Improve manufacturing? Think like Germans do

Australians have an outdated view of manufacturing, which also often struggles to attract the capital it needs, a new report finds.

A factory in Germany makes components for hybrid and electric vehicles. A new report says Australians should think of manufacturing in the same way Germans do. Picture: Bloomberg

The government-funded peak manufacturing body has delivered a report aimed at boosting capability across the Australian economy.

The report from the Advanced Manufacturing Growth Centre comes as federal and state governments seek to encourage manufacturing capabilities and the creation of “sovereign need” products.

The report tested 10 pain points identified by industry figures against 1000 students to gauge how manufacturers could boost the perception of manufacturing and the performance of their business.

The report finds perceptions do not meet reality. AMGC managing director Jens Goennemann said he hoped that one day Australians would think of manufacturing in the same way Germans do.

“Germany is a manufacturing powerhouse, it has a manufacturing GDP in excess of 20 per cent and is not known as a low-wage country. Made in Germany means better not cheaper which is the way Australia needs to go,” Mr Goennemann said.

“That’s why we’re putting it to the public, to students, to parents and also the manufacturers themselves that they should wear their chin very high that we’ve demonstrated in COVID-19 that we can make the most complicated things.”

The report finds a key issue for manufacturers in Australia is that many students do not view it as a secure area of employment but if there were a “more comprehensive promotion of the career path benefits” in industries that rely on manufacturing it could lead more students to consider a future in the industry.

Mr Goennemann said it was important that the outdated view of manufacturing as “just production” be replaced with the understanding that it was “capability, an enabler and a vital component of our economy”.

More than 1.3m Australians work in jobs that are directly or indirectly supported by manufacturing in Australia.

The report found Australian manufacturers often struggled to access capital which constrained their capacity to invest in advanced technology.

AMGC chairman Paul Cooper said the report arrived at an important time for manufacturing in Australia.

“By embracing technology, attracting the right people, investing for growth and actively managing their business, Australian manufacturers can realise substantial benefits for their business and in the process support greater local jobs and capabilities,” he said.

Australian industry minister Karen Andrews said her government was now finalising a plan that would “enable our manufacturers to scale, become more competitive and more resilient which are essential to creating jobs”.

“The Morrison government sees huge opportunities for our manufacturers to create the jobs that we need, both as we recover from COVID-19 and for future generations,” she said.

“To achieve this we need to make science and technology work for industry and focus on areas where Australia has an edge over our international competition.”

But shadow minister for industry Brendan O’Connor branded the Morrison government’s move to “rip almost $2 billion from the research and development tax incentive” as one which would damage future manufacturing in Australia.

“Australia has always been a nation that makes things, but this ability is under threat after seven years of inaction from this government, which has no comprehensive plan for industry policy or manufacturing,” he said.