Networking and skills can revive Australian manufacturing

Machine operator Faraaz Abdullah posing at the Smith Chip Snack Foods in Brisbane.

From Perth to Cairns, in either direction, Australians are united by their coffee culture.

I believe that the intense convictions behind that coffee culture provide us with the best opportunity for way out of the economic mess we will find ourselves facing in the post-COVID world.

Australians could drink instant coffee, and many do, but a large number choose to pay two or three times more for coffee that has been ground and blended in Australia and either served by a skilled barista or prepared at home using expensive appliances.

Translated to the wider world, the “coffee culture” shows that a significant proportion of Australians are prepared to pay more for Australian made quality – albeit that in the case of coffee, the basic beans are grown overseas.

I believe that “coffee culture” can be harnessed to spread recovery in many industries.

What won’t work

Right now our politicians are going to their traditional knowledge-wells, seeking guidance as to how to steer a way out of the current recession.

For ALP politicians it means going to their union friends and being told to increase JobKeeper JobSeeker and social payments. That will not work. For most Liberal party politicians it means going their big corporate mates and being told to lower company and personal taxes. Again, that will not work, as illustrated by BHP, who rather than investing large sums in Australia is buying back borrowings to deliver a return of just 2.4 per cent.

And large numbers of ordinary Australians with income are already stuffed full of cash as evidenced by high bank deposits. While Australians are worried about employment lower income taxes will have a limited impact, as well as making the deficit worse.

Then there is the regular chestnut of infrastructure spending but as Franklin Roosevelt discovered in his “new deal “after the 1930s depression, infrastructure spending takes a long time together momentum. So, we need new ideas to take advantage of the coffee culture.

Local tastes

Let’s start by watching consumers who are increasingly picking up goods and looking to see where they are made. Where there is a an Australian made alternative very regularly you will see that item is chosen, even though it costs a little more. Enterprises all around the land are waking up to this and the registered Made in Australia logo is experiencing a big rise in demand.

But to develop that momentum requires strategic actions. For example, in our building industry the COVID-19 crisis showed Australia that we are incredibly dependent on overseas materials such as plumbing fittings, windows, cladding, wall coverings and doors. And many of those imported components were of dubious quality.

A worker uses a sewing machine to sew face masks at a Carrum Downs factory based in Melbourne.

But the large builders say that we no longer have the capacity to provide the quantity of Australian made material required for apartment complexes or large housing estates.

But scattered around the country, particularly in regional and outer suburban areas, there remains manufacturing operations of a smaller scale. It would not require a great deal of organisation to network those plants so that there was the capacity to supply major contracts. And if large orders were placed with a network it would incentivise some of enterprises in that network to expand. And the networking principle can be applied to many industries outside building.

Tapping wasted talent

There are a whole series of government ministers with fancy titles who are no longer relevant to the post-COVID world. Believe it or not, most came to Canberra to contribute and would relish being given the task of mobilising networks and inspiring talented people to organise the task.

And it would make incredible sense to use some of the money currently allocated to financing projects of marginal value towards fostering networks. Australian made products will be more expensive than the cheap products coming in from overseas but I believe Australians are prepared to pay a higher price for local quality – tariffs are not required.

And once momentum is established it will be possible to invest in the new manufacturing techniques that will substantially lower the cost of manufacturing. Incentives would help. The development of networks will create demand for skills. So as part of the mobilisation of the country we need to harness the education system to satisfy that demand. Education Minister Dan Tehan has been vigorously criticised for his education plan but at least one element of his plan picks up the theme of greater manufacturing and the need for skills. And his hometown of Hamilton is in a region that is ideally placed to win from networking.

Australia’s change of direction towards favouring made in Australia goods will not change the world. But the US is different.

Made in the USA

President Trump tried hard to bring American overseas manufacturing back home during his four years in office. He had some wins but it was hard work. But, as in Australia, the US game is changing and Americans are becoming more interested in buying their own goods and paying a little more. Whoever win the November election will use “Made in America” to unify a divided nation.

Prime Minister Scott Morrison visited Anthony Pratt's new recycling plant in Ohio along with US President Donald Trump in 2019. Picture: Adam Taylor

The federations of both the US and Australia are experiencing more strain than I have ever seen. In Australia, it’s caused by the horrendous mistakes made by one state. Like the US we desperately need a unifying force or the Made in Australia theme will be replaced by Made in Queensland for Queenslanders; made in NSW for those in NSW and similar trends around the land. These are dangerous times for the nation of Australia and we need the unifying force of the “coffee culture” to be fostered by those in Canberra ends