Advanced

Manufacturing
A Roadmap for unlocking future growth
opportunities for Australia
NOVEMBER 2016

www.csiro.au

CSIRO FUTURES CSIRO Futures is the strategic advisory and foresight

arm of Australia’s national science agency.
CSIRO FUTURES ACKNOWLEDGEMENTS
CSIRO Futures is the strategy and innovation advisory We are grateful for the time and input of industry
business of Australia’s national science agency. We representatives consulted throughout this project and the
work with senior decision makers in Australia’s largest many researchers who provided invaluable review and
companies – and government – to help them translate feedback on this report.
science into strategy and plan for an uncertain future.
We would also like to thank the Advanced Manufacturing
We build on CSIRO’s deep research expertise to help
Growth Centre and the Manufacturing Business Unit
our clients create sustainable growth and competitive
Advisory Committee for their input.
advantage by harnessing science, technology
and innovation.
COPYRIGHT AND DISCLAIMER
CSIRO MANUFACTURING © 2016 CSIRO. To the extent permitted by law, all rights
are reserved and no part of this publication covered by
CSIRO Manufacturing plays a leading role as Australian
copyright may be reproduced or copied in any form or by
manufacturing shifts focus from heavy industry to
any means except with the written permission of CSIRO.
high tech products based on sustainable and advanced
processes. We harness our science and engineering
skills, equipment and international connections to keep
Australian manufacturers globally competitive.
CSIRO Foreword

One hundred years ago, Prime Minister Billy Hughes

imagined a national science agency that would “lead
the manufacturer into green pastures by solving for him
problems that seemed to him insoluble” and “open up a
thousand new avenues for capital and labour”. A century
later, today’s CSIRO is still focused on the excellent
science that drives breakthrough innovation, and gives
our businesses and industries the edge in an increasingly
competitive global marketplace. And today, just as Hughes
imagined, we’re still working closely with industry to align
our science with their needs.

We renewed this commitment in our Strategy 2020, which

sets out our vision to be Australia’s Innovation Catalyst
through deep collaboration for the benefit of Australia.
‘Customer First’ is the first pillar of our strategy, and
we’ve prioritised the way we work side‑by‑side with
our customers and partners to tackle the big challenges
facing their industries. We’re committed to responding
with agility and creativity to find the right solutions for
unique projects, and spending more time understanding
the specific requirements of industries and businesses.
This customer-centric approach doesn’t just extend to
how we work with our partners; it is also reflected in our
broader research agenda.

CSIRO conceptualises the major trends shaping Australia’s Responding to the disruption facing every part of the
future, including the Australia 2030 Report, Our Future Australian landscape requires nothing short of deep
World: Global Megatrends report, and the Australian collaboration. We look forward to working closely with
National Outlook. We believe Advanced Manufacturing the Industry Growth Centres as they further map out
has a bright and bold future in this country. This Industry their roads to success. Together, we can apply world-
Roadmap report identifies a range of opportunities that class scientific and technological expertise to our unique
could secure the future competitiveness and success of Australian challenges and chart a course for long term
manufacturing in Australia. But building this future relies sustainable prosperity for our nation.
on a collaborative approach from the research, education,
government, industry and investor communities. CSIRO Dr Larry Marshall
is committed to continuing to channel resources into this CSIRO Chief Executive
effort, including bringing our world-class science and
solutions to the table.

i
AMGC Foreword

It is my pleasure to jointly endorse the CSIRO Roadmap

for Advanced Manufacturing. Working together with
the CSIRO demonstrates that our sector can achieve
greater outcomes when we collaborate as encouraged
and combine our talents to advance manufacturing
in Australia.

In 2015, the Advanced Manufacturing Growth Centre

(AMGC) was formed as part of the Federal Government’s
Industry and Innovation Agenda. Our primary focus is to
ensure we build a relevant, viable and globally competitive
manufacturing sector. This will steer how we meet and
respond to the extraordinary transformation underway
in manufacturing not only here at home, but across
the globe.

We know that manufacturing is changing, and fast.

We now live and transact in a global marketplace where
consumers enjoy an unprecedented abundance of choice,
and where the relentless pace of technological change
continues to push the boundaries of how our goods and
services are made and experienced.

Our manufacturing sector has the potential to seize upon

a larger portion of these new opportunities and markets.
However, in order to do so, we must equally realise that in
many ways our current methods of manufacturing may not Our partnership with the CSIRO has produced two
be taking advantage of the full value of our local resources manufacturing collaboration hubs in Victoria with
to gain that competitive edge, and closely held beliefs on more hubs across Australia to be established in 2017.
what makes us competitive may also need to change. Together, we aim to utilise these hubs as way for firms
to showcase their technology leadership in producing
The AMGC’s Sector Competitiveness Plan (SCP) and this
solutions suitable to link into global supply chains.
Roadmap complement one another in helping Australian
This is one example of collaboration that can make a
manufacturers position for growth and sustainability, with
significant impact beyond our borders and back here to
the SCP providing detailed international competitiveness
our national economy.
benchmarking analysis. Our report reveals compelling
evidence that we can solve fundamental challenges if we I trust that you will find the contents of this report of great
agree as a nation to align behind a well‑chosen number, use as it contains the many essential factors needed for
yet highly effective set of initiatives. Applying a stronger raising our global competitiveness.
emphasis on commercialising our ingenuity, looking to
overseas markets for exports versus relying solely on Dr Jens Goennemann
a domestic market, and most importantly learning to Managing Director
better collaborate across the full spectrum of industry and Advanced Manufacturing Growth Centre Ltd
research organisations.

ii Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Executive
Summary

iii
Executive summary
Vision

Over the next 20 years, Australia’s manufacturing industry will transform into
a highly integrated, collaborative and export-focused ecosystem that provides
high‑value customised solutions within global value chains.

Australian manufacturing can and must be a thriving

component of Australia’s economy through the application A changing global landscape
of advanced manufacturing technologies, systems and
processes. The sector will focus on pre-production Manufacturing markets across the world are being
(design, R&D) and post-production (after-sales services) transformed by both demand and supply side drivers.
value‑adding, sustainable manufacturing and low volume, The megatrends depicted in Figure 1 represent long
high margin customised manufacturing. term shifts in the sector that are creating new business
models, social structures and cultural paradigms.
The development and adoption of digitally connected
To inform strategic decision making today, Australian
technologies is important for all growth opportunities,
manufacturers and their supporting ecosystem
as is the significant shift towards a more collaborative
(industry bodies, suppliers, research, education,
mentality. At the centre of this vision is an ecosystem
investors and governments) must consider what the
where businesses, research, education and customers
global manufacturing landscape will look like over
work together, embracing volatility and the opportunities
the coming decades.
that emerge from it.

FIGURE 1 – GLOBAL MANUFACTURING MEGATRENDS

MADE TO MEASURE
Advances in technology and greater consumer
expectations are causing a shift from mass
production of goods to bespoke solutions

SUPPLY CHAIN SERVICE EXPANSION

TRANSFORMATIONS Manufacturers are expanding
Specialisation is promoting greater their role in the value chain
collaboration in some markets while from making ‘widgets’ to
technological advancements are developing tightly integrated
enabling the vertical integration service-product bundles
of others

SUSTAINABLE OPERATIONS SMART AND CONNECTED

Resource scarcity and increasingly Advances in data capture and analytics
valued environmental and social are optimising operations across
credentials are encouraging the manufacturing value chain and
manufacturers to look for more the factory floor
efficient and sustainable processes
and operating models

iv Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Australia’s competitive landscape Opportunities for growth

Australia’s role in this evolving global landscape will In considering Australia’s competitive position in this
be dependent on the comparative advantages and rapidly changing global market, three broad opportunity
disadvantages of manufacturers and their supportive themes have been identified. These themes are not
ecosystem. Globalisation, digitalisation and the increased mutually exclusive and strategic growth opportunities
demand for more bespoke and complex solutions are exist for manufacturers under each, with the largest
causing Australia’s long-standing disadvantages such falling across all three.
as high labour costs, geographical remoteness and a
small domestic market to be less important. However,
manufacturers are also failing to capitalise on the full Customised high-margin solutions
potential of Australia’s advantages. • DESIGN SERVICES: From bespoke co-design
with customers to manufacturer-less
manufacturing
• SUPERIOR COMPONENTRY:
Globalisation, digitalisation and the increased
From components with improved
demand for more bespoke and complex characteristics to components with
solutions are causing Australia’s long- completely new characteristics
standing disadvantages to be less important. • NOVEL PRODUCTS: From upgrades
to existing products to complex and
integrated novel solutions in health,
defence and aerospace

Sustainable manufacturing
• BUSINESS MODELS AND PROCESSES:
COMPARATIVE From reduced land use and wastage to
DISADVANTAGES closed‑loop material use
COMPARATIVE High labour costs • PRODUCTS: From energy efficient
ADVANTAGES Geographical products to products designed with
remoteness recycling, recovery and collaborative
Education and
research skills Small and dispersed consumption in mind
domestic market
Quality and
standards Risk averse culture Selling services
SMEs Segregated • MAINTENANCE AND REPAIR SERVICES:
national agenda From static monitoring, diagnostics
Access to Asia
Commercialisation and predictive services to ingestible /
Early adopters
Staff training and embedded and intelligent sensors
Political and
development • WORKFLOW MANAGEMENT SERVICES:
economic stability
Digital infrastructure From wearable tracking devices
Natural resources
Public perception and bundling of add-on services to
Intellectual
performance-based contracts and
property laws Quality and quantity
of leaders interactive platforms that allow informed
decision making
• HEALTH AND BIOSECURITY SERVICES:
From discrete monitoring functions to
integrated and continual reporting for
advanced warning

v
Enabling science and technology

Strategic growth opportunities for Australia’s

manufacturing sector will be underpinned and supported In an increasingly competitive global
by significant technological innovation from public landscape, continual improvement and
and private research communities. In an increasingly investment in R&D is the only way to
competitive global landscape, continual improvement and
remain competitive.
investment in R&D is the only way to remain competitive.
The following technologies support product differentiation
through superior and customised attributes; efficiency
improvements across production floors and value chains;
and real-time monitoring for data driven decision making.

TABLE 1 – ENABLING SCIENCE AND TECHNOLOGY SUMMARY

NOW IN THE FUTURE

Sensors and Predominantly used during production Applied across the value chain, including
data analytics (remote monitoring of single attributes such predictive maintenance, logistical tracking
as temperature or flow rates). for operational efficiencies, quality control
and service offering (when integrated into
end product).

Advanced Reactive use to address specific product Proactive integration at early design phase
materials limitations e.g. enhanced durability, weight, to offer multiple novel attributes e.g.
look and feel. biocompatibility, biodegradability, energy
efficiency and self‑repairing.

Smart robotics Replace workers for tasks that are complex, Assistive robots that work collaboratively
and automation high precision, repetitive, dull or hazardous with humans and each other, with improved
e.g. handling operations and robotic welding. sensing, awareness and decision-making
capabilities that allow full autonomy and self-
learning behaviour.

Additive Prototyping and one-off production runs Reduced capital costs will allow greater
manufacturing of customised high-value complex metal adoption of the technology for production
componentry and low-value consumer of complete complex products and
(3D printing)
products, with high capital costs stalling wider associated advanced business models
spread adoption. such as customer‑led design processes and
just‑in‑time production.

Augmented and Predominantly restricted to gaming and Used to overlay product designs with
virtual reality consumer electronic markets, with limited use end-use environments, optimise machine
in the manufacturing sector. settings in the virtual world, facilitate remote
collaboration and train or guide workers
through complex/dangerous tasks.

vi Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Enabling actions

In order to pursue the strategic growth opportunities advantage to international competitors. Together, the
and realise the full potential of their enabling science Australian manufacturing ecosystem has the potential
and technology areas, Australian manufacturers to unlock a new wave of growth; one that builds on
must proactively transform the way they run their Australia’s high-value adding activities in R&D, design and
businesses, investing in new knowledge and practices. after-sales services. Future success will be determined by
Positioning for sustainable growth will require business the decisions made from here forward and the quality of
changes both internally (new skillsets, cultures and the science, technology and business conversations that
operating systems) and externally (participation in global underpin them.
value chains and collaboration models).

Improving Australia’s place in the global manufacturing Positioning for sustainable growth will
sector requires bold innovation leadership and investment
require business changes both internally
now. If Australian businesses do not act today – both
individually and collaboratively – they risk losing access and externally.
to emerging markets and new sources of competitive

TABLE 2 – ENABLING ACTIONS SUMMARY

Global value chains Skills, training and Collaboration

(GVCs) the workforce and culture
BUSINESS ACTIONS

• Promote capabilities internationally • Develop digital literacy, leadership • Increase use of joint-investment
through increased licensing, novel and strategic management, models e.g. pooling of SME funds
sales approaches and targeting GVCs customer interface and STEM skills. and co-investment with research
from product creation stage. organisations.
• Develop programs to improve skills
• Align digital systems with recruitment and development e.g. • Invest in cloud computing and
world‑leading best practice to graduate programs, structured collaborative software to allow
improve interoperability with training courses and site tours. greater value chain communication
global partners. and rapid adaptation to changes
• Increase diversity in the
in demand.
• Increase knowledge sharing workplace – specifically a greater
with experienced Australian representation of young and • Develop business placement
GVC operators. female employees. opportunities for researchers to
enhance knowledge sharing.

ECOSYSTEM ACTIONS

• Address interoperability barriers by • More closely integrate theory and • Improve business access to
implementing more appropriate industry application in tertiary advanced manufacturing research
and sophisticated industry education courses, including facilities for education and early
data standards, in consultation developing additional industry product development.
with companies. placement opportunities for
• Encourage the development
tertiary students.
• Identify and implement effective and of consortia bidding through
streamlined standardised regulation • Promote manufacturing as the government procurement strategies.
and compliance protocols both destination for new creative,
• Support planned co-locations of
within and between jurisdictions. high‑skilled and interdisciplinary
business, research and/or education.
jobs to address public perception
• Conduct social research studies to
issues and attract skilled labour.
better understand and address social
licence to operate issues for the • Develop tailored training
adoption of enabling technologies in courses for the re-skilling of
different global markets. transitioning employees and for
researchers to enhance pitching/
presentation skills.

vii
viii Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Contents

CSIRO Foreword...................................................................................................................... i

AMGC Foreword...................................................................................................................... ii

Executive summary ............................................................................................................... iv

1 Introduction...................................................................................................................... 2
1.1 A vision for Australian manufacturing................................................................................................................3
1.2 This report.............................................................................................................................................................4
1.3 Industry consultation............................................................................................................................................5
1.4 Defining Advanced Manufacturing.................................................................................................................... 6
1.5 Manufacturing in Australia..................................................................................................................................7

2 A changing global landscape.............................................................................................10

2.1 Global Manufacturing Megatrends...................................................................................................................10

3 Australia’s competitive landscape......................................................................................16

3.1 Australia’s Comparative Advantages................................................................................................................. 16
3.2 Australia’s Comparative Disadvantages............................................................................................................ 19

4 Opportunities for growth................................................................................................. 22

4.1 Customised high-margin solutions....................................................................................................................23
4.2 Sustainable manufacturing................................................................................................................................26
4.3 Selling services................................................................................................................................................... 30

5 Enabling science and technology...................................................................................... 36

5.1 Sensors and data analytics.................................................................................................................................38
5.2 Advanced materials........................................................................................................................................... 40
5.3 Smart robotics and automation ........................................................................................................................42
5.4 Additive manufacturing (3D printing).............................................................................................................. 44
5.5 Augmented and virtual reality ......................................................................................................................... 46

6 Enabling business changes............................................................................................... 50

6.1 Global value chains............................................................................................................................................ 50
6.2 Skills, training and the workforce.....................................................................................................................53
6.3 Collaboration and culture..................................................................................................................................56
6.4 Strategic planning...............................................................................................................................................59

7 Conclusion...................................................................................................................... 62
7.1 Enabling actions..................................................................................................................................................62
7.2 Implementation considerations........................................................................................................................63

Appendix............................................................................................................................. 66

ix
x Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Introduction

1
1 Introduction

Globally, the manufacturing sector is changing rapidly,

driven by changing trends and emerging technologies.

These changes are causing the weaknesses that have Investment in science and technology will be core
previously hindered Australian manufacturing – to unlocking new and emerging opportunities, as
high labour costs, geographical remoteness and a small will a greater focus on global markets, improved
domestic market – to be less impactful in the future. recruitment and retention of high-skilled employees and
Advanced manufacturing processes and systems are increased collaboration with other businesses and the
bringing Australia closer to the rest of the world and research community.
opening up markets where the nation has comparative
Australian manufacturing can and must be a thriving
cost advantages.
component of Australia’s economy through the
application of advanced manufacturing technologies,
systems and processes.

VISION
Over the next 20 years, Australia’s
manufacturing industry will transform
into a highly integrated, collaborative
and export‑focused ecosystem that
provides high‑value customised solutions
within global value chains.

2 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
1.1 A vision for Australian manufacturing
Under this vision, Australian manufacturers will be more work together, often in co-located clusters to allow for
customer and export-focussed, deeply integrating within improved transfer of knowledge. These interactions
global value chains. The sector will place greater focus enhance the number and impact of technology
on pre-production (design, R&D) and post-production breakthroughs and increase the rate at which these
(after‑sales services) value-adding, and sustainable and innovations are commercialised.
high margin customised manufacturing (see Figure 2).
Rather than aiming to grow into large businesses,
While the nation will retain its traditional strengths Australian Small and Medium Enterprises (SMEs) shift
such as food product, machinery and equipment from the micro to medium scale, operating within niche
manufacturing, the majority of manufacturing growth markets that supply to multinational organisations as
will come from increased global value chain operations in well as being exporters in their own right. Retaining
aerospace and defence; transport; pharmaceuticals and their agility and adaptability allows Australian SMEs to
medical technologies; scientific instruments; and mining continually meet changing customer demands. While the
equipment, technology and services. global manufacturing market continues to transform,
Australian manufacturers – both big and small – will
The development and adoption of digitally connected
learn to embrace the volatility and build resilience
technologies is important for all growth opportunities,
into their strategic planning. This rate of change is no
as is the significant shift towards a more collaborative
longer feared, but instead seen as an unlimited supply
mentality. At the centre of this vision is an ecosystem
of emerging opportunities.
where businesses, research, education and customers

FIGURE 2 – VISION FOR AUSTRALIAN MANUFACTURING: SHIFT IN FOCUS TOWARDS PRE- AND POST-PRODUCTION VALUE ADDING

3
1.2 This report
This Roadmap seeks to support Australian manufacturing Due to the breadth of sectors and industries impacted
in its transition to a high-value and export-focused by manufacturing, this report highlights three major
sector by understanding current and emerging trends, opportunity themes (rather than specific opportunities)
ascertaining market opportunities and challenges, and for Australia’s manufacturing sector. These themes are
identifying key business and R&D enablers. To achieve this, strongly linked to Australia’s comparative advantages and
CSIRO has worked closely with businesses to develop this the business drivers, potential disruptors and technology
Roadmap which is intended as a bridge between high-level developments of manufacturing globally.
sector strategies and specific technology roadmaps.
To capitalise on these opportunity themes, businesses and
A strong manufacturing sector is central to unlocking the supporting manufacturing ecosystem (industry bodies,
national economic prosperity through its influence suppliers, research, education, investors and government)
on infrastructure development, job creation, R&D, need to invest in a variety of science, technology and
productivity, export earnings, and flow on impacts business enablers. This report discusses these enablers
to other sectors.1,2 As parts of the sector continue to and recommends actions that are designed to best
experience contraction, it is more important than any position Australian manufacturing for the long-term
other time in Australia’s history that manufacturers opportunities identified.
seek out and pursue innovative opportunities to meet
the changing needs of their current and emerging
customers. This will involve focussing on a selection of key
opportunities that play to Australia’s national strengths.

FIGURE 3 – REPORT STRUCTURE

2. A CHANGING 5. ENABLING SCIENCE

GLOBAL LANDSCAPE AND TECHNOLOGY

What technologies
How is global
can help unlock these
manufacturing
4. OPPORTUNITIES opportunities and create
changing? 7. PRIORITY ACTIONS
FOR GROWTH competitive advantage?

What short-term
Where can
3. AUSTRALIA’S 6. ENABLING BUSINESS actions can support
Australia prosper?
COMPETITIVE LANDSCAPE CHANGES these enablers?

What are Australia’s What business changes

strengths and weaknesses are required to realise
in the global landscape? these opportunities?

1 Deloitte (2016). 2016 Global Manufacturing Competitiveness Index, London.

2 Department for Manufacturing, Innovation, Trade, Resources and Energy (2012). Manufacturing Works - A Strategy for driving high value manufacturing in South Australia,
Government of South Australia, Adelaide.

4 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
 1.3 Industry consultation
This industry-led document targets a range of The development of this Roadmap was industry‑led
stakeholders, with the aim of encouraging businesses to with Australian manufacturers – both local and
work cohesively with the entire manufacturing ecosystem global – providing direction and input across all
to address challenges and act on identified enablers. chapters (see A.1 for a list of contributing parties).
Industry consultation consisted of three elements:

CHAPTER KEY AUDIENCE AND PURPOSE INDUSTRY WORKSHOPS

CHAPTER 2 – • Assist businesses in understanding Three workshops were held to bring together
A CHANGING long-term drivers of change and
businesses from a range of manufacturing
GLOBAL disruptive trends that need to be
LANDSCAPE considered in strategic planning. industries and discuss the future opportunities
and needs of the sector over a 20 year time
CHAPTER 3 – • Assist businesses in understanding
AUSTRALIA’S inherent strengths of the sector
horizon. A small number of government,
COMPETITIVE that can be further leveraged, and education and research community
LANDSCAPE barriers that require action, to representatives were also present to provide
unlock opportunities for global
diverse perspectives while still allowing
competitiveness.
manufacturers to drive the conversations.
• Assist industry bodies, research and
governments to improve awareness
of areas where greater business INDUSTRY INTERVIEWS
engagement and joint-solution
development is required. One-on-one interviews were held with
additional manufacturing businesses
CHAPTER 4 – • Direct businesses towards growth
OPPORTUNITIES areas of manufacturing where Australia to supplement, test and refine the
FOR GROWTH can compete over the coming decades. workshop outputs.
• Provide investors, both public and
private, guidance on future growth
areas for Australian manufacturing. INDUSTRY SURVEY
A survey was distributed amongst businesses
CHAPTER 5 – • Improve business awareness of
ENABLING the current state of key enabling and industry bodies to identify Australia’s
SCIENCE AND technologies and the future manufacturing comparative advantages
TECHNOLOGIES possibilities they could unlock if
and disadvantages.
invested in today.
• Provide investors, both public
and private, guidance on
research priorities.

CHAPTER 6 – • Highlight key business issues that are

ENABLING limiting sustainable competitiveness
BUSINESS for the sector.
CHANGES • Provide businesses, research,
education and government
recommendations for
addressing these issues.

CHAPTER 7 – • Provide considerations for businesses,

CONCLUSION industry bodies, research, education,
investors and governments
in planning and implementing
recommendations.

5
1.4 Defining Advanced Manufacturing
Figure 4 outlines the current manufacturing supply
This report defines advanced chain and a selection of the many diverse sectors that
manufacturing industries support. Additional complexity
manufacturing as the set of occurs when delving into each sector’s unique supply
technology based offerings, systems chain, feedback loops and intermediary goods. Advanced
and processes that will be used to manufacturers can be found performing activities from the
initial research and development stage through to after
transition the current manufacturing sale services and increasingly end of life management.
sector into one that is centred on
Advanced manufacturing can be applied equally to
adding value across entire supply traditional manufacturing industries and those that are
chains. Advanced manufacturers being continually discovered through the expansion and
evolution of the sector. For example, an expansion of the
are companies that rapidly create or current supply chain into product disposal or re-use would
adopt these technologies. see a range of advanced manufacturing products, systems
and products be heavily utilised.

FIGURE 4 – SIMPLIFIED CURRENT MANUFACTURING SUPPLY CHAIN

6 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
1.5 Manufacturing in Australia
Australian manufacturing has an important multiplier What is less well publicised is the rise of high value‑adding
effect on the Australian economy, stimulating jobs, advanced manufacturers, who are poised to build
investments and sales in other downstream sectors.3 It has on Australia’s comparative advantages and increase
been estimated that, as a general rule, every $1 generated the sectors contribution to economic growth and
from manufacturing flows through to an additional $1.25 global trade.9 The adoption of advanced manufacturing
expenditure in the rest of the economy.4 However this offerings, systems and processes could see Australian
figure could be significantly improved. businesses enter and create new manufacturing industries.
Companies that invest in these new and innovative
The Australian manufacturing sector has been in a state
directions today will position themselves to lead the
of transition for many decades. Over the past 30 years,
sector into a period of sustainable competitiveness.
Australian manufacturers have been challenged by lower
tariffs, low cost competitors from emerging economies
and rapidly changing technologies. Being so closely
integrated with a wide variety of sectors, manufacturers
are required to constantly adapt to changes in other
MANUFACTURING SNAPSHOT
Australian sectors – such as Australia’s economic base Australia’s Manufacturing Sector in 2014–15
shifting from agriculture to mining and now to services.

Australia’s manufacturing sector is made up of a

disproportionate number of small firms, with 87%
employing between 1 and 19 staff.5 Most of these SMEs do Contributed Exports of Employs
not operate on a global scale, but many have the potential. 6.05% $96.1 856,000
of national GDP billion people
These challenges, coupled with the lack of a clear and
unified direction for future growth, have resulted in a
sustained contraction of many manufacturing industries $98.1 billion Gross Value Added (GVA)
that has led to a decline in share of GDP (8.5% to 6.1% in
the 10 years to 2014-15) and employment which fell by over Australia’s largest manufacturing industries include:
120,000, the most of all Australian sectors over the same Food, beverage and
period.6 In absolute terms, output today is around the tobacco products 27% (of GVA)
same level it was just over a decade ago.7 Machinery, transport
and other equipment 19%
These metrics have been brought to the attention
of the general public through the exit of recognised Metal products 17%
multinational automotive manufacturers,
Petroleum, coal, chemical
causing significant reputational damage to and rubber products 15%
Australian manufacturing.

However these trends are not unique to Australia. Most Manufacturer’s expenditure on
advanced economies have experienced similar declines – research and development reached
although perhaps not as severely as Australia8 – and many
$4.84 billion in 2013–14
of these statistics do not capture the blurring boundaries
between manufacturing and the sectors it supports. Source: ABS (8104.0, 8165.0, 5206, 5368), CSIRO Analysis.

3 Australian Business Foundation (2011). Manufacturing Futures, NSW Business Chamber, Sydney.
4 Australian Industry Group (2006). Manufacturing Futures – Achieving Global Fitness.
5 Department of Industry, Innovation and Science (2016). Manufacturing Data Card - September Quarter 2015, Australian Government. [Online]
Available from: http://www.industry.gov.au/INDUSTRY/MANUFACTURINGPERFORMANCE/Pages/ManufacturingDataCard.aspx Accessed 18/10/2016
6 Department of Industry, Innovation and Science (2016). Manufacturing Data Card - September Quarter 2015, Australian Government. [Online]
Available from: http://www.industry.gov.au/INDUSTRY/MANUFACTURINGPERFORMANCE/Pages/ManufacturingDataCard.aspx Accessed 18/10/2016
7 Reserve Bank of Australia (2016). Bulletin – June Quarter 2016.
8 Reserve Bank of Australia (2016). Bulletin – June Quarter 2016.
9 Withers, G. et al (2015). Australia’s Comparative Advantage, report for the Australian Council of Learned Academies. Melbourne.

7
8 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
A changing
global landscape

9
2 A changing global landscape

Manufacturing markets across the world are being

transformed by both demand and supply side drivers.

On the demand side, emerging economies in Asia and As access to technology continues to grow globally and
other developing regions are rapidly expanding the size developing countries leapfrog intermediary technology
of the consumer pool, adding an additional 1.8 billion stages to compete with developed providers, first-mover
people by 2025.10 At the same time, consumers in technology advantages are becoming short lived if not
developed economies are demanding new products at supported by strong intellectual property. This is creating
increasing speed. While much of the consumer demand a constant need for business evolution and providing new
relates to software (apps and internet connectivity), these forms of differentiation and value adding.
services can only evolve so far without new and advanced
To inform strategic decision making today, Australian
hardware being developed.
manufacturers, the research community and governments
must consider what the global manufacturing landscape
will look like over the coming decades.
Continuing to meet the evolving demands
of developed economies while addressing
the differing needs of new consumers in
developing economies is adding significant 2.1 Global Manufacturing
complexity to the sector.11 Megatrends

On the supply side, advances in technologies such as A megatrend is defined as a substantial shift in social,
additive manufacturing (3D printing), smart materials, economic, environmental, technological or geopolitical
sensors and automation are allowing the development conditions that may reshape the way a sector operates
of new products and services with superior qualities. in the long-run.12 Megatrends occur at the intersection
The digital connectedness of humans and machines of many trends; they are not mutually exclusive and the
across factory floors, supply chains, products and services trends that make up one megatrend can influence or
is changing the way manufacturing businesses shape contribute to another.
their operations, utilise staff, collaborate and continually
CSIRO has identified five megatrends evident in global
improve their offerings.
manufacturing that will have significant impact on the
sector over the next 20 years. These were developed
by applying CSIRO’s Global Megatrends13 to the
manufacturing sector and refining the output with both
research and business communities.

10 Manyka, J. et al (2012). Manufacturing the future: the next era of global growth and innovation. McKinsey Global Institute.
11 Adams, N. et al (2014). Equipping Australian Manufacturing for the Information Age. iManufacturing – Is Australia ready? CSIRO, Australia.
12 Hajkowicz, S. (2015). Global Megatrends – Seven Patterns of Change Shaping Our Future, CSIRO Publishing, Canberra.
13 CSIRO Futures (2016). Australia 2030: Navigating our uncertain future, CSIRO, Canberra.

10 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Global Manufacturing Megatrends

MADE TO MEASURE
Advances in technology and greater
consumer expectations are causing a
shift from mass production of goods
to bespoke solutions

SUPPLY CHAIN SERVICE EXPANSION

TRANSFORMATIONS Manufacturers are
Specialisation is promoting expanding their role in
greater collaboration the value chain from
in some markets while making ‘widgets’ to
technological advancements developing tightly
are enabling the vertical integrated service-product
integration of others bundles

SUSTAINABLE SMART AND

OPERATIONS CONNECTED
Resource scarcity and increasingly Advances in data capture
valued environmental and social and analytics are optimising
credentials are encouraging operations across the
manufacturers to look for more manufacturing value chain
efficient and sustainable processes and the factory floor
and operating models

11
 MADE TO MEASURE SERVICE EXPANSION

Advances in technology and Manufacturers are expanding their

greater consumer expectations role in the value chain from making
are causing a shift from mass ‘widgets’ to developing tightly integrated
production of goods to bespoke solutions. service‑product bundles.

Customers are increasingly demanding Customer demands are shifting away from products and
bespoke solutions that meet their unique towards services and experiences. At the same time, global
needs in place of more generic products. connectedness continues to grow rapidly. This is allowing
This demand is boosted by rising income people, businesses and governments to obtain information,
growth in developing regions as well as the perform transactions and interact with each other, and
billions of people transitioning out of poverty machines, through virtual platforms.
and into middle income classes in BRICS
These drivers are causing manufacturers to shift from a
economies (Brazil, Russia, India, China and
product-focused business model to a client-centric model.17
South Africa).
In order to better understand the needs of their customers,
At the same time, additive manufacturing meet more of their needs and maintain the relationship for
tools, new materials and computer-controlled longer, manufacturing companies are taking greater control
processes are becoming rapidly more available of operations further down the supply chain (closer to the
to manufacturing businesses. This is allowing customer). The Service Expansion megatrend is shifting
the growing customer demands to be met the activities and profit base of manufacturers towards
through the development of highly customised the provision of ongoing services for the products that the
outputs for individuals and niche markets. company supplies.18
In extreme cases, products of one for markets
Also driving this megatrend is an increasing proportion of
of one.14 For many markets, this is seeing a
customers who do not want the financial and environmental
sharp move away from the more traditional
burden of product ownership. Companies like Uber and Airbnb
‘assembly line’ form of production.
have reconceptualised physical products as services through
Advances in ICT are allowing direct customer collaborative consumption, shifting the economics of usage
input into the design phase of their bespoke from product to service, and changing to platform based
solutions, lowering the costs and cycle- business models.19
times of these processes to more closely
Now sectors are beginning to see established corporate
match those of standardisation and mass
businesses adjust to the shift. For example, large
production.15 The Made to Measure megatrend
automakers are launching their own car sharing platforms
will also see more manufacturers build to
such as Ford2Go, DriveNow (BMW) and Park24 (Toyota).
order rather than build to stock, reducing the
These collaborative models incorporate access to products
need for intermediaries that create value by
(cars) with ancillary services such as parking, servicing and
holding inventory.16
tolls. Business models based around this shared use of assets
incentivises manufacturers to provide more robust products
– aligning the incentives of producers and users – and allows
the creation of new service based revenue streams.20

14 Adams, N. et al (2014). Equipping Australian Manufacturing for the Information Age iManufacturing – Is Australia Ready? CSIRO, Australia.
15 Foresight (2013). The Future of Manufacturing: A new era of opportunity and challenge for the UK Project Report, Government Office for Science, London.
16 Hagel, J. et al (2015). The Future of Manufacturing: Making things in a changing world, Deloitte University Press.
17 KPMG (2014). Industrial Manufacturing – Megatrends Research. KPMG Europe LLP.
18 Adams, N. et al (2014). Equipping Australian Manufacturing for the Information Age. iManufacturing – Is Australia ready? CSIRO, Australia.
19 Hagel, J. et al (2015). The Future of Manufacturing: Making things in a changing world, Deloitte University Press.
20 Foresight (2013). The Future of Manufacturing: A new era of opportunity and challenge for the UK Project Report, Government Office for Science, London.

12 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
 SMART AND CONNECTED SUSTAINABLE OPERATIONS

Advances in data capture and Resource scarcity and increasingly

analytics are optimising operations valued environmental and social
across the manufacturing value chain credentials are encouraging
and the factory floor. manufacturers to look for more efficient and
sustainable processes and operating models.
Global manufacturing is being disrupted by the
Internet of Things (IoT)21 – often referred to as the The next 20 years will see the world population
‘Industrial Internet’ (US) or ‘Industrie 4.0’ (Germany/ grow by hundreds of millions of people and the
Europe) when applied to industry. The Internet continued rapid industrialisation of emerging
of Things is a concept that has been evolving for economies. These factors will see demand grow for
over a decade as the number of electronic devices key manufacturing inputs such as energy, minerals
and the number of connections between devices, and water – all of which have limited supply in the
humans and machines, increases. The convergence natural world.
of technologies like sensors, automation, intelligent
Global water demand from manufacturing is forecast
robotics, embedded electronics and their internet
to increase 400% between 2000 and 2050.24
connectivity is enabling the integration of data across
Manufacturing industries also use around 30% of
manufacturing functions and supply chains.22
global energy with demand expected to grow by 40%
On the factory floor, smart equipment, machinery to 83% through to 2050.25
and control systems are becoming increasingly
With growing concerns around the known and
interconnected and constantly measuring and
unknown consequences of greenhouse gas emissions
calibrating themselves to maximise efficiency.
and climate change on natural systems, manufacturers
The next 20 years will see a range of cognitive systems
are also experiencing pressure from their customers
being used in manufacturing that can adapt and learn
who are increasingly demanding products that are
from operating experience. Intelligent robotics are
made sustainably and that operate sustainably –
becoming more affordable and their agility provides
using less energy and fewer materials.26 Increasingly,
manufacturers with competitive advantage through
manufacturers will shift towards lifecycle cost
better quality assurance, management of resources,
management to improve value chain efficiency and
and reduced costs.23
meet customer demands for sustainable operations.
An increasing number of manufacturers are also using
embedded sensors and devices in their products to
monitor performance, diagnose issues and unlock
additional smart service possibilities – an intersection
with the Service Expansion megatrend.

21 Chui, M. et al (2010). The Internet of Things, McKinsey Quarterly, McKinsey&Company.

22 King, S. et al (2014). Make for Asia – The emerging Asian middle class and opportunities for Australian manufacturing, CSIRO, Australia.
23 King, S. et al (2014). Make for Asia – The emerging Asian middle class and opportunities for Australian manufacturing, CSIRO, Australia.
24 OECD (2012). OECD Environmental Outlook to 2050: The consequences of inaction, Highlights. Organisation for economic co-operation and development, Paris.
25 Philibert, C. (2015). Renewable Energies for Manufacturing Industries, RE Industry workshop December 2015, Paris, International Energy Agency. [Online]
Available from: http://www.iea.org/media/workshops/2015/cop21/otherevents/4DecPhilibert.pdf Accessed 18/10/2016.
26 MIT Technology Review (2013). Technology Review May/June. [Online] Available from: http://www.technologyreview.com/magazine/2013/05/

13
 SUPPLY CHAIN TRANSFORMATIONS

Specialisation is promoting greater

collaboration in some markets
while technological advancements
are enabling the vertical integration of others.

Greater demand for customised products is making it

increasingly difficult for manufacturers to meet every need
of all of their customers – limiting the pace of the Service
Expansion megatrend. This is causing many manufacturers
to focus on specialised niches, with the number of both
niches and players growing over time. This fragmentation
is primarily occurring, and will continue to occur, across
markets with high levels of digitisation that are based
around small, non-complex products, largely due to the
reduced transport costs along the supply chain.27

The specialisation of these markets is creating a greater

need and appetite for collaboration as each organisation
only provides part of the final solution. Advances in digital
technology and connectivity are allowing businesses to
organise activities between firms and locations – each
specialising in, and adding value to, a different part of the
supply chain. Research can be conducted in one place,
engineering in another, and manufacturing in a third.28

The globalisation of supply chains and open source software

are also driving collaborative design and development
processes, with open source software/design providing
access to new ideas for design possibilities and new
information on how products are used.29

In markets based around more complex products,

technologies such as 3D printing are causing the
opposite effect. Here, supply chains are being disrupted
and condensed by the integration of multiple stages.
Such technology allows a single company to design,
prototype and manufacture a product in close proximity to
the end user.

27 Hagel, J. et al (2015). The Future of Manufacturing: Making things in a changing world, Deloitte University Press.
28 World Economic Forum (2012). The Future of Manufacturing - Opportunities to drive economic growth, Geneva.
29 Foresight (2013). The Future of Manufacturing: A new era of opportunity and challenge for the UK Project Report, Government Office for Science, London.

14 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Australia’s
competitive landscape

15
3 Australia’s competitive landscape

While Australia’s competitive position can change as a result

of national decisions and sectoral disruptions, the identified
advantages and disadvantages discussed in this section are likely
to be relevant to strategic planning over the next 20 years.

Advantages can be lost if not continually invested in, while The following comparative advantages and disadvantages
disadvantages can become advantages by being prioritised were identified by Australian businesses through the
and addressed. Opportunities that leverage Australia’s industry workshops and survey (see 1.3).
comparative advantages and minimise disadvantages will
be more defendable and sustainable.

3.1 Australia’s Comparative Advantages

EDUCATION AND RESEARCH SKILLS and training.33 This is evident in the number of tertiary
High education levels (vocational and higher education) education and research institutions that perform well
and access to world-class research institutions are above world standard in fields of research relevant to
becoming increasingly important as advances in manufacturing (see Table 3).34 Further, CSIRO ranks in
manufacturing techniques and processes require a more the top 1% of the world’s scientific institutions in 15
skilled and educated workforce. Tertiary level education research fields.35
rates in Australia have grown each year since 2001 and Workshop participants noted that many of Australia’s
are well above the OECD average (37% vs 30%).30,31 brightest graduates – specifically in science, technology,
This is a relatively untapped advantage at present, as many engineering and mathematics (STEM) fields – move into
of the best graduates choose career pathways outside of research organisations that support businesses through
manufacturing and close to half the current manufacturing R&D. Australia’s research community was considered to
workforce is without a post-school qualification.32 be excellent at problem solving for industry, with strong
Globally, Australia is recognised as having a notable expertise in a range of areas including energy, advanced
competitive strength in the access to, and quality of, its materials and additive manufacturing.
education system – ranked 9th for higher education

30 Hajkowicz, S. et al (2016). Tomorrow’s Digitally Enabled Workforce: Megatrends and scenarios for jobs and employment in Australia over the coming twenty years,
CSIRO, Brisbane.
31 OECD (2015). Australian Manufacturing in the Global Economy, Study for the Australian Government, Department of Industry, Innovation, Science,
Research and Tertiary Education.
32 Australian Workforce and Productivity Agency (2014). Manufacturing Workforce Study, Australian Government.
33 Schwab, K. et al (2016). The Global Competitiveness Report 2016–2017, World Economic Forum, Geneva.
34 Australian Research Council (2015). State of Australian University Research 2015–16: Volume 1 ERA National Report, Australian Government. [Online]
Available from: http://era2015.arc.gov.au/ Accessed 18/10/2016
35 Australian Trade Commission (2016). Why Australia – Benchmark Report 2016, Australian Government.

16 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
TABLE 3 – PERFORMANCE OF AUSTRALIAN UNIVERSITIES IN FIELDS OF RESEARCH APPLICABLE TO MANUFACTURING (2015)

NUMBER OF AUSTRALIAN UNIVERSITIES WITH:

PERFORMANCE ABOVE PERFORMANCE WELL ABOVE

FIELD OF RESEARCH WORLD STANDARD WORLD STANDARD

Mathematical Sciences 11 7

Physical Sciences 4 11

Chemical Sciences 13 6

Earth Sciences 14 1

Environmental Sciences 17 9

Biological Sciences 15 4

Information and Computing Sciences 5 4

Engineering 14 5

Technology 6 3

Medical and Health Sciences 18 8

Built Environment and Design 3 0

Source: Australian Research Council 2016

QUALITY AND STANDARDS SMALL AND MEDIUM-SIZED ENTERPRISES

In saturated markets, or markets where quality is (SMEs)
prioritised over cost, Australia can differentiate itself by Being flexible and nimble in a rapidly changing sector is
leveraging its strong reputation for quality and standards. critical to sustaining success. While the pace of change
In the Reputation Institute’s 2016 rankings, Australia was within larger businesses can be impeded by their size,
rated the fourth most reputable country globally.36 SMEs can be more agile and have strong innovation
potential if linked into global markets. Further, larger
From food quality and safety to the operational reliability
businesses typically develop solutions to their problems
of heavy machinery, Australia’s quality assurance
internally whereas SMEs require connections and pooling
protocols, business transparency and reputation for
of knowledge and resources to generate scale or specialise
delivering a high standard of product are valuable
in niches of larger value chains (micro-multinationals).
and recognised attributes in the global marketplace.
Having existing connections and a culture of collaboration
This provides partners and customers with the confidence
will be critical as global customers demand more
that the goods and services developed by Australian
bespoke solutions.
manufacturers are safe and reliable.

36 Reputation Institute (2016). 2016 Country RepTrak – the most reputable countries in the world.

17
Many Australian advanced manufacturers are SMEs rather
than large-scale enterprises.37 In 2015, around 87% of the COMPARATIVE ADVANTAGES
83,000+ manufacturing businesses in Australia employed
between 1 and 19 employees.38 More importantly, in • High educations levels with access to world-class
contrast to large firms these SMEs are innovative by research institutions
OECD standards, ranking 5th out of 29 OECD countries • Strong reputation for quality, safety and reliability
in business innovation.39 While much of this potential • Growing number of innovative SMEs
is yet to be realised, Australia has around 1,000 to 1,500 • Strong ties to emerging and booming
successful micro-multinationals across industries such Asian markets
as defence electronics, medical devices, renewables and
precision engineering.40

ACCESS TO ASIA OTHER COMPARATIVE ADVANTAGES

With China and India emerging as economic powerhouses, Other Australian comparative advantages identified by
new export markets, trade relations and business models industry in workshops and the survey include:
will emerge for Australia. By 2022, China’s middle class
• Early adopters – Australia has a history of being a
alone is expected to rise from 300 million to 630 million,
beta-tester market for new technologies and are early
accounting for 45% of China’s population and consuming
adopters of consumer devices which may encourage
goods and services worth an estimated US$3.4 trillion
international investment and collaboration.
(24% of GDP).41
• Political and economic stability – Australia has a
Australia’s geographic proximity, time zone, free trade stable political system; low levels of terrorism and
agreements and strong business and cultural ties will social unrest; and has demonstrated economic
assist in capitalising on these opportunities. The higher resilience throughout the ‘dotcom crash’ and the
rates of immigration between the two continents has global financial crisis. This stability is attractive to
resulted in a diverse set of Asian language skills being international companies.
present in Australian organisations, with around 2.1 million
• Natural resources – Australia has an abundance of
Australian’s speaking an Asian language. These strong ties
non-renewable resources (natural gas, coal, titanium,
to Asia see international manufacturers look to Australia as
uranium, rare earths) that are used as inputs in a range
a gateway into emerging and booming Asian markets.
of manufacturing processes and product creation.
The nation is also rich in renewable resources (wind,
water, solar) that can be used to sustainably power
manufacturing processes. Australian manufacturers are
in a strong position to utilise these resources directly by
value-adding or indirectly by developing and exporting
systems for their use.
• Intellectual Property (IP) laws – Australia boasts a
strong legal system that supports the creation and
protection of IP and licensing for the commercialisation
of innovations.

37 Withers, G. et al (2015). Australia’s Comparative Advantage, report for the Australian Council of Learned Academies. Melbourne.
38 Australian Bureau of Statistics (2016). 8165.0 - Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015, Canberra. [Online] Available from:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/8165.0 Accessed 18/10/2016
39 Hendrickson, L. et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
40 KPMG (2015). Future state: Australian manufacturing and smart specialisation.
41 Australian Trade Commission (2015). Northern Australia: Emerging opportunities in an advanced economy, Australian Government

18 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
3.2 Australia’s Comparative Disadvantages
Much has been written and discussed about the RISK AVERSE CULTURE
comparative disadvantages of Australian manufacturing With a history of continuous contraction in traditional
in the global context. These discussions typically focus on manufacturing industries and transformation across the
three areas: entire sector, the majority of Australian manufacturers
• High labour costs – making it difficult to compete are finding it difficult to escape a survival mentality.
on price; Businesses are feeling the need to focus on the short-term
as a priority to ensure they will exist in the long-term.
• Geographical remoteness – restricting access to many
Industry workshop participants noted that a complacent
global markets due to high transportation costs; and
‘set in our way’ culture and more conservative approaches
• A small and dispersed domestic market – making it
to investment are further compounding the lack of
difficult to achieve scale and associated economies
strategic planning and action for long-term sustainability
of scale.
and growth.
These characteristics will not disappear in the next 20 Australian manufacturers fear competition rather
years and justify the need for Australian businesses to than thrive on it. Further, many businesses view their
transition their strategic competitive positions towards competitors as other local manufacturers, demonstrating
providing value through differentiation rather than cost a lack of awareness of the global marketplace. This is
and to identify areas where Australian production costs resulting in a reluctance to participate in business-to-
are competitive. For example, Australia has a wage cost business collaboration – a critical factor for innovation
advantage for high-skill workers in aerospace and medical and growth for businesses with small domestic markets.
technologies – around 40% below the US.42

The digitisation of manufacturing and the shift towards SEGREGATED NATIONAL AGENDA
bespoke solutions are causing all three disadvantages to Numerous organisations have been established at the
become less important. Opportunities for growth can be national, state and regional level by both governments
identified where these disadvantages are less relevant or and industry to develop plans and initiatives to strengthen
segments of the market where they act as advantages. various manufacturing industries. While this support and
For example, Australia’s isolation offers advantages in buy-in for manufacturing within Australia is critical for its
terms of pests and disease control for agriculture and future, these organisations have largely been developed
food manufacturing. independently and often have overlapping objectives and
In order to strengthen Australia’s competitive position industry audiences, forcing competition for the same pool
in global manufacturing, businesses, governments and of funds.
research organisations also need to focus on addressing Australia lacks a more streamlined and consistent
comparative disadvantages that can be influenced. bi‑partisan national agenda under which these
The following comparative disadvantages represent organisations can be streamlined and structured.
characteristics of Australian manufacturing that are more This includes the need for greater alignment across
susceptible to change than the three highlighted above. research, business and government regarding priority
industries and associated funding. Best practice examples
include Germany and Japan, where governments establish
The digitisation of manufacturing and and support research and education sectors that are
the shift towards bespoke solutions are more tightly integrated with manufacturing businesses,
causing all three disadvantages to become collaborating to develop innovative solutions to specific
less important. industry needs. Both nations have higher spending on
R&D than Australia.43

42 Advanced Manufacturing Growth Centre analysis.

43 OECD (2016). Gross domestic spending on R&D (indicator). doi: 10.1787/d8b068b4-en [Online]
Available from https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm, Accessed on 18/10/2016.

19
COMMERCIALISATION
COMPARATIVE DISADVANTAGES
Australian manufacturing businesses and researchers are
excellent at solving problems but poor at commercialising
• High number of reactive and risk averse businesses
these innovative solutions. In the 2016 global innovation
• A complex ecosystem with overlapping and
rankings conducted by Cornell University, INSEAD and
inconsistent support
WIPO, Australia ranked 11th for Innovation Input but
27th for Innovation Output, highlighting Australia’s poor • Poor commercialisation of local innovation
performance in translating input into output.44 • Inadequate focus on preparing workforce for
future needs
Two key drivers sit behind this disadvantage. The first is
a relatively small pool of seed funding and capital. While
larger businesses can leverage profits or accumulate
higher debt, Australia’s large share of SMEs are stifled by a
lack of investment in early-stage businesses and ideas. OTHER COMPARATIVE DISADVANTAGES
The second driver is a misalignment in incentives Other Australian comparative disadvantages identified by
between business and research organisations. While industry in workshops and the survey include:
business KPIs focus on revenue and profit, the research
• Digital infrastructure – Australia’s global ranking
community is heavily incentivised by publications rather
for internet speed (average peak connection speed)
than interactions with businesses or commercialisation.
dropped from 30th to 56th between September 2013
This misalignment discourages collaboration and
and July 2016.46,47 Internet speed is a critical enabler
prevents Australian manufacturing from realising the full
to doing business in global supply chains. Digital
commercialisation potential of Australian innovation.
infrastructure is important in all markets as advanced
digital technologies and data analysis become business-
STAFF TRAINING AND DEVELOPMENT as-usual in manufacturing. Businesses anticipate
Australian manufacturers do not capitalise on the full value the rollout of the National Broadband Network will
of staff development, an issue consistently raised in all negate much of this disadvantage, however they also
industry workshops and many survey responses. However, reported that rollout delays are causing them to be at a
analysis has shown that – particularly for micro businesses disadvantage for longer than necessary.
– Australia invests above the OECD average proportion of • Public perception – Much of the Australian public
gross value added into firm-specific on-the-job training.45 believes manufacturing in Australia is dying; partly due
Further investigation is required to determine whether this to the recent well-publicised closure of automotive
contradiction is due to manufacturing being at the low factories. Further, manufacturing is not often thought
end of this national data, or because the investments made of as a desired career path among young students.
in training are not generating value. These factors are limiting the number of quality
Evolving manufacturing business models, technologies students seeking out employment across the spectrum
and processes are rapidly impacting required skillsets, of manufacturing industries thus reducing the injection
however many businesses noted that they require of new ways of thinking into the sector.
more structured and up-to-date training avenues for • Quality and quantity of leaders – With a large portion
maintaining world-class practices and capabilities within of Australia’s manufacturing businesses having ‘family-
their workforce. On-the-job experience based training owned’ roots, those in leadership positions are less
and capability expansion is essential in adapting to likely to have had sufficient external experience to learn
the changing demands on manufacturers as well as in novel or more sophisticated approaches to business
ensuring high retention rates of quality STEM graduates. planning and staff management.

44 Cornell University, INSEAD and WIPO (2016). The Global Innovation Index 2016 – Winning with Global Innovation, Ithaca, Fontainebleau, and Geneva.
45 OECD (2015). OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society, OECD Publishing, Paris.
46 Akamai (2013). Volume 6, Number 3 – The State of the Internet 3rd Quarter, 2013 Report, Cambridge.
47 Akamai (2016). Volume 9, Number 2 – Akamai’s State of the Internet Q2 2016 Report, Cambridge.

20 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Opportunities
for growth

21
4 Opportunities for growth

The rapidly changing market and technology environment creates an impetus for
change, resulting in manufacturing companies and nations that are willing to deploy
new innovations to ensure survival in the future.

In considering Australia’s competitive position in this This section provides example opportunities and case
rapidly changing global market, three broad opportunity studies under each theme discussion to highlight their
themes have been identified – Customised high-margin relevance to the many industries that make up, and
solutions; Sustainable manufacturing; and Selling services. are influenced by, manufacturing. Where businesses
Strategic growth opportunities exist for manufacturers or industries are not leaders in their field, they need
under each of these themes, with the largest falling to pursue opportunities under these themes by being
across all three. ‘fast followers’ through the adoption of technologies
and approaches from overseas.48

TABLE 4 – SUMMARY OF OPPORTUNITY THEMES

OPPORTUNITY THEME

• DESIGN SERVICES: From bespoke co-design with customers to manufacturer-less

manufacturing
Customised
• SUPERIOR COMPONENTRY: From components with improved characteristics to
high-margin
components with completely new characteristics
solutions
• NOVEL PRODUCTS: From upgrades to existing products to complex and integrated
novel solutions in health, defence and aerospace

• BUSINESS MODELS AND PROCESSES: From reduced land use and wastage to
Sustainable closed‑loop material use
manufacturing • PRODUCTS: From energy efficient products to products designed with recycling,
recovery and collaborative consumption in mind

• MAINTENANCE AND REPAIR SERVICES: From static monitoring, diagnostics and

predictive services to ingestible / embedded and intelligent sensors
• WORKFLOW MANAGEMENT SERVICES: From wearable tracking devices and bundling of
Selling services add-on services to performance-based contracts and interactive platforms that allow
informed decision making
• HEALTH AND BIOSECURITY SERVICES: From discrete monitoring functions to integrated
and continual reporting for advanced warning

48 Bell, J. et al (2014). The role of science, research and technology in lifting Australian productivity. Report for the Australian Council of learned Academies, Melbourne.

22 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
4.1 Customised high-margin solutions
THE OPPORTUNITY THEME
Rising income growth in developing regions coupled with DRIVING MEGATRENDS
the increasing expectations of customers in developed • Made to Measure
economies is creating demand for more specialised and • Sustainable operations
customised product offerings. This demand is driven • Supply chain transformations
further by consumer awareness and technology availability
and maturity.

Manufacturing customised solutions provides businesses

with greater opportunities for product differentiation
and increased service bundling (see Selling services Case study
opportunity theme). Integrating customers into the design
of these products can offer increased loyalty, deeper Oventus52
consumer insights and a stronger value proposition.49
An estimated one million Australians suffer from
Customised high value manufacturing creates sleep apnoea, which can lead to high blood
opportunities for larger profit margins across the entire pressure, stroke, irregular heartbeats, heart
value chain; from research and development to after-sale
attacks and diabetes. Traditional treatments can
services and end-of-life management. These solutions
be problematic for patients, with issues such as
are typically manufactured for markets where quality
chronic jaw pain, teeth loosening, teeth wear,
factors (reliability, strength, durability, low weight, in-built
sensors, low defect or failure rate) are valued over cost.
ongoing adjustment or nasal obstruction.
Using a 3D scanner to map a patient’s mouth,
Australian medical device company Oventus,
It has been estimated that 71% of with help from CSIRO, can now print a
mouthpiece which prevents dangerous pauses
consumers interested in personalised
in breath during sleep. Printed from lightweight
products and services would be titanium and coated with a medical grade
willing to pay a price premium, with plastic, the breakthrough O2Vent device is
one in five of these consumers willing customised for each patient. The novel ‘duckbill’
design allows air to flow through to the back of
to pay a premium of 20%.50
the throat, avoiding obstructions from the nose,
the back of the mouth and tongue.
The Oventus O2Vent is effective as a standalone
These solutions are high-skill, technology and R&D technology or can be connected to a continuous
intensive; enabled by emerging state-of-the-art
positive airway pressure machine for more
manufacturing and digital technologies, and usually require
advanced treatment. Attracting a price premium
companies to invest and maintain expert knowledge in
due to its customised fit, the device retails
domains that underpin their products and services.51
This investment in domain knowledge can produce other
for around $1,700 with rebates available from
benefits, including enhanced absorptive capacity and private health insurers.
improved identification of new market opportunities.

49 Deloitte (2015). The Deloitte Consumer Review - Made-to-order: The rise of mass personalisation. Deloitte LLP, London.
50 Deloitte (2015) Press Release: Making it personal – One in three consumers wants personalised products, [Online] Available from: http://www2.deloitte.com/uk/en/pages/
press-releases/articles/one-in-three-consumers-wants-personalised-products.html Accessed 18/10/2016
51 Department for Manufacturing, Innovation, Trade, Resources and Energy (2012). Manufacturing Works - A Strategy for driving high value manufacturing in South Australia,
Government of South Australia, Adelaide.
52 CSIRO Website, Putting sleep apnoea to bed with 3D mouthguard, [Online] Available from: http://www.csiro.au/en/Research/MF/Areas/Metals/Lab22/Mouthguard
Accessed 18/10/2016

23
Why Australia?
Australia is a high-cost country, especially for Case study
manufacturing. Wages, property, energy and transport
costs are comparatively high and are continuing
Carbon Revolution57
to increase. Between 2004 and 2014, Australian
Carbon Revolution pioneered the commercial
manufacturing wages increased by 48%. Along with
production of carbon composite car wheels
decreasing productivity and high exchange rates,
which are made from a single piece of material.
Australian manufacturing is the least cost competitive of
Until recently the wheels have been sold as an
the world’s 25 leading exporting economies.53
after-market product for high-end cars, costing
While these factors make it difficult for Australia to US$15,000 per set. However in 2015 Ford Motor
compete against low-cost economies in low-margin
Company announced a deal that involved
commoditised markets, the nation has a cost advantage
Carbon Revolution supplying wheels for their
when it comes to complex and high value solutions that
high performance Mustang Shelby GT350R,
require innovation and advanced skills – around 40%
cheaper than the US in aerospace and medical technology
making them the first company in the world to
manufacturing.54 Further, customisation decreases the supply mass-produced carbon fibre wheels on
importance of scale economies, helping to address the standard equipment for a major automaker.
limitations of Australia’s small domestic market. The business has invested heavily in in-house
Ranked 5th in the OECD for innovation,55 Australia’s large research and development capabilities as well as
proportion of SMEs are well suited to rapidly adapting to collaborations with local research organisations
changing and divergent customer demands for increased to exceed original equipment manufacturer
customisation. SMEs can also specialise in niches for standards for their products. This has resulted
high-value products, manufacturing highly specialised and in wheels that weigh up to 50% less than
integrated products and componentry for target markets conventional aluminium equivalents and
where Australia has a natural advantage, such as mining,
reduced carbon emissions by up to 6%.
food and agriculture and defence. Through servicing
Looking forward, Carbon Revolution is now
the small domestic market, Australian manufacturers are
investigating opportunities in aerospace and
experienced in profitably manufacturing low volume,
niche products.56
industrial markets.

53 Sirkin, H. et al (2014). The Shifting Economics of Global Manufacturing, The Boston Consulting Group, Boston.
54 Advanced Manufacturing Growth Centre analysis.
55 Hendrickson, L. et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
56 Future Manufacturing Industry Innovation Council (2011). Trends in manufacturing to 2020: A foresighting discussion paper. Canberra.
57 Australian Advanced Manufacturing Council Website, Carbon Revolution, [Online] Available from: http://aamc.org.au/portfolio-items/carbon-revolution/
Accessed 18/10/2016

24 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
INDUSTRY OPPORTUNITIES There may also be opportunities in Australian industries
High-margin customisation presents opportunities that are undergoing contraction. While a lot of heavy
across a range of industries. In medical technologies and industry is moving offshore, investment can make sense
pharmaceuticals for example, quality is often prioritised when targeting niche heavy industry such as components
over cost as personalised devices and medicines require for the Australian Future Submarine Program.
high levels of reliability, durability and bio-compatibility. Table 5 lists a selection of opportunities for Australian
These products are typically at the smaller end of the size manufacturers to produce customised high-margin solutions
spectrum, reducing the cost of exporting goods from across a time horizon.58 These examples demonstrate the
Australia’s geographically remote location. Likewise, in breadth of opportunities across manufacturing industries
defence and aerospace, failure rates must be negligible as well as how the nature and application of these
and premiums can be charged for high quality and opportunities are likely to change over time.
extensive testing of customised products.

TABLE 5 – INDUSTRY OPPORTUNITIES FOR CUSTOMISED HIGH-MARGIN SOLUTIONS

SHORT TERM MEDIUM TERM LONG TERM

(0 – 3 YEARS) (3 – 10 YEARS) (10+ YEARS)

DESIGN SERVICES
From bespoke co-design with customers… …to manufacturer-less manufacuring

• Rapid prototyping services for new • Sensors, actuators and computing • Platforms where customers can send
product and component solutions. hardware that are designed to their electronic designs to shared-
be easily retrofitted to existing access 3D printers and control the
• In-store DIY experiences for consumer
equipment and with legacy entire process.
goods (e.g. personalised jewellery,
software, systems and technologies.
home hardware).
• After-market vehicle customisation
and restoration.

SUPERIOR COMPONENTRY
From components with improved characteristics… …to components with completely new characteristics

• Light-weight carbon fibre composites • 3D printed spare part solutions for • Advanced surface materials
to reduce aircraft weight. out-of-production parts. or integrated sensors that can
communicate operating properties
• 3D printed prosthetics, dental and • 3D printed vehicle componentry
of component or whole product
bone implants. with superior strength, durability
to operator.
and weight characteristics.
• Customised medical instruments and
surgical tools.

NOVEL PRODUCTS
From upgrades to existing products… …to complex and integrated novel solutions
in health, defence and aerospace

• Remotely operated vehicles for • Smart chairs, smart beds, and • Complex 3D printed organs that adapt
extreme environments (e.g. mine smart pillows that will self-adjust and grow with their environments.
sites, fire and rescue, warzones). to minimise pressure points and
• Biomarkers for in-situ disease detection.
optimise comfort.
• Personalised sporting goods
• Self-healing military vehicles
(e.g. golf clubs that are weighted • Self-repairing pipes to reduce
and apparel.
based on user profile). maintenance and shut-down costs
for oil and gas producers. • 3D printed parts that are integrated
• Customised tissue and simple 3D
with smart materials, sent to space,
printed organs used in transplants. • Precision medicines that are
and programmed to self-assemble.
developed by considering
distinct age, genetic and lifestyle • Pipes that expand when
combinations for increased efficacy. demand increases.

58 Time horizons should be viewed as a guide only, with factors such as business maturity and existing capabilities impacting how quickly a business could act on
any given opportunity.

25
4.2 Sustainable manufacturing
THE OPPORTUNITY THEME
The need for sustainable practices and technologies DRIVING MEGATRENDS
in manufacturing is being driven by both demand and • Sustainable operations
supply side pressures. These include competition for • Supply chain transformations
critical and increasingly scarce manufacturing resources • Smart and Connected
such as water, raw materials and energy; declining
productivity; increasing requirements for accountability
and transparency of operations; consumer preferences;
On the product side, demand is increasing for products
and a growing operational impact of social licence.
that contribute to reducing a customer’s environmental
Manufacturing industries have the potential to become a footprint during use, such as electric vehicle technologies,
driving force for realising a sustainable society. A recent water-efficient products, energy-saving consumer
global study found that 59% of executives believe that products, and solar and wind energy products.
sustainability initiatives are improving their growth While demand is present, these product opportunities
and profits, spurring global investment in innovative are often heavily reliant on government off-sets and
sustainable products and processes.59 Opportunities investment in supporting infrastructure.
for creating value in sustainable manufacturing span
Demand for sustainably manufactured products is likely to
the entire supply chain and product lifecycle, including
increase over the coming years, becoming an important
production processes, products and end-of-life disposal/
social licence issue. A range of indices and sustainability
recycling of products.
scales will be developed over the short term that allow
consumers and businesses to easily understand the
sustainability of products and value chains to make
A recent global study found that 59%
informed decisions. Examples that already exist include
of executives believe that sustainability Walmart’s Sustainability Index and the Dow Jones
initiatives are improving their growth Sustainability Index.
and profits, spurring global investment
Opportunities will also emerge for businesses that
in innovative sustainable products embrace the circular economy concept, taking
and processes. responsibility for whole-of-life impacts. Businesses can
achieve step-change improvements to resource efficiency
Sustainable processes can include reducing costs, through waste reduction, recycling, remanufacturing and
resources and emissions through cleaner energy reuse. Although waste intensity61 in the manufacturing
sources and leaner processing techniques; smarter industry has increased 31% between 1996-97 and 2013-14,
design using innovative technologies such as advanced there are signs of growth in the reuse and recycling of
and high performance materials and 3D printing; and manufacturing waste. The value of waste products (waste
maximising efficiency across value chains. Doubling materials with a positive value, e.g. scrap metal) supplied
energy productivity within Australian manufacturing by to the Australian economy increased 18% in the year to
2030 could reduce the cost of the sector’s energy use by 2010-11 to reach $5.4 billion; of which manufacturing
$5 billion per annum.60 accounted for approximately 14% ($741 million).62 In
addition to reducing the costs associated with wastage,
participating in a closed-loop economy can offer
manufacturers exposure to new and potentially untapped
value chain partners.

59 Rigby, D. et al (2015). Management Tools & Trends 2015, Bain & Company.
60 Australian Alliance to Save Energy (2014). Re-energising Australian Manufacturing – Doubling energy productivity by 2030 to improve the competitiveness of the
manufacturing sector, November 2014, Concepts for discussion, Draft version 1.0.
61 Waste intensity is measured in waste (tonnes) generated per million dollars of gross value added (GVA). Waste intensity is a measure of waste generation arising from
economic production. Source: Australian Bureau of Statistics, 4655.0 - Australian Environmental-Economic Accounts, 2016 – Glossary.
62 Australian Bureau of Statistics (2016). 4655.0 - Australian Environmental-Economic Accounts, 2016, Canberra. [Online] Available from: http://www.abs.gov.au/ausstats/
abs@.nsf/mf/4655.0 Accessed 18/10/2016

26 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
The global ‘green market’ (the market for low-carbon
products) has been estimated to be worth over
Case study
US$5 trillion and is expected to grow.63 At present, the
price difference between sustainably manufactured Waste Converters /
goods and more traditional options is large enough to
discourage many from switching, however, this gap will
Smart Recycling68
close significantly in the next decade through technology
Waste timber in the form of pallets takes up
improvements. Failure to adapt to increased transparency
costly space either in the landfill bin or on-site
and stricter government imposed requirements for
storage areas for almost all manufacturers.
sustainability could result in reputational damage and
missed opportunities within these emerging markets.
In 2014FY Australia generated over
500,000 tonnes of timber waste with around
Why Australia? 340,000 tonnes ending in landfill.

Australian businesses are feeling the pressure of Waste Converters / Smart Recycling buy and sell
sustainable manufacturing drivers more so than many second-hand pallets and manufacture reusable
other countries, providing an incentive to be first pallets, skids, crates and boxes. Through the
movers. Australia’s high education levels facilitate greater re-use and re-manufacture of timber pallets,
awareness of sustainability issues which translates they assist over 2,000 local organisations to
into higher levels of domestic demand for sustainably reduce their landfill costs and carbon footprint.
manufactured products. Timber that is unsuitable for packaging or
Accounting for approximately 20% of Australia’s energy resale is mulched to produce a variety of quality
consumption,64 manufacturing is Australia’s largest landscaping mulches.
industrial consumer of electricity and most energy
This business provides customers with a
intensive sector.65,66 With electricity prices increasing over
cheaper source of pallets, reduces their energy
60% for manufacturing businesses over the 10 years to
and landfill costs and creates a sustainable
June 2013,67 companies that become more energy efficient
stand to reduce costs, increase productivity and gain recycling loop. It is estimated that every 1 tonne
competitive advantage. of softwood pallet repaired and re‑used
(~40 pallets) results in a reduction of 0.7 tonnes
In addition to addressing Australia’s resource intensity
of CO2 emissions and 1 tonne diverted
challenges, this opportunity theme is also supported
from landfill.
by national comparative advantages. Australia’s large
land area, abundance of renewable energy sources and
strong agricultural sector positions the nation well for
opportunities in sustainable food and water technologies
and renewables such as wind, hydro and solar.
Australia’s expertise in mineral extraction techniques and
technologies can also be leveraged in the melting and
re‑purposing of discarded or end-of-life metal products.

63 OECD (2011). OECD Sustainable Manufacturing Toolkit – Start-up Guide, [Online] Available from: http://www.oecd.org/innovation/green/toolkit/48704993.pdf
Accessed 18/10/2016
64 Department of Industry and Science (2015). 2015 Australian energy update, Commonwealth of Australia, Canberra.
65 Energy intensity: gigajoules (GJ) of energy consumed per millions of dollars of Industry Gross Value Added.
66 Australian Bureau of Statistics (2016). 4604.0 - Energy Account, Australia, 2013-14, Canberra. [Online] Available from http://www.abs.gov.au/ausstats/abs@.nsf/mf/4604.0
Accessed 18/10/2016
67 Swoboda, K. (2013). Energy prices—the story behind rising costs, Parliament of Australia, [Online] Available from: http://www.aph.gov.au/About_Parliament/
Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook44p/EnergyPrices Accessed 18/10/2016
68 More information about this case study can be found at https://aspire.csiro.au/case-studies/timber-and-pallet-recycling.

27
 INDUSTRY OPPORTUNITIES
Case study Sustainable manufacturing presents opportunities across
a range of industries, particularly those with high water,
Sundrop Farms69,70 waste and energy intensity. For example, the most energy
intensive manufacturing industries in Australia are the
Producing food in the context of a rapidly
primary metal/metal product manufacturing and food
growing global population and increasingly product manufacturing industries. These two industries
limited arable land and fresh water supplies account for 59% and 10% of the total manufacturing
causes many challenges for sustainable food sector’s electricity consumption respectively, yet represent
production. Sundrop Farms is pioneering 2.6% and 12.8% of the total number of manufacturing
sustainable desert horticulture in Australia businesses in Australia.71
with its 20 hectare installation in Port Augusta.
In a first-of-a-kind system, tomatoes are Advanced materials for light weighting
being produced on a large scale using only A kilogram reduction in weight of a short-haul aircraft
seawater and sunlight for power, water, heating can equate to a saving of 80 metric tons of CO2 per year.72
and cooling. Opportunities exist within all industries to find more
A ten-year contract with Coles supermarkets efficient and sustainable material flow systems.
For example, waste from one process, business or industry
to supply 15,000 tonnes of truss tomatoes per
could be used as input to another, older products (or their
annum has provided the basis for securing
components) can be used for lower value purposes, and
$100 million in finance from venture capital
raw materials can be extracted to create new products.
firm KKR, enabling the expansion from pilot
facility to a fully operational 20-hectare farm.
The initial project has been supported by the Advanced materials for light weighting:
SA Government and Clean Energy Finance
A kilogram reduction in weight of a
Corporation. Sundrop now plans to set up
short‑haul aircraft can equate to a saving
similar operations in arid regions around
the world.
of 80 metric tons of CO2 per year.

Table 6 lists a selection of industry opportunities for

Australia to gain from sustainable manufacturing
applications across a time horizon.73 These examples
demonstrate the breadth of opportunities across
manufacturing industries as well as how the nature and
application of these opportunities are likely to change
over time.

69 Straight, K. (2016). Sundrop Farms pioneering solar-powered greenhouse to grow food without fresh water, ABC News. Available from: http://www.abc.net.au/news/2016-
10-01/sundrop-farms-opens-solar-greenhouse-using-no-fresh-water/7892866> Accessed 12/10/2016
70 Vorrath, S. (2016). World-first solar tower powered tomato farm opens in Port Augusta, Renew economy. Available from: http://reneweconomy.com.au/2016/world-first-
solar-tower-powered-tomato-farm-opens-port-augusta-41643 Accessed 7/10/2016
71 Australian Bureau of Statistics (2016). 8165.0 - Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015, Data Cube: Survival of Businesses by Main
State by Subdivision by Turnover Size Ranges, June 2011 - June 2015, Canberra.
72 Air France Case Study (2011). In a world first, Air France organizes lowest CO2 emissions flight. [Online] Available from: http://www.safug.org/assets/docs/case-studies/
air-france1.pdf Accessed 18/10/2016
73 Time horizons should be viewed as a guide only, with factors such as business maturity and existing capabilities impacting how quickly a business could act on any
given opportunity.

28 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
TABLE 6 – INDUSTRY OPPORTUNITIES FOR SUSTAINABLE MANUFACTURING

SHORT TERM MEDIUM TERM LONG TERM

(0 – 3 YEARS) (3 – 10 YEARS) (10+ YEARS)

BUSINESS MODELS AND PROCESSES

From reduced land use and wastage… …to redistribution and closed-loop material use

• Application of continuous flow • Renting out of underutilised • Factories located near value chain
chemistry methodologies to unlock resources (staff, machinery, partners and customers for reduced
easier scaling up/down of operations, equipment, vehicles) to transport and logistics requirements.
footprint reduction, lower energy use other businesses.
• Niche value chain partners who
and just-in-time manufacturing.
• Technologies to reduce heat loss in specialise in the identification,
• Enhanced waste recovery systems process industries. collection and processing of discarded
(e.g. steam from heat used to power products for re-use, re-cycling and
• Software-based energy monitoring
steam turbines). re‑manufacturing.
and planning systems to reduce
• Improved industrial symbiosis where overall energy consumption.
wastes and by-product from one
• Application of just-in-time
industry is used as raw material
production for reduced transport
for another.
and storage requirements.
• Technologies for food waste
processing and re-purposing
(e.g. fuel, feedstock).

PRODUCTS
From energy efficient products… …to products designed with recycling, recovery
and collaborative consumption in mind

• Double-glazing glass for • Robots that specialise in the • Waste material from metal product
thermal insulation (reduced disassembling of discarded or end- manufacturing processed into
energy costs) at residential and of-life assembled products. feedstock for 3D printing.
commercial properties.
• Green building materials (plastics, • Atmospheric energy harvesters
• Lightweight materials for chemicals, cement, steel) for that collect and store ambient and
wind turbines. construction and infrastructure. concentrated forms of naturally
occurring energy.
• Drawing on Australia’s free air space • Large scale energy storage devices
and terrain diversity to develop and from local materials for in-home • Artificial production of protein
test aerial drones for surveillance renewable energy storage. and leather to replace inefficient
activities (e.g. replacing heavy vehicle livestock farming.
• Self-service housing with integrated
use for crop monitoring, worker
recycled water, food waste • Substitution of virgin materials
tracking, transport of small goods).
processing and renewable energy. with secondary materials in medical
• Supercapacitors and efficient products (e.g. intravenous containers).
batteries for hybrid and electric
cars, and miniaturised for Internet
of Things.

29
4.3 Selling services
THE OPPORTUNITY THEME
Customer preferences – both intermediary and end DRIVING MEGATRENDS
users – are shifting away from tangible products and • Service expansion
towards services and experiences. Growth in services • Supply chain transformations
is being driven by ageing key consumer groups in • Smart and connected
developed economies demanding healthcare services and
rising incomes in emerging economies (as the share of
household consumption spent on services increases with
per capita income).74

Globally the average service-providing manufacturer Case study

receives over 30% of sales as services,75 with expansion Detmold77
into services offerings seen as core to growth by 86%
of global manufacturers, largely due to the significantly In 2012, the Detmold Group was approached
higher profitability of service based offerings.76 Service by a multinational food company who were
integration allows manufacturers to create a direct
seeking a high quality end-to-end packaging
relationship with customers. This increases the chance of
solution that could be delivered in a short
loyalty and upselling by being able to better understand
timeframe. From this request, Detmold’s centre
customer needs and by offering a differentiated or
customised product-service bundle which is harder
for R&D, concept creation and rapid prototyping
to imitate. in packaging (LaunchPad) was born.
With studios in Australia and China, the
LaunchPad team provides rapid integrated
Globally the average service-providing product development services, such as design,
manufacturer receives over 30% of sales prototyping, sample making, materials
as services, with expansion into services engineering, artwork and printing. The Detmold
offerings seen as core to growth by 86% Group has invested heavily in equipment and
of global manufacturers, largely due to software, including digital printers capable of
the significantly higher profitability of instant printing on its full range of packaging
service based offerings. materials, and flatbed cutting machines that
can deliver client samples on actual production
materials minutes after design concepts
Providing services requires different selling methods are completed.
and business models to conventional manufacturing
This process allows a business’s lead time
but delivers businesses with additional revenue that
to commercialisation to reduce from over
has traditionally been captured by other value chain
participants such as retailers. This shift will require 12 months to just one day. Detmold has seen
manufacturers to develop their customer interface skills 50% growth since the introduction of LaunchPad
as well as back-end systems that support service-based and a four-fold increase in new clients.
offerings, such as cloud-based customer relationship
management systems.

74 Dobbs, R. et al (2016). Urban World: The global consumers to watch, McKinsey Global Institute, McKinsey & Company.
75 Visnjic, I. and Van Looy, B. (2012). Servitization: Disentangling the Impact of Service Business Model Innovation on the Performance of Manufacturing Firms. ESADE Business
School Research Paper No. 230.
76 Macaulay, J. et al (2015). The Digital Manufacturer – Resolving the Service Dilemma, Cisco, San Jose.
77 Food Innovation Australia Limited (2016). Celebrating Australian Food and Agribusiness innovations.

30 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
The long-term contracts associated with services provide
greater financial stability through more predictable and
Case study
ongoing revenues and costs. Where new products typically
require expensive re-tooling and investment in untried ANCA Tools
technologies, new services often avoid these costs and so
have a lower risk profile for pursuing economic growth.78 ANCA’s multi-axis grinding machines are
enhanced with integrated solutions for
The simplest method of entering the services market is to offer
automation, part measurement and quality
a service that complements an existing product offering, such
as maintenance, support, and installation. This is a relatively
control and machine status monitoring
cheap option for manufacturers to develop the skills, processes and reporting. 
and systems required to be successful in this growing market. ANCA is currently delivering a solution to Japan
More sophisticated models could include collaborative to be integrated into a customer’s unmanned,
consumption or the integration of services at the design factory wide automated production
stage of a product. The most extreme example of the latter system. ANCA machines are fed parts from
is where customers are only buying the product as a way a separate conveyor line – reading a linked
of accessing the service. In this instance, the product might RFID (radio-frequency identification) chip on
even be a loss leader for the service. the part. Using that data, the ANCA machine
accesses the factory is enterprise resource
Why Australia? planning system to retrieve tool information
With commoditised goods markets being dominated specific to the customer’s purchase order
by large and low-cost economies, the services market is and automatically generates the required
particularly crucial for manufacturers in high-cost nations grinding program.
like Australia. Diversifying into the services market is one
solution to the pressure felt by local manufacturers to
In-built measurement systems on the machine
differentiate in order to participate in global value chains. ensure part dimensions are maintained
in tolerance and corrections applied as
Australia’s fast moving and innovative SMEs are another
required. This allows ANCA’s customer to
advantage for this opportunity theme. Australian SME
produce bespoke tools in batch sizes of one,
manufacturers ranked 5th in the OECD for innovation,
all the while running unmanned. By integrating
while Australian SME service sector businesses ranked 7th.79
machines into highly automated production
Manufacturers are well positioned to leverage Australia’s systems, customers can realise significant cost
large pool of services skills, with the services sector
reductions while also reducing lead times to
accounting for 60% of GDP and around 80% of jobs.80
their customers.
The service sector also has experience in selling abroad,
with service exports accounting for almost 20% of total The customer plans to take advantage
exports and growing at a rate of 3.2% annually over the five of ANCA’s newly developed machine
years to 2014.81 Not only do businesses have the potential Management Suite.  This will allow remote, real
to leverage these skills, but the large services market in time production monitoring of the machines,
Australia also generates the required demand to drive as well as machine data collection that can
technological innovations that support service provision.
be used for future process enhancement or
Finally, Australia’s high level of education positions the predictive maintenance activities.
sector well for succeeding in service markets which require
a higher-skilled workforce.

78 KordaMentha (2013). Australian manufacturing – redefining manufacturing, Publication No. 13-03.

79 Hendrickson, L., et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
80 Office of the Chief Economist (2015). Australian Industry Report 2015, Department of Industry, Commonwealth of Australia, Canberra.
81 Department of Foreign Affairs and Trade Website, The importance of services trade to Australia, [Online] Available from: http://dfat.gov.au/international-relations/
international-organisations/wto/pages/the-importance-of-services-trade-to-australia.aspx Accessed 18/10/2016

31
INDUSTRY OPPORTUNITIES Looking to the future, a number of technology
Adding or integrating services to products presents developments will enable new service offerings, including
opportunities for all manufacturers. Service provision increased uptake and application of sensors, smart
is most progressed in industries where Australian devices, additive manufacturing, big data analytics
manufacturers have a strong reputation for quality, and cloud computing.83 For example, the collection,
authenticity and uniqueness. Businesses have already analysis and interpretation of longitudinal medical
begun to extend this trust to their services in aerospace, data through implanted sensors will allow for superior
defence and medical technologies. data‑driven decision-making compared to current
‘snapshot’ diagnostics.
For decades, aircraft engine manufacturers like
Rolls Royce and General Electric have been offering Table 7 lists a selection of industry opportunities for
performance‑based service and logistics agreements Australia to gain from selling services – both domestically
to customers. These services involve a fixed warranty and abroad – across a time horizon.84 These examples
and operational fee for the hours engines are running, are non-exhaustive however demonstrate the breadth of
meaning that in addition to making the product, the opportunities across manufacturing industries as well as
manufacturer takes care of installation, after-sales how the nature and application of these opportunities are
maintenance, repair, overhaul and overall service and likely to change over time.
parts management.82 Customers value a trusted supplier
taking over responsibility and risk for these tasks and
manufacturers can increase profit margins by improving
their efficiency.

82 Deloitte Research (2006). The Service Revolution in Global Manufacturing Industries, Deloitte Development LLC.
83 Rehse, O. et al (2016). Tapping into the Transformative Power of Service 4.0, BCG Perspectives.
84 Time horizons should be viewed as a guide only, with factors such as business maturity and existing capabilities impacting how quickly a business could act on any
given opportunity.

32 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
TABLE 7 – INDUSTRY OPPORTUNITIES FOR SELLING SERVICES

SHORT TERM MEDIUM TERM LONG TERM

(0 – 3 YEARS) (3 – 10 YEARS) (10+ YEARS)

MAINTENANCE AND REPAIR SERVICES

From static monitoring, diagnostics and predictive services… …to intelligent sensors

• Condition monitoring, diagnostics • Multi-site orchestration and control • Sensors directly incorporated into
and predictive maintenance of heavy of autonomous equipment and materials that allow monitoring
machinery (e.g. turbines, engines, vehicles maintenance systems. of equipment and infrastructure
chemical processing equipment, ore properties such as stress or changes
sorting machines). due to heat.

WORKFLOW MANAGEMENT SERVICES

From wearable tracking devices and …to performance-based contracts and interactive
bundling of add-on services… platforms that allow informed decision making

• Incorporation of GPS, imaging and • Remote support services through • Monitoring insights from packing
video feeds in transport tracking light-weight and durable wearable and assembly robots that capture
systems to maximise efficiency across cameras that provide live feed from information on product quality
value chain logistics. onsite field technicians. and counts.
• Monitoring of staff location in • Condition monitoring and • Data collection and analysis of quarry
widely dispersed and/or hazardous diagnostics of a component or wall feeding into autonomous decision
environments (e.g. mines, chemical product across its value chain, making about where to mine next.
plants, oil-fields). providing maintenance and
• Sensor-embedded industrial fridges
scheduling insights.
• Service and logistics agreements for that automate direct ordering and
aerospace engines that involve fixed • Selling the guarantee of transport of food from factory to
fee for installation, testing, training, performance-based metrics in the fridge, based on stock levels.
after-sales maintenance, repair, aerospace sector (e.g. flying time,
• Data analytics of de-identified big data
overhaul and overall servicing. fuel efficiency).
sets that have been collected through
• Online prototyping and design • Algorithms, platforms and processes monitoring services connected to
services for 3D printing. to reduce burden of data cleansing products (e.g. public health analysis or
and integration. product use analysis).
• Service contracts for new mining
equipment products that include • Drone delivered on-demand packages
overhaul, replacement or repair at (food, tools, spare parts).
end-of-life.

HEALTH AND BIOSECURITY SERVICES

From discrete monitoring functions... …to integrated and continual reporting for advanced warning

• Packaging sensors that provide • Ingested or embedded biological • Monitoring of staff health through
condition monitoring for perishable sensors that track the biochemical implanted biosensors in high risk
food across the value chain. health of livestock through industries and workplaces (e.g.
probing biosystems. commercial truck driving, mines,
• Physical and psychological therapy
chemical plants, oil-fields).
performed through virtual reality.
• Embedded sensors in food or
individual packets that report quality
through real-time visual cues.
• Prosthetics controlled by
artificial intelligence.

33
34 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Enabling
science and technology

35
5 Enabling science and technology

Strategic growth opportunities for Australia’s manufacturing

sector will be underpinned and supported by significant
technological innovation from public and private research
communities. Sustained growth in the sector will require proactive
investment and translation of enabling science and technology.

In order to acquire the benefits associated with these Convergence of technologies through innovative
long-term technology breakthroughs, businesses need to combinations will transform industries and generate
plan and invest today. Significant competitive advantage growth greater than the sum of their parts.88
can be gained through the fast and efficient adoption Examples include the convergence of fast DNA sequencing
of new technologies,85 with investment in R&D central and analytics to allow for more precise decisions regarding
to maintaining a strong position in global value chains, patient health, and enhanced computing power and
growing exports and ensuring sector growth.86 robotics to accelerate the automation of manual work.
New disruptive technologies will also come from outside
the manufacturing sector.
In order to acquire the benefits associated This chapter aims to raise business – particularly SME
with these long-term technology – awareness of key enabling science and technology
breakthroughs, businesses need to plan areas for the future of manufacturing in Australia.
and invest today. Each discussion includes a list of research priorities that
describe the challenges that the research community
is currently focussed on and is expected to address or
Looking forward 20 years, it is difficult to understand the overcome in the next decade. Businesses can use the
vast changes that will occur in technology; many of today’s list to better understand current technological barriers,
nascent technologies and ideas will be further developed, benchmark their own preparedness based on their current
however, there will also be completely unforeseen and experience or investments in each area, and consider how
radical changes. One certainty is the importance of upcoming advances could support their operations, create
IoT devices and systems in driving breakthroughs and new IP and unlock new opportunities.
applications across all fields of research. The broader suite
These technologies are applicable across many diverse
of digitally connected technologies has been estimated to
industries, are typically combined in their application
generate productivity gains of 5-8% on average over the
and represent a selection of enablers rather than an
next 5 to 10 years after considering the cost of materials,
exhaustive list.
with industrial component manufacturers who invest
in these technologies estimated to experience up to a
30% improvement.87

85 Williamson, R. et al (2015). Technology and Australia’s future: New technologies and their role in Australia’s security, cultural, democratic, social and economic systems,
Australian Council of Learned Academies, Melbourne.
86 Hendrickson, L. et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
87 Rüßmann, M. et al (2015). Industry 4.0: The future of productivity and growth in manufacturing industries, BCG Perspectives.
88 Hagel, J. et al (2015). The future of manufacturing: Making things in a changing world, Deloitte University Press.

36 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
TABLE 8 – ENABLING SCIENCE AND TECHNOLOGY SUMMARY

NOW IN THE FUTURE

Sensors and Predominantly used during production Applied across the value chain, including
data analytics (remote monitoring of single attributes such predictive maintenance, logistical tracking
as temperature or flow rates). for operational efficiencies, quality control
and service offering (when integrated into
end product).

Advanced Reactive use to address specific product Proactive integration at early design phase
materials limitations e.g. enhanced durability, weight, to offer multiple novel attributes e.g.
look and feel. biocompatibility, biodegradability, energy
efficiency and self‑repairing.

Smart robotics Replace workers for tasks that are complex, Assistive robots that work collaboratively
and automation high precision, repetitive, dull or hazardous with humans and each other, with improved
e.g. handling operations and robotic welding. sensing, awareness and decision-making
capabilities that allow full autonomy and self-
learning behaviour.

Additive Prototyping and one-off production runs Reduced capital costs will allow greater
manufacturing of customised high-value complex metal adoption of the technology for production
componentry and low-value consumer of complete complex products and
(3D printing)
products, with high capital costs stalling associated advanced business models
wider spread adoption. such as customer‑led design processes and
just‑in‑time production.

Augmented and Predominantly restricted to gaming and Used to overlay product designs with
virtual reality consumer electronic markets, with limited use end-use environments, optimise machine
in the manufacturing sector. settings in the virtual world, facilitate remote
collaboration and train or guide workers
through complex/dangerous tasks.

37
5.1 Sensors and data analytics
Sensors measure or detect properties of the environment Data analytics can improve the operational efficiency
they are in and can be configured in many different of the entire manufacturing process, enabling activities
ways – standalone, integrated or embedded into products such as real time productivity monitoring, predictive
or materials, combined with other sensors, wearable maintenance and supply chain optimisation. It is
or implantable. estimated that a big data/advanced analytics approach
to manufacturing can result in a 20 to 25% increase
BENEFITS OF TECHNOLOGY in production volume and up to 45% reduction
in downtime.90
Sensors can detect a vast and growing number of different
properties including physical attributes of products
(temperature, pressure, flow rates), locations and usage MARKET CONSIDERATIONS
patterns.89 This enables real time monitoring, diagnostics, Sensors are becoming cheaper, smaller, lighter and
tracking, control and even automated responses through less energy hungry. With the continued digitisation of
IoT connectivity. the manufacturing sector and advances in materials
While sensors will facilitate an explosion in the amount development, it is expected that one trillion sensors will
of data captured, these advances are relatively useless if be connected to the internet by 2025.91
not accompanied by equal or greater improvements in Globally, the market for sensors in the manufacturing
networking infrastructure and data analytics. The latter sector is estimated at US$8.7 billion in 2016, with
will allow informed and automated decision making to rapid growth expected over the following decade as
create efficiencies across value chains and factory floors, manufacturers invest in factory upgrades.92 Recognised
as well as improving safety, quality control, traceability as an area of opportunity, the ‘Prime Minister’s Industry
and product provenance. 4.0 Taskforce’ was established in early 2016 to help drive
common standards for the industrial internet and define
ways that Australian industrial innovation can be more
connected, and be a more competitive participant in the
future of global manufacturing.93

OPPORTUNITY THEME ROLE OF SENSORS AND DATA ANALYTICS

Customised • Sensors integrated into high-margin products to add to unique selling proposition.
high-margin • Types and combinations of sensors can be integrated into products based on specific needs
solutions of customer.

• Energy monitoring and planning systems during production and intralogistics to reduce overall
Sustainable energy consumption
manufacturing
• Reduced inputs and wastage through operational efficiencies across value chain

• Predictive maintenance, remote monitoring and diagnostics

Selling services
• Data analytics on product usage as a complementary offering to existing products

89 Frost & Sullivan (2016). Global Sensor Outlook 2016, Mountain View.
90 McKinsey Digital (2015). Industry 4.0: How to navigate digitization of the manufacturing sector. McKinsey&Company.
91 World Economic Forum (2015). Deep Shift Technology Tipping Points and Societal Impact, Geneva.
92 Marketsandmarkets (2016). Industrial IOT Market – Global Forecast to 2020.
93 Connolly, J. (2016) Industry 4.0 and Australia’s economic transition, [Online] Available from: https://www.linkedin.com/pulse/industry-40-australias-economic-transition-
jeff-connolly Accessed 18/10/2016

38 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
FUTURE RESEARCH PRIORITIES: CREATING ADVANTAGE THROUGH RESEARCH

Sensor improvements Data analytics

• Self-powering sensors through improvements in • Improved systems for data storage and management
battery developments such as miniaturisation, that can handle the rapidly increasing amount of
increased capacity and density, and the use of data captured.
sustainable sources of energy where available • Improvements in quality of data captured and
(e.g. solar). development of decision making algorithms to
• Wireless connectivity of in-situ remote sensors enable autonomy.
through on-board electronics. • Improved mechanisms for cyber security and data
• Improved durability and sensitivity to function in privacy to ensure data integrity and safety, and more
high temperature, harsh or remote environments valuable and secure data sharing.
while producing reliably calibrated data.
• Improved depth sensors to enable 3D machine vision.
• Combined and integrated sensors to collect multiple
information types and reduce the overall number of
sensors needed.
• Intelligent/smart sensors able to process data on
board, enabling real-time highly accurate decisions
and corrective action.
• Biodegradable and bio-compatible sensors for
use in medical technologies, agriculture, and
environmental monitoring.

39
5.2 Advanced materials
Advanced materials are new or modified materials that MARKET CONSIDERATIONS
have been engineered to provide superior performance R&D for advanced materials is strongly tied to specific
across one or more desired characteristics, including industry problems rather than focussing on broader
weight; strength; formability; conductivity and engineering challenges. With much of the science already
self‑healing properties. possible, and near infinite in application, the key role of
the research community is to identify which combination
BENEFITS OF TECHNOLOGY of techniques is the best to use for any given problem,
Whether fully replacing existing components, or being develop or improve methods for manufacturing, and guide
added as coatings or surface technologies, the use of businesses through the adoption of new materials and
advanced materials can assist with product differentiation processes.
by enabling the creation of customised solutions or by While other technology areas will experience a reduction
adding additional functionality to existing solutions. in unit costs over the next 20 years, the focus for advanced
Advanced materials play a significant role in the materials is instead on expanding the type and number
development and application of most novel science of attributes that materials can possess without a
and technology areas, including those discussed in this change in price.
chapter. The convergence of advanced materials with Innovations in materials over the next 20 years will
these technologies can unlock a number of opportunities, help address some of the key challenges society faces:
including 3D printed biocompatible and biodegradable increasing energy and water use, decreasing health
products; renewable energy storage solutions; and robots and nutrition, and the need for better environmental
that can operate in extreme environments. stewardship and practices. Key markets for advanced
materials include agriculture, infrastructure, electronics,
energy, healthcare and mobility.94

OPPORTUNITY THEME ROLE OF ADVANCED MATERIALS

Customised • Products that offer tailored solutions (novel characteristics) to specific business needs.

high-margin • Biocompatible coatings for high-value customised medical implants.

solutions • Strong, lightweight materials for use in aerospace, automotive and defence.

• Products that use natural resources more efficiently, emit fewer greenhouse gases during
production and provide energy efficiencies.
Sustainable
manufacturing • Biodegradable materials to reduce long-term environmental impact of products.
• Products with longer lifespans due to increased durability and self-repairing properties.

• Nano-materials which gather information about a material’s surroundings, reacting once a

critical state is reached.
Selling services • Customer designed materials with ideal characteristics.
• Continuous data analytics through biocompatible and durable sensors.

94 World Economic Forum (2016). Advanced Materials Systems- Chemistry and Advanced Materials, Geneva.

40 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
FUTURE RESEARCH PRIORITIES: CREATING ADVANTAGE THROUGH RESEARCH

Process improvements Material improvements

• M
ore sophisticated tools for testing and selecting • L ightweight, high strength materials to reduce
the best material science solutions – computer carbon emissions and increase fuel efficiency.
modelling, high throughput screening, visualisation • Novel coatings including: thermal barrier coatings
tools, advanced analytical characterisation (allowing higher operating temperatures),
and analysis. anti‑biofouling coatings (preventing adherence of
• Increased reproducibility through use of flow organisms to a surface), superhydrophobic coatings
chemistry techniques. (repelling water), anti-bacterial, cell-signalling
• Repeatable and scalable production processes and and anticorrosion.
parameters to enable adoption of materials with • Biomaterials for medical applications such as
exceptional physical properties. implants (bone plates, joints, sutures), devices
(pacemakers, blood tubes), and biosensors.
• Computationally designed materials with tailored
properties to allow for predictable performance for
improved safety and cost.
• Smart self-healing and flexible materials that
incorporate sensing functions along with
mechanisms for the fast in-situ repair of damaged
material, and/or the ability to change shape
according to need, whilst displaying appropriate
mechanical and physical properties.
• Combination products made of multiple compatible
advanced materials.

41
5.3 Smart robotics and automation
Smart robotics and automation involves the design, In addition to enabling autonomous robots, automation
construction and operation of robots and the computer technologies can be used in manufacturing to provide
systems that control them. Traditional forms of process control; improved safety, quality and operational
these technologies combine the fields of mechanical efficiencies; and energy and asset management functions.
engineering, electrical engineering and computer science, These improvements along the production process can
however, the next 20 years will see further integration allow Australian manufacturers to become economically
with fields such as material sciences, nanotechnology and competitive with low labour cost countries.
energy harvesting and storage.
Finally, the adoption of robotic solutions can facilitate the
on-shoring of Australian jobs. These solutions can replace
BENEFITS OF TECHNOLOGY tasks that were previously outsourced overseas and often
Industrial robots for manufacturing are used to improve require local support and control.
productivity and operational flexibility (allowing businesses
to run 24-hour production), costs, safety and efficiency
by completing tasks that are complex, high precision,
repetitive, dull or hazardous. Smart robots can be used
to provide assistance to workers or entirely replace
them, allowing workers to move to higher-skilled tasks.
Examples include autonomous self-guiding vehicles,
lightweight robots, tele‑supervised robots and collaborative
robots (cobots).95

OPPORTUNITY THEME ROLE OF ROBOTICS AND AUTOMATION

Customised • Greater precision and complexity for high value products.

high-margin • Higher margins generated through productivity and efficiency improvements.
solutions

• Process optimisation that reduces wastage and consumption of inputs (water and energy), and
Sustainable increases throughput.
manufacturing
• Robots with material sensing, dismantling and sorting capabilities for end of life recycling.

• Bundled offerings where robot (product) is packaged with monitoring, control and data
analytics services.
Selling services • Pay-per-use models for access to robotics technologies.
• Autonomous service delivery (e.g. household appliances, delivery drones).

95 Frost & Sullivan (2016). Evolution of Robotics—Growth Opportunities in the Age of Industrie 4.0, Mountain View.

42 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
MARKET CONSIDERATIONS to spread throughout other manufacturing industries as
Robotics is expected to become as ubiquitous over the robotics converges with other technologies such as data
next decades as computer technology is today.96 In 2014, analytics, sensors and machine learning.
it was estimated that 1.5 million industrial robots were In addition to replacing lower-skilled jobs, robotics
operational globally,97 with automated manufacturing and automation are increasing demand for judgement,
functions constituting approximately 10% of all creativity and problem solving skills, as well as
functions.98 One of the fastest growing segments is mobile more skilled roles in the deployment, operation and
robots – with autonomous self-guiding vehicles expected maintenance of robots. Cobots are expected to see rapid
to grow at an annual rate of 70% by 2020.99 market growth over the short term, creating shared
The key manufacturing industries globally that utilise workplaces in which a human’s intelligence, flexibility
robotics are the automotive and electronics industries, and reasoning is combined with the strength, endurance
with the most popular applications being handling and precision of a robot to increase productivity
operations and robotic welding. Adoption is expected and responsiveness.100

FUTURE RESEARCH PRIORITIES: CREATING ADVANTAGE THROUGH RESEARCH

Industrial robots Software

• A
dvanced materials developments focussing on light • I mprove interoperability across different systems and
weighting, energy harvesting, strength, functionality establish enabling standards.
and structural design of robots. • Improved computational ability with the integration
• Materials development to enable ‘soft robotics’ of machine learning algorithms, sensors, machine
which have a greater range of dynamic actions and vision, big data, cloud technologies and the internet
flexibility, with fewer ‘robotic’ aesthetics. of things to allow robots to autonomously repair,
• Machine vision and sensor developments/ self-calibrate and change behaviour based on
miniaturisation to allow robots to develop perception informed situational decision making.
and situational awareness to safely interact with their • Improved machine-to-machine communication
environments and humans. enabling robots to communicate with each other.
• Increased energy density and miniaturisation of • Development of algorithms that can operate in
batteries for autonomous robots and software to more dynamic environments with fluid rule sets to
optimise the use of on-board power.101 facilitate advances in machine-learning / artificial
• Advanced, more dexterous end-of-arm tooling such intelligence and situational awareness.
as intelligent grippers, servo grippers, vacuum
grippers, jamming grippers, sizing software for
grippers and other application specific grippers.102

96 Georgia Institute of Technology et al (2013). A Roadmap for U.S. Robotics – From Internet to Robotics, 2013 Edition.
97 International Federation of Robotics (2015) World Robotics 2015 Industrial Robots, [Online] Available from: http://www.ifr.org/industrial-robots/statistics/
Accessed 18/10/2016
98 Frost & Sullivan (2016). Evolution of Robotics—Growth Opportunities in the Age of Industrie 4.0, Mountain View.
99 Frost & Sullivan (2016). Evolution of Robotics—Growth Opportunities in the Age of Industrie 4.0, Mountain View.
100 Brea, E. et al (2013). Lightweight Assistive Manufacturing Solutions: Improving Australia’s Manufacturing Competitiveness, CSIRO, Australia.
101 Frost & Sullivan (2016). Power Technologies for Drones and Autonomous Robots (TechVision), Mountain View.
102 Frost & Sullivan (2016). Evolution of Robotics—Growth Opportunities in the Age of Industrie 4.0, Mountain View.

43
5.4 Additive manufacturing (3D printing)
Additive manufacturing (or 3D printing) is a MARKET CONSIDERATIONS
computer‑driven process of manufacturing three It is estimated that in 2015 there were between 100 and
dimensional products from a digital model by laying 150 polymer-based industrial systems and approximately
down successive layers of a material. six installed metal-based industrial systems installed in
Australia.105 While additive manufacturing of plastics
BENEFITS OF TECHNOLOGY is cheaper and more widely adopted in industry
This process allows a reduction in lead times and globally, these low barriers to entry have created
product development cycle times, reduced waste, significant competition and low margins. There is no
and unlocks a myriad of customisation and product clear rationale for Australia to be competing in plastics,
differentiation opportunities. Additive manufacturing however the nation’s abundant mineral resources and
enables the production of complex, high precision and advanced engineering capabilities form a competitive
intricate shapes, providing flexibility in design and advantage for the development of metal-based additive
customisation. This creates the potential for a range manufacturing technologies.
of new products that are not possible with traditional Australia is one of few countries with the potential
manufacturing techniques, with applications across for domestic capabilities in all stages of the metals
almost all end user sectors. While the initial capital additive manufacturing value chain, including: ore
outlay for additive manufacturing machines and input extraction, metal manufacture, powder manipulation,
materials can be considerable, these costs are likely to consolidation, product design and testing, and production.
reduce in the next few years and it is estimated that Australia would face competition from low cost countries
employing these technologies can result in up to 70% cost for the final production stage, however may be able to
savings on prototyping by reducing the requirements for retain this value-adding stage on-shore if it were tightly
tooling.103,104 integrated with the preceding steps.

OPPORTUNITY THEME ROLE OF ADDITIVE MANUFACTURING

• Truly customised product attributes (shape, size, strength, texture, tolerance) to match
Customised customer requirements.

high-margin • Prototyping and product development / refinement (small batch production runs) of
solutions customised and high margin products.
• Rapid prototyping that increases flexibility and tailored product improvement.

• Reduced waste and lower material-intensity compared to subtractive manufacturing techniques.

Sustainable
• Reduced energy and input usage as no requirement for tooling processes.
manufacturing
• Reduced transport and storage requirements through just-in-time production.

• Bundling of services such as customisation, design, prototyping, short-run production and

just‑in-time manufacturing.
Selling services • Design process integrated with, or performed by, customer.
• Increased focus on solutions rather than products.

103 Frost & Sullivan (2016). Strategic Analysis of the Additive Manufacturing Market in Australia, Mountain View.
104 Frost & Sullivan (2016). Emergence of 3D Printing Materials, Mountain View.
105 Frost & Sullivan (2016). Strategic Analysis of the Additive Manufacturing Market in Australia, Mountain View.

44 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Along with new products, additive manufacturing will As the price of additive manufacturing decreases over
facilitate the emergence of new business models, a time, it is expected that technology improvements will
highly skilled and adaptable workforce and increased enable larger product runs, growing from runs of one to
multidisciplinary collaboration. Hyperlocal manufacturing ten, to hundreds then thousands, taking market share from
with printers located near customers is expected to disrupt casting processes and expanding applications beyond
current manufacturing hubs,106 and excellence will require the current manufacturing industries within aerospace,
greater levels of collaboration across a diverse range of automotive and medical technologies.
skills – design and creative thinking, software (e.g. CAD),
engineering and materials science – in all of which
Australia has strengths.

FUTURE RESEARCH PRIORITIES: CREATING ADVANTAGE THROUGH RESEARCH

Process improvements Feedstock improvements

• I mproved quality assurance processes to ensure • A
dvanced materials to enable additive manufacturing
predictable quality, consistency and performance of of parts that exhibit properties that are competitive
printed products. with conventionally made parts (particularly
• Improved monitoring, sensing and feedback control for strength).
to reduce metal movement during layering. • Feedstocks with greater tensile strength, durability,
• More sophisticated, specialised modelling packages flexibility, heat resistance, conductivity and ease
and skills to produce better designs suited to additive of processing.
manufacturing techniques (rather than adaptations • Tailored alloys designed specifically for additive
from subtractive manufacturing). manufacturing processes.
• Increased speed of production and scalability to • Better and cheaper powdered feedstocks from
enable efficient manufacture of large scale industrial improved milling techniques and reduced
products and components. energy requirements.
• Machine advances to enable printing of integrated • Drawing on Australia’s mineral processing
dissimilar materials. IP to develop high quality metallic additive
• Nanoprinting to enable creation of new advanced manufacturing feedstock.
materials (e.g. Graphene). • Biocompatible and biodegradable materials for use
in 3D printed implants.
• Advanced feedstocks for printing of finished goods.

106 Frost & Sullivan (2016). Strategic Analysis of the Additive Manufacturing Market in Australia, Mountain View.

45
5.5 Augmented and virtual reality
Augmented Reality (AR) is the engagement of a user As VR restricts 100% of a person’s ‘real world’ vision, it is
with superimposed computer-generated content over limited in application on the factory floor due to safety
a live view of the physical world, while Virtual Reality issues, however can be used for training simulations
(VR) is an artificial, computer generated interactive and data visualisation applications in the product
environment.107, 108 design phase.

BENEFITS OF TECHNOLOGY MARKET CONSIDERATIONS

Augmented Reality (AR), and to a lesser extent Virtual Gaming and consumer electronic markets are the key
Reality (VR), are emerging as exciting technologies in drivers of developments and research priorities for AR and
the manufacturing sector, with the potential to drive VR and are continuing to push costs downward. The global
productivity, quality and safety improvements on the market for AR is expected to substantially increase over the
factory floor, and increase customer engagement and next five years, estimated to reach nearly US$120 billion by
service provision during product design. 2020, with a faster growing set of applications than VR.110

AR can be used to overlay product designs with their While the use of these technologies in the manufacturing
end-use environments, guide workers through complex or sector is currently minimal, it is expected that uptake will
dangerous processes through field-of-view instructions, reach a critical mass over the medium term (3 – 10 years),
and facilitate remote collaboration or control of remotely with the development of breakthrough systems and
controlled machinery. The technology provides increased content. This is likely to impact the design of both products
situational awareness, informed decision making, cost and and factories, with visual markers built-in to allow AR
process optimisation and improved safety outcomes.109 maintenance further down the track.

OPPORTUNITY THEME ROLE OF AUGMENTED AND VIRTUAL REALITY

Customised • Provides end-user interface for design of customised solutions.

high-margin • AR convergence with additive manufacturing will enable manufacturers to preview digital
solutions designs prior to printing and also visualise and monitor during the printing process.

Sustainable • Improved productivity and worker safety through AR guided processes and VR
training simulations.
manufacturing

• Facilitates immersive customised design and engagement experiences.

• Simulations that provide validation of designs and operations prior to implementation
Selling services or purchase.
• Product troubleshooting / post-sale services.
• Physical and psychological therapy performed through virtual reality.

107 Frost & Sullivan (2016). 5 Key Augmented Reality Trends: Industrial Manufacturing, Mountain View.
108 Frost & Sullivan (2016). Augmented and Virtual Reality Applications in Healthcare, Mountain View.
109 Frost & Sullivan (2016). 5 Key Augmented Reality Trends: Industrial Manufacturing, Mountain View.
110 Jude, M. (2016). Tapping Opportunities in Augmented Reality, Stratecast, Volume 16, Number #31, Frost & Sullivan, Mountain View.

46 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
 FUTURE RESEARCH PRIORITIES: CREATING ADVANTAGE THROUGH RESEARCH

Devices User experiences

• Improved properties for wireless operation such as: • I mproved solutions for haptics (integration of
– Decreased size and weight of headset / on-board touch) and audio integration, such as replacing
tracking systems; standard keyboard and mouse with voice and
gesture commands.
– Improved battery life through increased energy
density and miniaturisation; and • Alignment of different spatial orientations in the
same reality to allow educators and pupils to perform
– Increased pixel transfer and decreased latency.
joint-training/tasks in the same VR space.
• Improved processing power and download size to
• Address social licence to operate issues that are
allow more complex visualisations for longer time
imperative to deployment and adoption of AR
periods.
into industrial use, such as concerns over ethics
• Improved development and integration of camera and privacy with the proliferation of cameras and
devices, such as panoramic and light field cameras to
increase in data.
improve display.
• Improved resolution and frame-rates of display fields
for phone-based AR and head-mounted equipment.
• Advanced sensors for AR such as depth sensors for
3D impact and Natural User Interface (NUI) sensors,
enabling humans to interact with computers in more
natural ways through sensory tracking, speech,
touch, vision, gestures etc.111

111 Frost & Sullivan (2016). Global Sensor Outlook 2016, Mountain View.

47
48 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Enabling
business changes

49
6 Enabling business changes

In order to fully realise the strategic growth opportunities

and their enabling science and technology areas, Australian
manufacturers must proactively transform the way they run
their businesses, investing in new knowledge and practices.

Positioning for sustainable growth will require business

changes both internally (new skillsets, cultures and
6.1 Global value chains
operating systems) and externally (participation in global With a relatively small domestic market and
value chains and collaboration models). increasingly globalised manufacturing value
Many of the challenges and enablers discussed in this chains, Australian manufacturers need to shift
chapter have been known for some time but have been their thinking from local to global customers
difficult to get right. There is no single or fast acting and competitors when strategic planning. Participation in
solution to tackling these challenges. The recommended global value chains (GVCs) has been linked with increased
actions in this section seek to generate incremental innovation; R&D and skills development; collaboration;
progress towards the vision for Australia’s manufacturing sophisticated management, financing and technology
sector. Actions have been separated into ‘business systems; and productivity premiums.112 Global interactions
actions’ (those which manufacturers should proactively also provide businesses with critical exposure to new
lead) and ‘ecosystem actions’ (those to be led by industry technologies, processes and skills.
bodies, suppliers, research, education, investors and Despite these benefits, Australian manufacturing is
governments, in consultation with businesses). typically not well linked into GVCs, ranking below the OECD
median in the OECD’s global value chain participation
index.113 The vast majority of advanced economies saw an
increase in the share of imported content in their exports
from 1995 to 2011 (backward linkages), indicating a stronger
integration into global value chains, while Australia
remained relatively constant.114,115

Australian manufacturing is typically not

well linked into GVCs, ranking below the
OECD median in the OECD’s global value
chain participation index.

112 Hendrickson, L., et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
113 Hendrickson, L., et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
114 OECD (2015). Australian Manufacturing in the Global Economy, Study for the Australian Government, Department of Industry, Innovation, Science, Research and
Tertiary Education.
115 OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society, OECD Publishing, Paris.

50 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
The nation performs more strongly when it comes to Businesses can also enter GVCs by offering free product
forward linkages – the export of domestically produced trials. If the customer is satisfied with the solution they
goods and services – specifically parts and componentry can be invoiced, and if not, no payment is required. Even
rather than goods that are produced wholly within if a sale or longer term contract does not eventuate, the
Australia. Specific industries where the nation has business will still gain valuable experience in a GVC which
an advantage in parts and componentry production can help further refine their offering.
include aircraft parts, parts of earth moving and mineral
Finally, digital interoperability with global partners is
processing machines, and specialised automotive parts.116
crucial. This will require joint efforts across research,
Currently, Australia’s strongest participation in global government and business. Many European countries
value chains (above world median) is in the manufacturing already have national strategies for unlocking digital
of food and basic metals,117 which draw on Australia’s connectivity based opportunities - Industrie 4.0 in
historical strengths in agriculture and mining. Without Germany, the Factory of the Future in France and Italy,
the strong global reputation for quality that these sectors Smart industry in Sweden, and Catapult centres in the
have built, it will be critical for emerging industries and UK.119,120 In March 2016, Germany and the US-based
businesses to build trust with global partners. Attracting Industrial Internet Consortium, announced they would
multinational companies to operate in Australia is work together to set the global course for digitalisation
an important enabler for these businesses, both as a standards.121 Linking Australian industry with these
signalling factor to other international companies and to efforts will not only open up opportunities in these large
facilitate the development of cluster-related activities and international markets but will also address Australia’s own
specialised support services.118 domestic interoperability challenges. The Prime Minister’s
Industry 4.0 Taskforce has been established to ensure
Trust is built through providing quality and on-time
Australian connectivity to global standards in this area.
products and services. For businesses still attempting
to enter GVCs, this reliability can be demonstrated by
approaching potential partners in person, listening to their
needs, revising product prototypes accordingly and quickly
presenting more tailored solutions.

116 Office of the Chief Economist (2016). Global production sharing and Australian manufacturing 2016. Department of Industry, Innovation and Science.
117 Hendrickson, L., et al (2014). Australian Innovation System Report 2014, Department of Industry, Commonwealth of Australia, Canberra.
118 Office of the Chief Economist (2016). Global production sharing and Australian manufacturing 2016. Department of Industry, Innovation and Science.
119 Davies, R. (2015). Briefing - Industry 4.0 – Digitalisation for productivity and growth, European Parliament Research Service.
120 Government Offices of Sweden (2016). Smart industry – a strategy for new industrialisation for Sweden, Stockholm.
121 Connolly, Jeff (2016). Prime Minister’s Industry 4.0 Taskforce, [Online] Available from: https://www.linkedin.com/pulse/prime-ministers-industry-40-taskforce-jeff-connolly
Accessed 18/10/2016

51
 BUSINESS ACTIONS ECOSYSTEM ACTIONS

• Develop strategies for marketing, acquiring • Address interoperability barriers by implementing

and selling products to GVCs from the product more appropriate and sophisticated industry
creation stage. data standards.
• Develop services (e.g. business management • Work with businesses to ensure suitable standards
software for use across value chains or are in place for privacy of data, including appropriate
product‑specific services) that can be used as a handling, ownership and storage.
differentiator to gain access into GVCs before • Identify and implement effective and streamlined
expanding into other offerings. standardised regulation and compliance protocols
• Promote capabilities to global markets by both within and between jurisdictions.
participating in industry-specific international • Conduct social research studies to help businesses
forums, events and trade missions. better understand and address social licence
• Align digital systems with world-leading best practice to operate issues for the adoption of enabling
to improve interoperability with global partners. technologies in different global markets e.g. data
• Connect with businesses who have successfully privacy concerns for sensors and analytics; safety
entered GVCs – either other manufacturing of synthetic advanced materials; or job losses
businesses or businesses from globally integrated associated with smart robotics and automation.
sectors such as agriculture and mining – to leverage • Examine policy settings to attract more global
the lessons learnt from their experiences integrating multinational corporations to operate in Australia,
into GVCs. particularly where it provides emerging businesses
• Implement novel sales approaches such as free trials the opportunity to work in global value chains
and reciprocal arrangements. by servicing local demand and overall benefit to
the nation.
• Increase licensing of technologies to/from
global players. • Develop robust cybersecurity solutions for
manufacturers that act in anticipation to prevent
unauthorised and malicious access to digital
infrastructure (robotics, automation, sensors,
analytics, augmented reality, cloud technologies and
personal devices).
• Develop GVC maps that help businesses identify
global partners.

52 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
6.2 Skills, training and the workforce
SKILLS AND TRAINING • Leadership and strategic management – With a large
Australian manufacturing boasts a talent pool number of family-owned and run manufacturing
of engineers, technicians and designers that businesses, many Australian businesses are led by
are supported by world-class research capabilities. These individuals or teams without significant external
strengths will remain relevant over the next 20 years as experience or more sophisticated approaches to
Australian business models shift focus towards the start business planning and staff management. Visionaries
(design, prototyping) and end (logistics, after-sale services) and entrepreneurs are needed within leadership teams
of manufacturing value chains. of Australian manufacturing businesses to address
the risk averse culture; embracing fast failure and the
Autonomous machines and additive manufacturing lessons that come from it.
are reducing the labour intensity of manufacturing,
significantly lowering the number of low-skilled roles. These leaders need to be supported by strategically
As this trend continues, capabilities that are more difficult minded managers who can help businesses transition
to automate such as the deeply human characteristics of to new business models; improve productivity and
ethics, creativity and intuition will be more important innovation; and invest more time into long term
and highly valued. In manufacturing, these attributes planning. It is also important for these managers to be
will be required by high-skilled knowledge based experts mobile – getting out of the businesses to see first-hand
and decision-makers in performing system planning, the way that other businesses and research institutes
engineering, exception handling, commercial activities, are approaching solutions.
coordination and orchestration.122 • Customer interface – As the line between
Australian manufacturers need to further target the manufacturing and services continues to blur, advanced
development or acquisition of skills in the following areas: manufacturers are forming direct relationships with
end-user customers. The integration of marketing
• Digital literacy – Many Australian manufacturers still and product design will require a higher proportion
use paper-based systems or spreadsheets to track of softer skills to liaise with customers, identify needs
customer information.123 To remain competitive and and earn trust by responding to the feedback acquired
integrate within more complex global value chains, through revised products and services. Customer
advanced manufacturers require more sophisticated engagement staff will also require more front end user
ICT systems and digital infrastructure such as experience knowledge to act as a conduit between
installed fibre optics. In order to realise the benefits consumers and design.
of these platforms, data science and digital skills
will be essential across the value chain, spanning These interpersonal skills will also be critical in enabling
the use of design related software during the R&D stronger levels of business-to-business and business-to-
phase of product development to data analytics and research collaboration. Relationship building is essential
interpretation skills post-sale. to identifying appropriate collaboration partners and
should be paired with strong IP and commercialisation
Digital literacy needs to go beyond strong computer, expertise to ensure fair agreements are made across
coding, mechatronics and data management global value chains.
skills to include expertise in smart data systems,
communications and data interpretation.124

122 World Economic Forum (2015). Industrial Internet of Things: Unleashing the Potential of Connected Products and Services, Geneva.
123 Salesforce research (2016). 2016 Connected manufacturing service report – insights into manufacturing service.
124 CSIRO Website (2014). Australia examines its strengths and sees its future in manufacturing, [Online] Available from: http://www.csiro.au/en/News/News-releases/2014/
Australia-examines-its-strengths-and-sees-its-future-in-iManufacturing Accessed 18/10/2016

53
• STEM – STEM skills are fundamental for advanced There is also a risk that Australia loses critical skills
manufacturing, especially in product design and through the closure of industries (e.g. the automotive
development. It is estimated that 75% of emerging production industry). While many of these workers possess
jobs will require STEM skills and by shifting just 1% skills that can be transferred to higher value‑adding
of Australia’s workforce into STEM roles, GDP could tasks in related industries, closures can also mean a
increase by over $57 billion.125 Research has shown loss of critical mass in demand for certain capabilities,
that students who study STEM are more creative, resulting in downstream impacts on other sectors.
flexible and able to take advantage of the changes For example, the diminished local demand for OEM
that are predicted in the workforce and workplaces of expertise is causing medical technology businesses to
the future.126 source these skills offshore – reducing the transfer of tacit
knowledge and incremental innovation associated with
Australian manufacturers often lack clarity around how
local collaboration.
to best utilise STEM capabilities, with design, modelling
and prototyping being under-represented in their Australia can retain at-risk skillsets by investing in
business operations - reducing the potential demand emerging markets that demand similar capabilities.
for STEM skills. For example, the carbon fibre industry could leverage
Australia’s existing knowledge of car manufacturing
On the supply side, Australia ranks well below the
processes and automation to boost the production of
OECD average when it comes to the number of STEM
carbon fibre composite automotive parts.
graduates as a proportion of total graduates.127,128
Supply is further stifled by manufacturing’s outdated
reputation of being centred upon dull assembly WORKFORCE
lines. Only half of bachelor degree science graduates Despite Australia having a strong
(including mathematics) seeking full-time work had education system that produces quality
found it four months after completing their degree graduates – particularly in STEM fields – around 45% of
(17% below the average for all graduates).129 This figure the manufacturing workforce do not hold any post-school
is significantly improved for engineering graduates qualifications, compared to 39% for all industries.131 This
(around 75%) but still below what is expected of discrepancy will need to be addressed as demand for more
an advanced manufacturing ecosystem. Stronger skilled labour increases.
linkages need to be developed between graduates and
Businesses also need to place greater importance on
manufacturers to prevent demand for STEM capabilities
diversity to ensure an adaptive and innovative workforce.
outweighing supply and forcing Australian businesses
Businesses with gender-diverse management teams
to look offshore for these skills.
outperform peers’ earnings before interest, taxes,
These skills will need to be applied to continually depreciation and amortisation (EBITDA) by 15% and
converging and diverging industries. Many jobs will businesses with ethnically diverse management teams
require workers to have a broader interdisciplinary skillset, outperform peers’ EBITDA by 35%.132
combining deep scientific expertise, software and data
skills with softer skills in leadership, creative problem
solving, communication and collaboration.130

125 PwC (2015). A Smart Move - Future-proofing Australia’s workforce by growing skills in science, technology, engineering and maths (STEM), PwC Australia.
126 Mulcahy, M. (2016). What is STEM and why is it important? CSIRO Blog, 8 September 2016 Available from: https://blog.csiro.au/what-is-stem-and-why-is-it-important/
Accessed 7/11/2016
127 Source uses ‘natural sciences and engineering’ fields of education which correspond to ISCED-97 fields 4 (Science, comprising the life sciences, physical sciences,
mathematics and statistics and computing) and 5 (Engineering, manufacturing and construction).
128 OECD (2015). OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society, OECD Publishing, Paris.
129 Norton, A., & Cakitaki, B. (2016). Mapping Australian higher education 2016, Grattan Institute.
130 World Economic Forum (2015). Industrial Internet of Things: Unleashing the Potential of Connected Products and Services, Geneva.
131 Australian Workforce and Productivity Agency (2014). Manufacturing Workforce Study: Skills to grow competitive, high-end manufacturing, Factsheet,
Australian Government.
132 Mackey, C. (2016). Manufacturing Megatrends, Manufacturers Alliance for Productivity and Innovation (MAPI), Arlington.

54 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Despite the benefits of diversity being widely accepted, risk/change-averse culture and limiting the supply
Australian manufacturing has proved slow in transitioning of newer ways of thinking. However the data does
away from a male dominated workforce. Males make up not strongly support this, with the median age in the
around 73% of the manufacturing workforce, compared manufacturing sector being only two years older than
with around 54% for all industries.133 Anecdotally, the average.134 With younger professionals and graduates
Australian businesses fare better when it comes to being more attracted to pre- and post-production
ethnic diversity. activities such as design, this minor age difference could
be evened out by an increased focus on these activities in
Business sentiments frequently refer to an
the future.
over‑representation of older workers in the workforce,
which were argued to be contributing to the persisting

BUSINESS ACTIONS ECOSYSTEM ACTIONS

• Focus workforce skills development on digital • More closely integrate theory and industry
literacy, leadership and strategic management, application in tertiary education courses, including
customer interface and STEM skills. For example, developing additional industry placement
enhance capabilities in digital platforms for opportunities for tertiary students.
interacting with customers for either design • Promote manufacturing as the destination for
or marketing. new creative, high-skilled and interdisciplinary
• Establish graduate programs with clearer career jobs to negate public perception issues and attract
pathways for the attraction and retention of skilled labour.
graduates, particularly in STEM fields. • Provide training to researchers to enhance their
• Implement more structured training programs skills in pitching/presenting their work to a business
(both course-based and on-the-job) for staff audience in order to enhance collaboration and
development and upskilling. uptake of new technology.
• Develop opportunities for secondary and tertiary • Develop tailored training courses for the re-skilling
education students to tour advanced manufacturing of employees who are transitioning out of closing
workspaces to better promote the sector as an manufacturing industries but have a wealth of
exciting career path and help debunk existing knowledge and experience that can be leveraged in
reputational issues. growing or emerging industries.
• Increase diversity within the workforce (for example
through internal quotas) with a focus on increasing
the proportion of younger personnel and a greater
representation of female employees – particularly in
management and leadership teams.

133 Australian Workforce and Productivity Agency (2014). Manufacturing Workforce Study: Skills to grow competitive, high-end manufacturing, Factsheet,
Australian Government.
134 Australian Workforce and Productivity Agency (2014). Manufacturing Workforce Study: Skills to grow competitive, high-end manufacturing, Factsheet,
Australian Government.

55
6.3 Collaboration and culture
Australian manufacturing will need to undergo substantial FIGURE 5 – COLLABORATION FRAMEWORK138
cultural change in order to realise sustainable growth.
Analysis by the Australian Office of the Chief Economist
shows that only 16% of Australian businesses have a
Exploratory Collective
high performance innovation culture, where innovation development action

Open
is part of the strategy and businesses are outward
Attract and test new Tackle large-scale
orientated.135 To improve manufacturing culture, there partners, test new ideas shared and/or pre-
is a need to enhance the speed at which businesses are in unproven areas competitive challenges

IP approach
moving away from traditional siloed, protectionist and
risk-averse attitudes and towards open, creative and
networked interaction. Obtaining the benefits associated Strategic
with advances in technology and innovation can only be advantage
Tactical
Protected
obtained if businesses are prepared to be less conservative
investment Address fundamental
and embrace change. challenges that can
Address immediate
deliver competitive
operational challenges
advantage at a
Only 16% of Australian businesses have a firm level

high performance innovation culture. Short-term Long-term

Time horizon
Collaboration across the value chain and with research
organisations and government will be more important
than ever before. Most businesses cannot access all the BUSINESS-TO-BUSINESS
information required to be competitive, so the depth COLLABORATION
and quality of a company’s networks and interactions In the long-term, sophisticated
is critical to its competitiveness.136 Further, improved manufacturing industries will operate within
collaboration is required to unlock opportunities around local and global networks that share data, resources
industrial ecology. and processes. This will unlock significant opportunities
for those involved by being able to identify innovative
At present, many collaboration models are overly
solutions faster through pooled knowledge and
formal and deter businesses through complex high-cost
experience. A business’s absorptive capacity – its ability
arrangements. Further, more effort needs to be placed
to identify, assimilate and apply external knowledge for
on promoting successful collaboration arrangements and
commercial benefit – plays a critical role in collaborative
helping manufacturers identify collaboration models that
innovation, inter-organisational relationships and
best fit their needs. ‘Time to outcome’ and ‘IP ownership’
comparative advantage.139
are two variables that are useful to consider when
planning collaboration (see Figure 5). Australia’s strong fear of competition – particularly
from local competitors – needs to be overcome in
Similar to having a portfolio of innovation projects,
order to successfully operate in future global markets.
collaboration efforts can also be evaluated as a portfolio
In the short‑term, focussing on pre-competitive
using the framework. This allows innovation projects/
business‑to‑business collaboration would help
programs to be regularly reviewed to determine the
demonstrate the benefits of collaboration while keeping
most appropriate collaboration model(s) and identify
IP risks minimal. This could be as simple as aggregated
opportunities to move a project between different modes
purchasing for inputs across businesses to achieve
depending on objectives and progress.137
purchasing power and small unit costs.

135 Lalor, A. et al (2015). Australian Innovation System Report 2015, Department of Industry, Commonwealth of Australia, Canberra.
136 Withers, G. et al (2015). Australia’s Comparative Advantage, report for the Australian Council of Learned Academies. Melbourne.
137 CSIRO Futures (2015). Unlocking Australia’s resource potential – Innovation in the energy and mineral resources sector, CSIRO, Canberra.
138 Adapted from: Perkmann, M. and Salter, A. (2012). How to Create Productive Partnerships with Universities, Sloan Management Review. 2012;53(4).
139 Lane, P. and Lubatkin, M. (1998). Relative absorptive capacity and interorganizational learning, Strat. Mgmt. J., 19: 461–477.

56 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
 Another enabling collaboration model is the
joint‑investment in shared capital to minimise the costs of
Case study
depreciation as systems and equipment are being replaced
Competitor at a higher rate than ever before.

collaboration140 In the long-term, as customers demand more tailored and

rapidly delivered solutions, the co-location of value chains
Lack of connectivity not only restricts could provide an advantage in just-in-time manufacturing
underground communications, but also the and provide greater opportunities for knowledge sharing.
ability to communicate vital information
between the surface and mines. The current
standard practice is to have access points along COLLABORATION WITH THE
RESEARCH COMMUNITY
the mine wall to boost the Wi-Fi signal and to
Australia ranks the lowest across OECD
lay fibre optic cabling. Both of these practices
countries in terms of collaboration between
are prone to failure due to the Wi-Fi signal
industry and research.141 Only a small proportion of
being lost or weak, and fibre optic cabling can
Australian manufacturers have a strong awareness and
easily be cut during mining operations.
understanding of the breadth of capabilities that lie within
Nautitech and Northern Light Technologies the research community. Even fewer have structures in
(NLT) were brought together by a mining place to take advantage of these world-class problem
company to solve this problem and developed solving skills and instead rely on limited in-house
R&D functions.
a breakthrough system for underground
communication. The solution combines At the same time, a more customer focused research
Nautitech’s high-bandwidth power line modem community would help to ensure that research projects
with NLT’s Wi-Fi communication system that are aligned to addressing industry’s greatest needs and
withstands harsh mining environments to create target activities that can be commercialised. Even basic/
Wi-Fi hotspots around continuous miners and fundamental research, while having a reduced focus on
commercial outcomes, can assist businesses by showcasing
other equipment.
projects and allowing businesses to identify the
By using portable equipment without wires, commercial possibilities that the research may unlock.
vital coverage is provided in areas where it is
Collaborative hubs or clusters of aligned capabilities
needed most and allows contractor monitoring,
encourage organic knowledge sharing and reduces the
increased worker safety, fleet optimisation, costs of collaboration. Bringing multiple businesses and
machine performance monitoring, autonomous research teams together geographically allows each party
mining and productivity improvements. to see and hear first-hand the problems and solutions
being worked on. Researchers can offer novel solutions to
The businesses developed, allocated and agreed
the business problems they observe and businesses can
well defined and independent engineering task
identify markets for the technology being developed by
lists and met for several information sharing
researchers. Clustering is also attractive to multinational
meetings. As neither business’s product could
businesses as it presents a single site for collaboration.
solve the issue independently, they agreed on the This is already happening in some industries, such as
price of their other’s kit and cross-promoted the South Australia’s aerospace cluster that brings together
products. The prevented issues of IP ownership the Defence Teaming Centre, the Department of State
and opened up additional marketing avenues. Development and the local defence industry to help
connect SMEs with global defence companies.

140 Nautitech (2015). The communications breakthrough boosting safety and productivity in underground coal mining.
141 Ferris, B. et al (2016). Review of the R&D Tax Incentive, Department of Industry, Innovation and Science, Canberra.

57
These clusters facilitate the flow of personnel between While businesses and research institutes should
business and research in both directions. Secondments proactively engage in collaboration for these mutual
allow individuals to be fully integrated into the day-to‑day benefits, government has a role to play in supporting
operations of their potential collaboration partners. these activities. This report does not seek to discuss
This fosters the identification, discussion and solving regulatory or policy environment requirements, noting
of problems in real time through pooled knowledge that the need for more targeted (sector-specific) R&D
and experience. incentives, reducing the compliance costs of initiatives
relative to benefits and improved clarity around the scope
of eligible activities are covered in other reports.142,143

BUSINESS ACTIONS ECOSYSTEM ACTIONS

• Increase the application of joint-investment models • Provide SMEs and start-ups with demonstrations
for combining the funds of SMEs to invest in R&D of, and open access to, cutting edge advanced
projects. For example, pooling funds to pay a larger manufacturing research, tools and technologies to
manufacturer with access to R&D, with all parties see firsthand what is possible and to use in early
sharing the economic outcomes and IP. stage design and development.
• Increase the level of co-investment with research • Identify synergies across research organisations
organisations to better align incentives. For example, to avoid unnecessary duplication of projects and
retain generated IP from jointly-funded projects but equipment, improving clarity for businesses around
license the solution to the research partner to sell to where capability lies.
non-competing businesses. • Encourage the development of consortia bidding
• Increase expenditure on R&D to drive the continual through government procurement strategies.
development of world-leading innovative products • Improve education on the various forms of business-
and solutions. to-business collaboration.
• Invest in cloud computing and collaborative software • Support the co-location of businesses, research
to allow greater connection to GVCs and enable institutes and education providers.
improved business-to-business and business-to-
customer collaboration, allowing manufacturers to
adapt almost instantly to changes in demand.
• Establish additional business placement
opportunities for researchers, making these
secondments part of the core training and
development offering of both parties.
• Establish more formal and structured collaboration
models to reduce dependency on more transient
informal relationships/personnel.

142 Ferris, B. et al (2016). Review of the R&D Tax Incentive, Department of Industry, Innovation and Science, Canberra.
143 Advanced Manufacturing Growth Centre (2016). AMGC Sector Competitiveness Plan.

58 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
6.4 Strategic planning
Each of the enabling business changes discussed need The narrative presented in this report can be continuously
to be key components of individual business strategies. applied at a company level to inform strategic decision
Navigating long-term change requires manufacturers making. Global manufacturing megatrends, opportunities
to constantly assess the way they run their businesses for growth, and enabling science, technology and business
– ensuring that scarce resources (labour, capital) changes can be tailored for individual businesses using the
are appropriately allocated, that business decisions Explore, Choose and Plan steps of the framework depicted
are underpinned with strong underlying market in Figure 6. Scenario planning and input for the Create
and technology assumptions and that innovation is step have been excluded from this report as application is
proactively applied. highly company specific, however additional information
can be found in CSIRO’s Australia 2030 report.

FIGURE 6 – CSIRO FUTURES STRATEGIC PLANNING FRAMEWORK

Explore Choose Plan Create

Future Landscape Future Strategy Future Investments Future Change

• Identify global trends • Understand core • Translate business • Implement R&D

• Identify emerging business and vision into innovation projects, programs
technologies advantages under strategy and and partnerships
different scenarios technology portfolio • Create sustainable
• Build custom
scenarios • Prioritise strategic • Identify skills, value from
initiatives for capabilities and technology
• Identify strategic
business growth resources required • Develop corporate
initiatives for growth
• Align strategic to succeed innovation programs
and disruption
initiatives with long- • Assess technology
term business vision requirements

Continual monitoring and assessment of strategies and projects

59
60 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Conclusion

61
7 Conclusion
7.1 Enabling actions
The following table summarises the key themes from the enabling business changes chapter.
Actions have been separated into business actions (those which manufacturers should proactively lead)
and ecosystem actions (those to be led by industry bodies, suppliers, research, education, investors and
governments, in consultation with businesses).

TABLE 9 – ENABLING ACTIONS SUMMARY

Global value chains Skills, training and Collaboration

(GVCs) the workforce and culture
BUSINESS ACTIONS

• Promote capabilities internationally • Develop digital literacy, leadership • Increase use of joint-investment
through increased licensing, novel and strategic management, models e.g. pooling of SME funds
sales approaches and targeting GVCs customer interface and STEM skills. and co-investment with research
from product creation stage. organisations.
• Develop programs to improve skills
• Align digital systems with recruitment and development e.g. • Invest in cloud computing and
world‑leading best practice to graduate programs, structured collaborative software to allow
improve interoperability with training courses and site tours. greater value chain communication
global partners. and rapid adaptation to changes
• Increase diversity in the
in demand.
• Increase knowledge sharing workplace – specifically a greater
with experienced Australian representation of young and • Develop business placement
GVC operators. female employees. opportunities for researchers to
enhance knowledge sharing.

ECOSYSTEM ACTIONS

• Address interoperability barriers by • More closely integrate theory and • Improve business access to
implementing more appropriate industry application in tertiary advanced manufacturing research
and sophisticated industry education courses, including facilities for education and early
data standards, in consultation developing additional industry product development.
with companies. placement opportunities for
• Encourage the development
tertiary students.
• Identify and implement effective and of consortia bidding through
streamlined standardised regulation • Promote manufacturing as the government procurement strategies.
and compliance protocols both destination for new creative,
• Support planned co-locations of
within and between jurisdictions. high‑skilled and interdisciplinary
business, research and/or education.
jobs to address public perception
• Conduct social research studies to
issues and attract skilled labour.
better understand and address social
licence to operate issues for the • Develop tailored training
adoption of enabling technologies in courses for the re-skilling of
different global markets. transitioning employees and for
researchers to enhance pitching/
presentation skills.

62 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
7.2 Implementation considerations
Most of the actions listed above require a collaborative Transforming Australia’s manufacturing sector is not
effort across at least two sector stakeholder groups. a short-term process, with many industries having
In order to accelerate or improve the impact of these experienced significant challenges for decades. Regardless
actions, a number of considerations must be contemplated of the actions of the sector over the next few years,
by these groups to identify the most efficient and effective positioning Australian manufacturing for sustainable
implementation approach. These considerations include: competitiveness is a long-term play. A consistent and
supportive policy environment is required over the next
• Recognising national differences: This report
decade to provide businesses with stability and allow them
highlights examples of world-leading international
to execute long-term strategies.
manufacturing ecosystems such as Germany and Japan.
It is important to acknowledge that – compared to Relationship building and solution development takes
Australia – these regions have different education time. Industry is acutely aware of its pain points, but
systems, innovation systems, markets, histories and require greater connection with research to understand
cultures. While this report recommends aiming to what science and technology exists that could form
achieve many of their attributes (closely integrated solutions. These connections are equally important for
stakeholders, enhanced collaboration, risk taking and the research community, not just to ensure projects are
consistent government agendas), an exact replication aligned to industry needs, but also because businesses
of their successful systems would be unlikely to work in can assist research in identifying markets for technologies
Australia due to these differences. Instead, the sector under development.
needs to consider which elements of these international
In the long-term, as manufacturers begin to capture
benchmarks could be adapted to suit Australia’s
the economic benefits of their investment in novel
context, and whether novel pathways exist due to
technologies (e.g. cost efficiencies or premiums charged
Australia’s unique competitive landscape.
for enhanced quality), it is important that these funds
• Acknowledging pace of cultural change: It is critical to are reinvested into new forms of innovation rather than
take into account Australia’s high levels of risk aversion ‘banked’. In an increasingly competitive global landscape,
when planning and delivering on these recommended continual improvement and investment in R&D is the only
actions. While the 20 year vision describes an Australian way to remain competitive.
manufacturing ecosystem that takes calculated risks
and invests heavily in novel products, systems and
processes, this represents a significant transformation
from present day. Cultural change is slow, and in order
to achieve this vision, risk incentives (largely provided
by government) need to focus on medium-risk/medium-
reward solutions in the short-term rather than attempt
to incentivise the desired ‘end point’ behaviours.
• Tailoring solutions for SMEs: The vast majority of
Australian manufacturers are SMEs. These businesses
typically have lower levels of collaboration with
research, reduced access to high performing graduates,
and less revenue to invest resources (budget and
personnel) in strategic planning, however the agility
and specialisation of SMEs will be critical in achieving
the 20 year vision for Australian manufacturing. In
implementing the suggested actions, it is important to
ensure solutions are valuable and accessible to SMEs,
and that the research community and larger businesses
are greater incentivised to collaborate with SMEs.

63
64 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
Appendix

65
Appendix
A.1 Contributing parties
A&I Coatings Pty Ltd IXL Group Pty Ltd

Advanced Manufacturing Growth Centre Josie’s Transport Group Pty Ltd

Agri Fibre Industries Pty Ltd Manufacturing Skills Australia

Air Radiators Pty Ltd Marand Precision Engineering Pty Ltd

Ausbiotech Medina Engineering Pty Ltd

Austeng Pty Ltd MiniFAB Australia Pty Ltd

Australian Advanced Manufacturing Council Nautitech Mining Systems Pty Ltd

Australian Manufacturing Technology Institute Limited NSW Business Chamber

(AMTIL)
NSW Department of Industry
Australian National University
Pallion Group Pty Ltd
Baraja Pty Ltd
Plastics and Chemicals Industry Association (PACIA)
Boeing Australia Holdings Pty Ltd
Private Individuals
Bosch (Aust) Pty Ltd
Qenos Pty Ltd
Boundary Bend Olives Pty Ltd
Quickstep Technologies Pty Ltd
Cap-XX Pty Ltd
Rail Manufacturing CRC
Carbon Revolution Pty Ltd
Red Team Research
Ceramisphere Pty Ltd
RedFern Applied
Computer Sciences Corporation (CSC)
Regional Development Australia Sydney
Dow Chemical (Australia) Pty Ltd
Regional Development Victoria
Economic and Industry Development,
Romar Engineering Pty Ltd
Department of State Development (QLD)
Silanna Semiconductor Pty Ltd
Fledge Innovation Labs
South East Melbourne Manufacturers Alliance Inc
Free Engineer
Sutton Tools Pty Ltd
Future First Holdings Pty Ltd
Textor Technologies Pty Ltd
Geelong City Council
Tiller Design Pty Ltd
Geelong Manufacturing Council
Titomic Pty Ltd
HAYS Specialist Recruitment (Australia) Pty Ltd
University of New South Wales
Industrial Control Technology Pty Ltd
Weir Minerals Australia Ltd
Industry Capability Network (ICN)

Integra Systems Pty Ltd

66 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
A.2 Other sector planning documents
The following reports provide deeper insights into some OTHER ROADMAPS IN THE CSIRO SERIES
of the specific manufacturing trends and concepts covered This report is the first of a series of roadmaps that are
in this Roadmap: being developed by CSIRO. Upcoming reports will include:
1. Deloitte (2015). The Deloitte Consumer Review – 1. Medical Technologies and Pharmaceuticals –
Made‑to-order: The rise of mass personalisation, A Roadmap for unlocking future growth opportunities
Deloitte LLP, London. for Australia.
2. McKinsey Digital (2015). Industry 4.0: How to 2. Mining Equipment, Technology and Services –
navigate digitization of the manufacturing sector, A Roadmap for unlocking future growth opportunities
McKinsey&Company. for Australia.
3. World Economic Forum in collaboration with Accenture 3. Food and Agribusiness – A Roadmap for unlocking
(2015). Industrial Internet of Things, World Economic future growth opportunities for Australia.
Forum, Geneva.
4. Oil, Gas and Energy – A Roadmap for unlocking future
4. Visnjic, I. and Van Looy, B. (2013). Servitization: growth opportunities for Australia.
Disentangling the impact of service business model
innovation on manufacturing firm performance. Journal
of Operations Management.

5. OECD (2015). Service-manufacturing linkages in OECD

Science, Technology and Industry Scoreboard, OECD
Publishing, Paris.

6. Office of the Chief Economist (2016). Global production

sharing and Australian manufacturing 2016. Department
of Industry, Innovation and Science.

7. PWC (2016). For US manufacturing, virtual reality is for

real, PWC.

8. The Carbon Trust (2012). Green your business for growth,

The Carbon Trust, London.

67
A.3 Co-contributing funding schemes for
Australian SMEs and start-ups
Many of the activities recommended in this report require investment in R&D. The table below lists national and
state based funding schemes available to Australian SMEs and start-ups that support innovation and commercialisation.144

PROGRAM PROJECT

NAME STATE VALUE SME CONTRIBUTION ELIGIBILITY / NOTES

Innovation Connections All < $50k 1:1 cash • $1.5m - $100m turnover, 3+ years in business.
• Grants available for researcher, business researcher
and graduate placements.

CSIRO SIEF STEM+ Business All < $105k 1:1 cash • $1m - $100m turnover.
p.a.
• Projects delivered by early-career researchers.

Accelerating All < $1 mil 1:1 • < $20m turnover.

Commercialisation
• Funds commercialisation, not research and
development.

ICon Proof of ACT $5k-30k 1:1 cash and/or in-kind • < $2m turnover.
Technology grant

ICon Accelerating ACT $5k-10k 1:1 cash and/or in-kind • < $2m turnover.
Innovation grant

TechVouchers NSW < $15k 1:1 cash • < $30m turnover, < 20 employees, 1+ years in
business.
• Preference for companies not previously engaged in
research.

BISI Innovation Voucher NT < $25k 40% • < 100 employees.

Knowledge Transfer QLD < $50k 1/3 cash • < 200 employees, 2+ years in business.
Partnerships
• Research performed by KTP eligible graduates.

Innovation Voucher SA $10k -$50k 1:2 or 1:1 • < $200m turnover, 1+ years in business.
program
• Contribution 1:2 for SMEs below $5m.

Business Transformation SA < $50k 1:1 cash • 1+ years in business.

Voucher
• Can include developing new business models or R&D.

BioSA Industry SA $50k-250k • Early-stage/start-ups.

Development program repayable
• Bioscience and related industry sectors.

SBDF Start-up SA < $20k 1:1 cash • To contribute to starting a new business or buying a
business grant business.

SBDF Business SA $10k-100k 1:1 cash • < 20 employees, 1+ years in business.

Expansion grant

Innovation Vouchers WA < $20k At least 20% • < $500k turnover, < 200 employees.

144 Current as at October 2016. For more information on the funding schemes available to Australian SMEs and start-ups see CSIRO’s SME Connect Program
http://www.csiro.au/SMEConnect

68 Advanced Manufacturing | A Roadmap for unlocking future growth opportunities for Australia
CONTACT US
t 1300 363 400
+61 3 9545 2176
e csiroenquiries@csiro.au
w www.csiro.au

WE DO THE EXTRAORDINARY EVERY DAY

We innovate for tomorrow and help improve today –
for our customers, all Australians and the world.
Our innovations contribute billions of dollars to the
Australian economy every year. As the largest patent
holder in the nation, our vast wealth of intellectual
property has led to more than 150 spin‑off companies.
With more than 5,000 experts and a burning desire to get
things done, we are Australia’s catalyst for innovation.
WE IMAGINE
WE COLLABORATE
WE INNOVATE

FOR FURTHER INFORMATION

Dr Keith McLean
Director, CSIRO Manufacturing
t +61 3 9545 2599
w www.csiro.au/en/Research/MF
James Deverell
Director, CSIRO Futures
t +61 2 9490 8456
e futures@csiro.au
w www.csiro.au/futures
Simon Hanson
Director, SME Connect
t +61 3 9545 2752
w www.csiro.au/SMEConnect

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