Future of Manufacturing in Australia:

Die. Survive. Thrive.

Managing Director since 1995

Chairman since 2000

Qualified Electrical Engineer

Varley established 1886

Employs 650 people across multiple sites in Australia and overseas

Jeff Phillips – Varley Group

“Making goods or wares by manual labour or machinery.” Macquarie Dictionary

“Transformation of material into new products.” ABS Industry Classification

“The full cycle of activities from research and development, through design, production, logistics and services, to end of life management.” University of

Cambridge's Institute for Manufacturing

Manufacturing is a broad term that covers many technologies, all materials and can be applied to one-off builds or mass reproduction.

Too broad to be easily communicated

What is Manufacturing?

DIE

Who cares if we have a manufacturing sector in Australia?

The Image of Manufacturing

Do we need Manufacturing in Australia?

Australia has always been a primary sector economy

Globalization has commoditised consumer products and created regions of technical expertise

Manufacturing continues to shrink. 1984 – 17% 2014 – 8%

Australia’s high cost base – both labour & materials, regulatory costs, tax, transport

Low R&D and risk adverse seed capital

Buying local is considered uneconomical

Exporting is more difficult to achieve – marketing, transport, travel time

No land connected neighbours & low internal population

Not on any major trade route

Australia is in the wrong location

China has capacity to manufacture for the whole world

China has abundant cheap labour & material

China is investing heavily in education & machinery

The Rise of China

ABS 2013 has Manufacturing- 4th largest component of the Australian economy- 4th largest employer in Australia - 3rd largest export from Australia at $41b- the largest R&D spend at $4.5b

The highest multiplier effect of all sectors at 1.43 (US Research Report, “Manufacturing: An Economic Driver for Jobs and Florida’s Future.” August 2011.)

Promotes high levels of workforce education

China cannot control the world’s distribution channels

But Manufacturing remains Important to Australia

SURVIVE

How do we stay alive as a manufacturer in Australia?

Manufacturing must have a positive perception

Negative talk does not endear supporters

Passion for the business & determination to exist

Adaptability & perseverance to the changing regulatory, economic & technological landscape

Operate with cash reserves & never become reliant upon government assistance

Unlikely to compete with a global product but easier to survive in niche markets

Business will need to be blended – offer a broad spread of products or complementary services

Leadership must have the Will to Exist

Be Close to your Customer

Customization - Identify, design, develop, make and sell products and services that your customer needs!

Have effective after sale warranty, spares & service

Make the customer feel important

Exploit your Strengths

Extremely high labour efficiency

Well educated free thinking workforce

Capitalize on unconventional opportunities

Remain agile for quick change

Globally high acceptance of Australian made goods

THRIVE

How to outgrow Australia?

Control or own desired technology (IP) - local or global

Be a quantum step cheaper in production costs – constantly strive for zero production costs

Ensure that these advantages cannot be easily replicated

Utilize multiple smarter partners to create a new offering

Super Smart or Super Cheap

Foresee the Future

Closely observe your market trends & pick most likely future requirements

Be disciplined with strategic business planning

Exploit market downturns to position for explosive growth in the boom market

Continuously adopt new technologies and materials

Keep business structures that can react quick to disruptive change

Invest in innovation

Borderless Manufacturing

Will Additive Manufacturing transform the world?

How will 3D Printing transform Manufacturing?

Product development can occur in Australia while the manufacture will be done in the country of the customer

Focus will switch to design development & ownership of this IPManufacturing costs will have greater consistency around the world- Energy cost become more

significant - Labour & transport less significant- Material costs should equalise

Manuf. Cost = raw mat. + machine time + comms

Greatly increase speed to market with limitless customization

Is this really Manufacturing?

Removes country of destination import duties/tariffs & meets local content requirements

Negates the need for FTA’s on manufactured goods

By the ABS Definition of Manufacturing this will not be classified as manufacturing

Expedites the shift from physical labour to brain power

So has Australian Manufacturing thrived or died?

THANK YOU