Revamp manufacturing industry urgently, says former Dow Chemical chief executive Andrew Liveris

Urgent need to revitalise Australia’s manufacturing sector, says former Dow Chemical chief executive Andrew Liveris.

Andrew Liveris at home

The Morrison government needs to urgently revitalise Australia’s manufacturing sector to help the economy recover and reduce its overreliance on China, according to former Dow Chemical chief executive Andrew Liveris, who is now serving as a special adviser to the Morrison government’s National COVID-19 Coordination Commission.

Speaking to The Australian for the latest episode of the Forward Slash podcast, Mr Liveris, who is now a board member of US tech giant IBM, said Australia needed to expand its definition of “manufacturing” to include digital services, and focus its efforts on technology-rich sectors where Australia could compete on capability rather than price.

He said that the private sector was crying out for a framework to help drive a manufacturing-led recovery.

“We’ve had chopping and changing and ‘reportitis’,” Mr Liveris told The Australian. “We’ve just generated more and more reports and acronyms and committees. Business hates uncertainty, so we need to put together a bipartisan framework so business can actually invest.

“We are a knowledge-based nation; we have a lot of intelligent people and a lot of great ideas. But what’s happened to us is we’ve chopped and changed ourselves so much that we have had many false starts on how to embrace a 21st century economy. We have the tools, we have the people. I think we just got to get to the actual decision and doing part of it.”

Mr Liveris held critical roles advising both the Trump and Obama administrations, and said Australia couldn’t simply replicate what the US had accomplished in jump-starting its manufacturing.

“Australia’s size on the consumption side doesn’t give us the scale to export at a low cost, and have low labour costs, so we have to flip it around and say ‘if I invested in R&D, if I invested in innovation, and digital, and picked half a dozen areas that are actually not far away from what I do well … I can sell that to the world’.

“We also need to be creating affordable power, so the technology road map that Alan Finkel has put out makes a lot of sense. That means leaving coal in our rearview mirror, and putting gas into the passenger seat, maybe the driver’s seat, and driving to get us affordable renewables in place as fast as possible.”

The executive cited medtech, defence, space, batteries and pharmaceuticals as areas Australia should be capitalising on. He said the opportunity in manufacturing wasn’t low-cost, labour-intensive commodities that were already being sent overseas, but complex manufacturing that required a significant amount of IP to design and develop.

Top-down focus

“We need a top-down focus to aggregate our public spending in areas like battery technologies, advanced building materials, and things like renewable energy,” Mr Liveris said. ”And then match private sector funds against the public spend. So pick half a dozen sectors, and say ‘I’ve got a public sector spend of X, I want to match that with a private sector spend of Y’, you get X plus Y, then create an ecosystem of invention, innovation and scaling.

“We can do what the US, Britain and Ireland have done and do the scaling around campuses and industrial parks and industrial campuses.”

Amid escalating political tensions, Mr Liveris said Australia needed to ‘‘immunise itself’’ against an overreliance on China, which had been subsidising much of its manufacturing industry.

“We got intoxicated a bit. We stopped developing the high-quality items that we needed,” he said. ”I think diversification is the lesson out of this crisis.

“The United States got a wake-up call on its dependency on batteries and solar panels from China, pre-Trump, that it needed.

“We can never compete against large, big-consumption economies that subsidise. So we‘ve got to diversify. And to do that we’ve got say ‘I’m going to develop the better battery, I’ve got to develop the better electric vehicle, I’ve got to develop the aeroplane’ for ourselves.”

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