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Speech at Smart Manufacturing, 3D Printing and Industry 4.0 Forum

Melbourne

30 November 2018

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Ladies and gentlemen, it’s great to be able to join you here.

You really are at the heart of the transformation in modern manufacturing in this country, and you are a vital store of knowledge and wisdom.

Modern manufacturing is looking promising as the sector embraces the ‘new smart’ – the one that comes with digital technology advances - while capitalising on generations of previous experience. What I see at the moment - and hear from the sector – is that the fundamentals are right, and the prospects are real, and exciting.

Exciting really is the right term for it, as manufacturers use digital technologies, robotics, artificial intelligence, augmented reality, 3D printing, predictive maintenance, the Internet of Things – these and more are the new tools of Industry 4.0 and smart manufacturing.

Let’s look at the transformation that 3D printing has driven in the last 10 years. The price of 3D printers has dropped dramatically while they’ve become much faster. All major shoe manufacturers have started to print shoes. With smart phones it’s also possible for us to digitise our feet and print our very own bespoke shoes at home. In China, a six-level building has already been 3D printed. I suspect that’s pretty challenging for most of us to get our minds around. Yet by 2027—less than a decade from now—it’s predicted that 10 per cent of production will be done by 3D printer.

So what’s this telling us?

  • The pace of change and the rates of production are increasing exponentially
  • The whole concept of production has been turned on its head – how we do it, where we do it, who does it, and with what materials and human input
  • And this is happening right now – we talk about the future of manufacturing, but the future has arrived
  • And as to what we’re producing: certainly, we’ll go on producing things——but the new economy is predominantly characterised by value adding.

I’m not a fan of the word, servitisation, or worse still, servicification, but there’s no denying what it means.

Uber is the biggest taxi company in the world, and it doesn’t own a single vehicle. Airbnb has the same status as a global hotel chain, without a building on its books. Both are simply software tools, platforms for creating value.

In a manufacturing context, what this means today and into the future is a value chain of activities or services:

  • designing, making, selling, and supporting the use of goods
  • delivering more opportunities and benefits than production alone.

In 2016, the Japanese government first described the broader picture as Society 5.0. While it sounds like a video game update, what it means is a society of intelligence in which physical space and cyberspace are strongly integrated.

The point here is that this is happening right across the economy and society and, in varying degrees, it is shaping and affecting how we do business, how we work, and how we live.

The Coalition Government has made science and technology the central pillars to support this transformation, while ensuring our long-term economic prosperity, wellbeing, and quality of life.

As Minister for Industry, Science and Technology, this is my brief.

So let’s look more closely at manufacturing, a key driver of competitiveness in our economy.
It contributes around $110 billion in exports, it’s a significant employer of skilled Australians, and among the leaders in business R&D.

In the 12 months up until August this year, more than 86,000 new jobs were created in manufacturing, bringing the total direct employment in the sector to more than 976,000 people - that’s the most since 2010!

Then add to that the increasing number of jobs in services that support manufacturing, such as R&D, and the number goes up to around 1.3 million.

In fact, Australian manufacturing has recorded over two years of uninterrupted growth – the longest run since 2005.

These are incredibly encouraging figures which show that far from being a ‘dying industry’, Australian manufacturing is modernising and can contribute to a more prosperous, highly-skilled future for Australia and Australians. This is why the Coalition believes in backing our manufacturing industry and helping it grow – under Labor, we saw 1 in 8 manufacturing jobs disappear.

The growth figures demonstrate that the sector has maintained its strength, resilience, and adaptability despite the challenges and transitions over the last 40 years – and still continuing, with fluctuations in the Aussie dollar and the rise of protectionism in international markets.

I mentioned jobs growth in the sector. What’s important to be clear about here is that manufacturing jobs are becoming increasingly high skilled.

As Industry 4.0 and smart manufacturing take hold, and the face and place of production change, we’ll see more and more people employed in research, development, design, and data analysis; more and more people working in distribution and service jobs.

So we need to see this as a huge opportunity to upskill our workforce, and create new and more jobs.

We need to see this technological revolution as a means of generating and accelerating new and tailored ideas and opportunities that can serve all manner of businesses, markets, and workers.

This is how value and competitive advantage are created and sustained.

But we won’t get there by sheer luck – you need a government that is willing to work with the sector and commit to the right policies to support growth.

In decades past, Australian manufacturing grew off the back of protectionism and taxpayer subsidies.

What we’ve seen in the last 5 years of Coalition Government is that the Australian manufacturing of the future can grow and be globally competitive without this.

A key part of the reason your sector has been growing over the last two years is because we are fostering a business environment that keeps costs down, cuts red tape, encourages trade and investment, and delivers a skilled workforce. On top of this, we are supporting use of new technology and making smart, targeted investments in our areas of competitive advantage.

Many of you will be familiar with the Coalition’s Industry Growth Centres initiative, one I think we can all be proud of.

Concentrating on six sectors of competitive strength and strategic priority to Australia, our industry-led Growth Centres are getting industry and researchers working together to support the transition to smart, high value, export-focused industries.

I’m talking about sectors we know as:

  • cyber security
  • food and agribusiness
  • medical technologies and pharmaceuticals
  • mining equipment, technologies and services
  • oil, gas, and energy resources
  • and directly relevant to us here, advanced manufacturing.

Experts at the Advanced Manufacturing Growth Centre estimate that Australian manufacturing has the potential to lift its output by 25 to 35 per cent over the period to 2026 – that’s equivalent to adding $36 billion to GDP.

The potential is in:

  • new processes that improve productivity,
  • packaging up design and other services to produce high value specialised goods,
  • and competing on the value of the whole chain of activities and services, rather than a single commodity.

We’re already seeing how companies in the sector are seizing this potential.

Take B&R Enclosures. Family-owned and operated, it has been in the business of designing and manufacturing data racks, cabinets, and industrial enclosures for over 60 years.

The difference today is that it uses digital technologies to connect and coordinate information right across its manufacturing chain.

This has allowed it to apply decades of knowledge, experience and resources to a range of applications that go well beyond commodity production – in security, hazard management, electrical integration, and data analytics.

B&R is also part of the Virtual Shipyard project supported by the Advanced Manufacturing Growth Centre. This is equipping it with the digital tools it needs to pursue the manufacturing opportunities provided by the Coalition’s Defence industry spend.

B&R’s outputs are high value, high quality, and in high demand. And in the course of its Industry 4.0 journey, it has created 25 high-skilled manufacturing jobs over the long term.

The Growth Centres are among a suite of measures delivered through my portfolio that focus on integrated support for industry and business, science and technology, research and innovation – encouraging all components to work together to:

  • develop and commercialise ideas,
  • build digital capability and skills,
  • grow profits and jobs,
  • and become globally connected and competitive.

Victorian-based firm, Water Source, has commercialised its portable water purification unit, and is now exporting to East Timor. Over the medium term it is looking to generate $20 million in export revenue and 15 high-skilled jobs.

Clearly, these numbers are very significant for the business itself. When replicated over and again across the sector, they are momentous in driving the new economy.

And to emphasise the importance of bringing industry and researchers together in close physical proximity, there was the move last year by Boeing Research and Technology Australia’s Brisbane team to The University of Queensland’s St Lucia campus.

There’s no better way of crystallising ideas than having researchers and students from multiple disciplines—engineering, neuroscience, chemistry, physics, psychology—actually working alongside one another.

These innovation precincts are growing around the country. And they are most successful when they’re industry-led. The Government’s Statement of Principles for Australian Innovation Precincts is about ensuring best practice in this regard.

I should say that the model has been the impetus for another government measure, the SME Export Hubs Initiative, which supports local and regional firms to grow, export, and employ more people.

And that support extends to the Automotive Innovation Labs, Industry 4.0 Testlabs, CRCs, and CSIRO’s Living Labs, all helping firms to trial new technologies and collaborate with researchers to develop commercial solutions to industry problems.

Collectively, the Coalition is fostering a thriving business environment that keeps costs down and encourages more investment.

This means lowering company taxes, reducing regulation, investing in infrastructure and reducing energy prices.

We’re also making sure we have the lowest possible barriers to trade and investment. This includes Free Trade Agreements.

Australia currently has 10 Free Trade Agreements in-force – with China, Japan, South Korea, Singapore, USA, Thailand, Chile, Malaysia, New Zealand and with ASEAN-New Zealand - giving business greater access to some of the fastest growing markets in the world. The countries covered by these FTAs account for 67 per cent of Australia’s total trade.

There are five free trade agreements concluded but not yet in force – Hong Kong, Indonesia, Peru, the Pacific Agreement on Closer Economic Relations, and the Trans-Pacific Partnership.

And the Coalition is currently negotiating another three – Pacific Alliance, EU and the Regional Comprehensive Economic Partnership - the latter is currently being negotiated with the 10 ASEAN nations, India, NZ, Japan, Korea and China.

Heuch, for example, is an Australian manufacturing and service company specialising in heating, ventilation, air conditioning engineering solutions and programmed maintenance services. 

Heuch is taking advantage of the ASEAN-Australia-New Zealand Free Trade Area to export to Indonesia.

If I can return now to the crux of this forum – exploring and arguing the best strategies for adopting new technologies to secure manufacturing’s competitive edge.

Government certainly has a part in this.

The Coalition will soon release a Digital Economy Strategy that will guide policy decisions and investments in the digital economy.

There’s the $100 million Advanced Manufacturing Fund too – helping industry to boost innovation, skills and employment in advanced manufacturing in Australia.

$46 million in assistance has gone to 33 businesses across Victoria and South Australia, unlocking an additional $133 million in investment from partner firms.

Micro-X, for example, is a manufacturer of novel, miniature x-ray products for medical and security applications. It is translating processes from the lab to real time; meanwhile lowering production costs and opening up previously untapped global opportunities.

We’re also helping firms to understand and trial new technologies.

CSIRO’s Lab 22 in Clayton is providing Australian companies with access to metal additive manufacturing (or 3D printing) technologies so they can experiment and innovate with less capital investment risk.

The Innovation Manufacturing Cooperative Research Centre has developed FUTUREMAP, a diagnostic tool that allows firms to test their Industry 4.0 preparedness. 

This CRC is working with the Entrepreneurs’ Programme to help Australian manufacturing SMEs to think about how digital technologies and new business models can create more commercial opportunities.

Melbourne-based medical device company, Anatomics, designed and manufactured the world’s first 3D printed sternum and rib implant using the 3D printing facility at Lab 22 for a Spanish cancer patient.

The operation was a success, and twelve days after the surgery, the patient left hospital in excellent shape.

Yet this is the new, exciting, stuff transforming our thinking, our businesses, our economy, and our people.

And that’s my next point. While we’re growing our businesses and economy, we must grow our people too. This is as critical to our prosperity as a nation and society.

Our Advanced Manufacturing Growth Centre estimates that as many as 113,000 new jobs in R&D, design, higher-skilled production and sales and services positions will be created by 2026.

Quickstep Holdings is a market leader in carbon fibre composite technology. Working with the Growth Centre and Deakin University, it has devised a fender for cars it expects will pique the European luxury automotive market.

In the process, Quickstep expects to create 30 new highly skilled jobs, and generate revenue of $25 million in export earnings.

Another, Watkins Steel, a 50-year-old Brisbane-based steel fabrication company, is showing us how automation can grow a workforce.

In recent years, the company has transformed its operation by incorporating a unique digital workflow that links the entire fabrication and installation process from start to finish, connecting digital equipment, software and people for improved steel detailing.

It also offers technology services in 3D laser scanning, design and data collection.

It has switched hard hats for cutting-edge HoloLens (or augmented reality) technology.

No jobs were lost in the transition. In fact, staff readily took on new roles using their expert knowledge of steel and the fabrication process.

Yesterday’s boiler makers are today’s tech experts. The business has doubled in size, entered global markets, and for every new piece of automated equipment installed, another 10 people have been employed.

So, what this is telling me, the Government, businesses, all of us, is that we need to invest in our workforce, our people.

We need to encourage people to keep learning and training throughout their working lives so they’re equipped for changing demands and tasks.

We need more science, technology, engineering and mathematics-qualified workers, in all range of jobs, from research, to the physical and virtual factory floor.

We need women to be there alongside men, or we’re missing out on a big chunk of our intelligence, capability and possibility.

And, while I’m at it, if we don’t get this right, we’re failing our standard as a society that prides itself on fairness and equality of opportunity.

Ensuring Australians have the right skills to succeed in a changing labour market, and businesses have access to the skills they need to grow the business, is a key priority for the Government. That is why the Prime Minister recently announced an independent review of the VET sector, to be led by Steven Joyce, the former NZ Minister for Tertiary Education, Skills and Employment, and Minister for Finance.

Manufacturing jobs rely on a skilled workforce, and that’s why the Coalition Government has also committed $1.5 billion through the Skilling Australians Fund to support apprentices and trainees.

The Ai Group—in partnership with digital-technology leader, Siemens Ltd, and Swinburne University of Technology—is delivering higher apprenticeships through a ground-breaking program, with the first cohort of 20 students learning the practicalities of applying Industry 4.0 in their work.

There’s also the Australian Industry and Skills Committee:

  • working with the Growth Centres,
  • advising Government on industry skills needs,
  • and helping to determine the competencies for our VET system.

The Committee has recently established other reference committees too – in the Shipbuilding Industry, Pharmaceuticals Manufacturing, and Digital Transformation.

I urge you to contribute your expertise and insights to the work of these committees.

Together, we can make sure Australia’s VET sector supports industry—including manufacturing—with the skilled workforce it needs.

Science, technology, engineering and mathematics skills, as I’ve already flagged, are essential in this mix.

Businesses that innovate are twice as likely to use STEM skills, and seventy per cent of Australian employers see STEM employees as the most innovative.

By 2030, it’s estimated that Australian workers will spend 77 per cent more time using science and mathematics skills.

The Coalition is reviewing the Australian Qualifications Framework, including looking at how education can respond flexibly to changing industry and skills needs.

We’re working with state and territory governments to look at skills in automation, digital and big data, cyber security and supply chains.

I recently launched the $5 million Automotive Engineering Graduate Program - to support a pipeline of highly trained designers and engineers to enter the automotive industry, with a focus on solving real world problems.

And to rally women’s engagement in STEM, the Coalition has introduced a range of long-term measures funded to around $4.5 million.

Included, is a ‘Girls in STEM Toolkit’ to help school-aged girls see and believe the endless possibilities of a STEM career.

And we’ve just appointed our first Women in STEM Ambassador, star astronomer and science communicator, Professor Lisa Harvey-Smith.  Lisa will be an advocate for gender equity in STEM, and encourage more young Australian women to pursue STEM study and careers.

Of course, with any major change, come challenges. Some workers, and businesses, are facing difficult transitions. And the Government recognises that they must be supported.

The Coalition Government also set up the Jobs and Education Data Integration. JEDI, for short. It analyses a person’s skills used in current and previous employment to recommend jobs in other sectors, or to recommend VET courses that will best meet their training needs.

Think about the transition in the automotive industry, as we’ve seen in Victoria and South Australia.

The Coalition Government has worked with Ford, Toyota and Holden to support automotive workers and supply chain firms affected by the closure of motor vehicle production.

All three companies report that around 80 per cent of their former workforces have now either found new jobs, are studying or are retired.

Take Bosch in this context. It has had a presence in Australia since 1907, manufacturing automotive components. With the closure of the local car industry, it did two things.

It shifted its energies to export markets, which means it now has around 20 per cent of the global market share in the supply of parts used in vehicle alternators.

As well, it has applied decades of experience to establishing a new business unit that builds special purpose machines for manufacturing companies.

It employs 55 highly skilled people who devise robotics and automation solutions for a variety of industries from automotive to medical technologies, agriculture and food production.

The Bosch experience, and the other businesses I’ve spoken about today, tell the real story of modern manufacturing in Australia.

Yes, change brings challenges, but with a solid foundation of:

  • commercial experience,
  • skills and expertise,
  • a willingness to embrace the power of digital technologies to transform products and processes and sharpen competitive advantage,
  • and a commitment our most valuable and adaptable assets, our people,

Those challenges become opportunities to extend the success and profitability of businesses, and ensure that manufacturing continues to be a major contributor to the Australian economy and workforce.

I am very confident in our capacity to do this. And given your enthusiasm for tackling the issues, I know you are too.

Media contact: Minister Andrews' office 02 6277 7070