Australia’s chance to lead the fourth industrial revolution

Are the Germans crazy? They are adamant that they can build submarines in Australia at costs that are equal or better than those back home. Even more amazingly, they believe that the first submarine can be built in Adelaide, in contrast with the Japanese proposal that the second or third submarines can be built here, after the first is built in Japan. Haven’t the Germans heard of our work practices and poor economies of scale?

One of the men behind the German tender is Chuck Grindstaff, global president and CEO of Siemens PLM Software business. Chuck was educated in the US and is based in Texas.

Chuck says that the world of manufacturing is entering the so-called fourth revolution and, as part of this revolution, design and manufacturing is now being digitised.

As a result, Australia will no longer be held back by scale and parts of our workforce are ready to adapt, at least in the submarine arena.

At the moment the global digitisation revolution is being led by the US and Germany. The Japanese are way behind. What Siemens is offering is a digital manufacturing network based in Australia, which combines German and American knowledge. Most past Australian shipbuilding efforts have been based on paper two-dimensional designs — often in languages other than English. They have failed many times.

The old way of designing a vessel (or car) was to actually make a prototype and then duplicate that prototype.

Grindstaff says that is what Japan is proposing in its tender for the submarines contract. That’s why their first submarine must be made in Japan. And there is no way the Japanese submarine designed in the old way will see Australia lead in the fourth industrial revolution.

The German submarine, like all their recent submarines, will be based on a three dimensional digital design. Everything will be in English. The plant and the Australian supply network created around it will enable Australia to be a player in Asian digital manufacturing. In that arena China is making a determined drive.

I do not claim to be an expert on submarines and obviously the German submarine needs to at least equal the Japanese submarine in warfare. But if it they are of similar capabilities then this represents a marvellous opportunity for the nation. The fourth industrial revolution is of incredible importance to Australia.

The previous three industrial revolutions were steam, division of labour and electronics /IT. (Yes, we are onto the next one.)

In a pure sense the fourth industrial revolution encompasses more than just digital manufacturing and covers the merging of all the sciences.

Already it is having a big impact in Germany and the US.

Central bankers are puzzling over why inflation is not breaking out, given the unprecedented economic stimulus being undertaken, but part of the answer in simple terms is that we are learning how to make just about everything at a fraction of the old cost.

Digitisation can transform the cost structures of new or old mining plants, food processing equipment, health equipment, motor car and appliance manufacturing and, of course, defence equipment.

The Germans believe that Australian labour can produce a submarine at a globally competitive cost because of digitisation and the agreement they have made with the unions.

Clearly South Australia is set to win bigtime from this, as will other states.

But what about Tasmania? As we saw with last week’s medical funding debate Tasmania has become hooked on so called “sit down” money and is on a downward spiral. Just about any worthwhile project that generates top jobs is rejected by the mainland or the locals (usually both) on environmental grounds.

But digitisation means that Tasmania can be a world leader in food processing, if it embraces digital technology.

The base of Australian defence must be our local industrial capacity. A digitally designed submarine gives us another chance to economically restore our run down industrial capacity.