Automation, certain dogma has said for the last couple of decades, will bring an end to traditional employment and the labour-based workforce of the Australian economy. Robots and automation will end traditional manufacturing, as countries with the best technology infrastructure build everything more efficiently than economies dependent on human manual labour.
But is there a hidden opportunity for Australia? Could automated and distributed manufacturing build a new Australian supply chain with a world class technology infrastructure and new economic benefits?
While many worry about an automated economic disruption that would yield thousands of job losses and entire sectors being wiped out, the economy has already shifted, and thousands of jobs losses have already occurred. The recent disruption was not automation, but a globalised manufacturing revolution. China and certain other low-cost Asian nations realised that they could tackle their domestic unemployment and create several new industries at the same time. These new industries are aimed at supplying goods aligned with global megatrends like digitisation, on-line trading platforms (AliBaba), the rise of middle class wealth in Asia, urbanisation and a forward view to the carbon constrained future. New cities in China, India and south Asia fuelled demand for ultra-modern transportation, housing and clean energy generation. Australian copper, aluminium and steel fed the construction of this once-in-a-generation construction boom, but a significant volume of the output of Australian mining was in raw ore, not finished metal. An economy of less than 25million workers had connected itself to an Asian tiger of billions of consumers building new cities and industries. With homegrown Chinese labour, off-the-shelf technology, and significant foreign high tech investment from Europe and the USA, the first decade of the millennium yielded extraordinary growth in Asian manufacturing at economies of scale a hundred times larger than the Australian market. Australia’s manufacturing sector, mainly established post World War II, was not suited to compete. The result was the destruction of numerous sectors of Australian manufacturing and the offshoring of goods production to countries that were cheaper, faster and bigger.
The advent of automation could be Australia’s chance to reinvent a manufacturing sector and bring new economic activity back onshore, but the form might be fundamentally different than big steel, aluminium smelting and automobile manufacturing.
What jobs could emerge?
In automated businesses, robots are the ‘pointy end of the stick,’ but they are not the entire business. While we picture intelligent robots assembling goods in rooms on their own, this is rarely the case. Even with advancements in artificial intelligence and machine learning, automated production lines still require programming, repair and upkeep. They need cleaning, parts replacement and recalibration when new products are brought online. Rapid cycle time for product changes drives demand for new product design. Increasingly, consumers want green products with lighter environmental footprint. The share economy and the use-and-return economy are changing consumer patterns.
An automated economy could deliver new jobs to the Australia, but this manufacturing would be fundamentally different to the last century’s behemoth production lines. New skill requirements mean universities and training institutions must expand their offerings. International businesses may look to Australia as an automated manufacturing hub – a place where cutting-edge technology meets traditional manufacturing. Australia’s finance sector and capital markets are robust. New capital is needed to finance new industrial activities. Sound governance and high reliability already distinguish Australia’s medical devices industry, a high technology, export-focussed sector worth billions of dollars of annual sales and driven with highly innovative domestic intellectual property. Additive manufacturing, also commonly called “3D printing” of parts, combined with digital design, digital ordering and connectivity to domestic and international supply chains could open new value-added markets for conversion of Australia’s rich resources to niche, low-volume, high value goods.
The opportunities could flow on to other sectors. As international businesses seek out Australian expertise, business to business offerings could see an increase in demand. Linkages overseas through existing Australian citizens and their overseas families are enhanced with the high volume of international students passing through the nation’s world-class universities and inbound tourism.
Can Australia be a distributed manufacturing hub in the evolving world economy?
The eyes of the world have been focused on China for the last decade. The country has dominated the financial news, and therefore piqued the interest of global society in general. The same thing happened with America after World War II, and England was the centre of technology during the early Industrial Revolution. Prosperity and innovation make people pay attention. While Australia’s relations with China and the US are good, the ongoing US-China trade war may open opportunities. Brexit and ongoing problems in the EU may also open possibilities. Local manufacturing, products aimed at locally differentiated consumer preferences and local circular economies open possibilities.
A focus on automation could yield a second manufacturing boom for Australia and has the potential to last far longer than the mining boom. Most importantly, the worst fears of the public have already happened. Awkward off-shoring of the metal smelters and steel bashers of the last century is nearly complete. In this next phase, distributed local manufacturing will be more important as supply chains turn towards circular economy models.
We have the chance to set ourselves up for a bright new future in manufacturing that utilises the latest tools, technologies and automation.
This story is featured in the 8 February 2019 edition of The Warren Centre’s Prototype newsletter. Sign up for the Prototype here.