Why Australian Manufacturers Need to Onshore Their Technology
Australian maker of electric vehicle chargers, Tritium, is trying to fix a problem that many manufacturers in advanced technology are facing.
The company, founded by three PhD students in Brisbane in 1999, is at the forefront of a resurgence of onshore manufacturing in Australia.
Today, it specialises in electronic energy technology, with a focus on electronic vehicles, renewable energy and battery management.
Tritium CEO, Jane Hunter, who was recently appointed to the role after heading up Boeing’s PhantomWorks division, believes there is a strong business case for high-end manufacturing in Australia.
She said it was important that Australian businesses learn to commercialise and develop their own technology and turn it into a business.
“It’s really critical that Australia learns to do that rather than offshore everything, or just take the attitude that Australia can’t do manufacturing,” she said. “I think that we’ve been very quick to dismiss out abilities in that regard.”
One of the key challenges is sourcing engineers with highly specialised skills, according to Hunter.
“We have incredibly smart engineers here in Australia, and we should keep them here by creating jobs for people in the high end of those technology areas,” she said.
“That’s not going to happen if we take IP and sell it offshore and allow a foreign company to do the development work.
“This sort of company is exactly where we want to be, which is growing Australian jobs and engineering capability in Australia, high-end jobs and niche areas to the point that we really tap the market out in some of those areas.”
The electronic energy technology developed by Tritium is now being used in Australia, New Zealand, the UK, US, Canada, Germany, the Netherlands, Sweden, and Norway.
The company, which produces chargers for electric cars, has launched a 175-kilowatt IDC charger called the RT175, a 350-kilowatt charger called the PK350, along with a hard version called the PK175. The new Veefil-RT 50, a 50-kilowatt modular scalable solution, is also being released this year.
Hunter credits the strength of the company to the advanced technology and a team of highly specialised mechanical engineers, power electronic engineers and harness engineers.
“There are a core group of people who are really critical to what we do with highly specialised skills, which are really hard to attract in Australia and hard to find,” Hunter said.
“We’re talking about skills which are very highly sought after and not common. We have a great core of engineers that we can rely on to do the new product development.”
Hunter sees similarities between her current role and her former job, where she oversaw the building of prototypes of autonomous drones.
“Coming out of aerospace and moving into this EV area, we’re still learning about the technology, maturing it, maturing the manufacturing process, and the development process is actually quite similar,” she said.
“The way that you learn is iterative. You will have some failures during your learning, and then you pivot, and you go left or you go right, and that area of processes, technology development, is actually very similar between the two industries.
“The parameters and the drivers are the same.”
Drawing on her experience in technical leadership, Hunter aims to unite the team and work together to grow under the same strategic direction.
Hunter draws on past leadership roles in a number of corporations as a former CFO at Boeing, as well as senior management roles in information and communications technology, procurement, legal, and finance.
“There’d be very few areas of the business where I don’t have a very steep understanding of and I’ve also led technical teams of engineers in manufacturing,” she said.
Thinking about commercialisation and its outcomes for the business is a priority for Hunter.
Pivoting in times of need
During the COVID-19 pandemic, the Australian Government has encouraged manufacturers, through various partnerships and funding schemes, to adapt their supply chains to produce Personal Protective Equipment (PPE).
Speaking to Channel 7’s Sunrise, Minister for Industry, Science and Technology, Karen Andrews, said South Australian packaging manufacturer, Detmold Group, was a prime example of businesses adapting to current market demands.
The company has delivered the production of millions of face masks from its Adelaide factory – 100 million for the National Medical Stockpile and another 45 million for the state.
“This is absolutely pivoting at its best,” Andrews said. “They’re going to be employing an extra 160 people or so in there.”
Minister Andrews said in a recent interview with ABC News Breakfast that it was important for the public to understand the government has made “incredible changes” in a short space of time.
“Let’s understand that these are unprecedented times,” she said. “I think the important thing is that a lot of action has been taken, and we have made it very clear that the money will start to flow as quickly as we possibly can.”
The government is focused on “cushioning the blow” for Australians who have lost their jobs or have had their hours reduced.
“Our big businesses are out there looking at what they can possibly do to retain the workers,” she said. “We want to make sure that employers have the workers ready to step back in, and we need to make sure that employees are ready to go.”
Minister Andrews also acknowledged that Australia needs to stop relying on exports from China and India, and that Australia has learnt a lot from the coronavirus crisis.
“I think what the coronavirus has proven to us is that it’s wrong for us to be totally reliant, or even reliant …on supply chains that bring products from overseas,” she said.
“The positive thing that’s come out of this is a demonstration that we have a very strong manufacturing base, and that they can pivot really quite quickly, they can upscale.”
South East Melbourne Manufacturers Alliance CEO Vonda Fenwick said onshoring would benefit the Australian economy.
Among the benefits are local, accessible supply chains, retaining skills, knowledge and capability in Australia, and allowing local companies to engage in innovative research and development (R&D) in partnership with universities.
“The multiplier effect for manufacturing has been shown to be greater than any other sector; fostering on-shore manufacturing creates direct jobs which in turn flow into the economy and drive further employment,” Fenwick said.
She believes the government needs to extend their focus beyond medical supplies and PPE.
“To focus on just medical equipment and pharmaceuticals fails to recognise the importance of having broad-based, robust and resilient supply chains within Australia,” Fenwick said.
“Robust supply chains and the critical part played by SME manufacturers needs to be considered when developing a new manufacturing industry plan. Our standard of living, our national sovereignty depends upon it.”
Industrial-scale additive manufacturer, Titomic has been actively involved in pushing for further investment opportunities for SMEs.
Titomic managing director Jeff Lang is involved in pushing for a capital growth fund for small to medium businesses.
The Business Growth Fund aims to create a private sector-owned fund to provide ongoing equity for small businesses across a range of sectors, with investment from Australian banks and superannuation funds.
The model is expected to follow similar measures set by international precedents, such as in the UK, where the Business Growth Fund established in 2011 invested $2.7 billion into various sectors across the economy.
Lang is currently working with small businesses on how they could potentially implement the federal government’s stimulus packages.
“In the manufacturing sector, it is estimated 85 per cent of all manufacturing businesses are SMEs,” he said.
“But unfortunately, when the federal government approaches key advisors on what to do in manufacturing, they never go to the SMEs. I find that disturbing to me as a proud Australian, why we continue to push this agenda.”
Lang said Titomic is “front and centre” pushing for small- to medium-sized enterprises and is involved in lobbying the cause in Canberra.
“What I’m concerned about with the current stimulus packages is the money will go to the normal regulars that will not feed its way down to SMEs and the general public,” he said.
According to Lang, the government needs to reconsider how to reinvigorate the sector, or risk losing sovereign capability.
He believes Australia is in a position to do an economic reset to build that capability.
“I think it’s a great opportunity for Australia to reset what we actually do in the country and to reinvigorate our manufacturing, but very strongly into two principles,” he said.
“The first principle being taking advantage of local resources that we have, and more importantly, using advanced technologies to really push front and centre on the global stage.”
Lang was recently in discussions with the German government, who look upon Australia for mineral resources. He said there is an export opportunity around “green steel” that is produced from hydrogen.
“Australia has the best renewable resources, and if we look heavily upon that in the future, Australia could be producing our iron ore from hydrogen to create green steel,” Lang said.
“Instead of selling our dirt, we should really start building value chains around those commodities, and then build local manufacturing industry around that, too.”
He believes it is important that Australia starts replacing cheap labour with advanced technologies and automation processes, which has proven to include more workers overseas.
“We’ve painted is this dystopian where automation and AI is going to take people’s jobs away,” Lang said.
He said according to a study in Germany, when a robot is placed into a manufacturing centre, it creates 3.6 jobs.
Titomic is also involved in encouraging long-term collaborations between industry, universities and research centres.
“It’s in a transitional period, but we’ve got to get to the point where the top students in Australia getting graduated are ready to enter into the workforce,” Lang said.
“I think it’s wrong for Australians to say that Australia doesn’t have the capability to do advanced manufacturing.
According to Lang, one of Australia’s biggest problems is that although the country is really good at developing advanced technologies, the labour costs of manufacturing are high compared to China and other developing economies.
“What we’re not good at doing is being competitive on mass production against China and these other guys, where they’ve got cheap labour.”
Lang hopes Titomic is setting an example of how to take advantage of local resources and apply them for the production of advanced technologies.
“We can really create an independence within our sovereign capability to be a standalone country that’s self-sufficient,” he said. “I think that’s really important that Australia looks forward into that area.”
Manufacturing revival during COVID-19
Despite the Performance of Manufacturing Index (PMI) jumping to 53.7 per cent in March, with domestic manufacturers of food, personal care, and other essential items having led the way in increasing production, manufacturing as a whole did take a hit during the crisis.
It fell by 17.9 points to 35.8 in April, recording the largest month-to-month fall in the 28-year history of the index.
Australian manufacturing contracted at its worst pace since April 2009 (anything below 50 indicates a contraction in the economy). With that in perspective, the need for onshoring becomes more critical.
Recently, a group of Australian manufacturers secured a $31.3 million contract from the federal government to build ventilators as part of Australia’s response to COVID-19.
Two thousand ventilators will be made under the Advanced Manufacturing Growth Centre (AMGC) and the Victorian government’s Emergency Ventilator Program.
Andrews said the program was another example of Australian industry and the private sector working with the Government to ensure critical supply of medical equipment during the crisis.
The grant is in addition to the $500,000 Grey Innovation had received from the Victorian government to lead a consortium of manufacturers to produce the ventilators.
Several AMGC members, which include ANCA and Marand, will assemble thousands of parts, with Bosch will manufacture the test equipment for verifying the ventilators.
The supply, which commenced in June, is said to be 99 per cent Australian made.