
2.64
2.6 2.8 3 3.2 3.4management scores
USSweden
JapanGermany
CanadaAustralia
FranceGreat Britain
ItalyPoland
PortugalIrelandBrazilIndia
GreeceChina
Not statistically different *
*
Global management performance
Source: Data collected from interviews conducted by the Australian Management Practices Project Team
3.32
3.19
3.19
3.18
3.15
3.02
3.01
2.99
2.98
2.90
2.79
2.77
2.68
2.67
2.66
2.64
2.6 2.8 3 3.2 3.4management scores
USSweden
JapanGermany
CanadaAustralia
FranceGreat Britain
ItalyPoland
PortugalIrelandBrazilIndia
GreeceChina
Not statistically different *
*
Global management performance
Source: Data collected from interviews conducted by the Australian Management Practices Project Team
Large, global companies
Significant plant autonomy
High levels of skill &
education
Better management is associated with:
Australian management performance gaps
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Australian score
Global best performing country score
OperationsManagement
Performance Management
PeopleManagement
OperationsMetrics
PerformanceMetrics
PeopleMetrics
Australia
Global best
Australian management performance gaps
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Australian score
Global best performing country score
OperationsManagement
Performance Management
PeopleManagement
OperationsMetrics
PerformanceMetrics
PeopleMetrics
Australia
Global best
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Australian score
Global best performing country score
OperationsManagement
Performance Management
PeopleManagement
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Australian score
Global best performing country score
OperationsManagement
Performance Management
PeopleManagement
‘Instilling a talent mindset’
“Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century.”
Australia in the
Asian Century, 2012
Key policy stepsIdentify areas of existing and potential
competitive advantage (Knowledge Foresight)Support SME participation in global markets and
value chains (Micromultinationals)Invest in knowledge creation, exchange and
engagement (Innovation Ecosystem)Promote design, technology and business model
innovation (Business Transformation)Upgrade management capability and integration
of workforce talent (Creative Leadership)