Q&A with Dr Jens Goennemann - Managing Director the Advanced Manufacturing Growth Centre

What is the largest misunderstanding about manufacturing?

The prevailing view that manufacturing is comprised solely of production, or assembly, is simply not true. Manufacturing consists of seven steps across an entire value chain, of which production is just one.

For example, making a vaccine involves all seven steps of the manufacturing value chain:

1. Research and development of an effective vaccine 2. Design of the vaccine 3. Logistics for sourcing ingredients 4. Manufacture of the vaccine 5. Distribution of the vaccine 6. Selling of the vaccine 7. Servicing of the vaccine through monitoring patients

© weyo / AdobeStock_220120304

In this example, health is the sector, and manufacturing is the enabling capability– as it is in every other sector – be it resources, food and agriculture, consumer goods, industrial applications and the list goes on.

Advanced manufacturing is not about the items you make, but how you make it and is an essential capability of a competitive economy.

How will Australia's Manufacturing Industry emerge from COVID-19? COVID-19 has increased the appreciation for a country to be able to make things. This presents the manufacturing industry with the opportunity to further ignite the country’s capabilities, add more value onshore, and become even more globally competitive.

While Australia has been fortunate to escape the significant challenges others have faced as a result of COVID-19, the circumstances have proven that an advanced manufacturing industry is best placed to respond to changing needs. Whether those changing needs are due to a health crisis or not, a broad, wellestablished manufacturing industry is well placed to capitalise on any opportunities.

What sectors will see increases in Australian Manufacturing following COVID-19?

Australia has already identified key areas of national competitiveness that offer comparative growth opportunities, and manufacturing is one of them. These areas of priority also extend to mining, agriculture, food and beverage, pharmaceuticals, med- and bio-tech, defence, energy, and the emerging space sector. We also need to look at waste and how we recycle it better.

Manufacturing as a capability adds tremendous value to all of these sectors. It is about balancing the focus between new sectors and building upon the alreadyidentified sectors of comparative strength. The more value Australian manufacturing can add to each sector, the stronger and more globally competitive our economy will be. I also believe that imported items such as face masks can and should be manufactured in-country. In pre-COVID-19 times, the mining and construction industry used 10-20 million P2-masks per month. Given such baseload, I like to think that there is a business case for making those masks here. However, it is important that such endeavours are economically viable and not a case for subsidies.

How has AMGC assisted its members before and during the crisis? AMGC commenced working to transform Australia’s manufacturing industry four years before the pandemic, encouraging manufacturers to shift their mindset to; become more resilient, collaborate, make superior goods, become more flexible and compete on value, not cost. Our long-term approach is evidenced by a portfolio of projects. To-date, AMGC has facilitated 70 projects with a total cofunding investment of $47 million. These projects are expected to create 2,100 new jobs and deliver up to $900 million in additional revenues – all are great examples of manufacturing best practice and represent a significant return on investment.

Throughout COVID-19, AMGC managed over 2,500 submissions from manufacturers and others, via the COVID-19 Manufacturer

Response Register, who stepped up to help respond to the crisis, focusing on areas of critical need including ventilators, hospital beds, and PPE. The dedication and reaction of manufacturers, many AMGC members, to the crisis underlined the strength, agility and collaborative nature of our industry. In fact, it took COVID-19 to remind us of the essential nature of collaboration.

For example, four Australian manufacturers teamed up with a medical technology company, Stryker, to map a local supply chain, adapt designs, create prototypes, and begin production of emergency hospital beds within hours – it was collaboration at its best.

How has COVID-19 changed the needs of your members? Some members reported disruptions to their normal operations, due largely to global lockdowns which impacted material and component supply. In some instances, manufacturers were able to source new supplies, however at a much higher price. The COVID-19 Manufacturer Response Register also facilitated domestic alternatives, with some of those suppliers establishing an ongoing relationship.

Many of our members experienced increased uptake of their offerings in response to the crisis, with several of their clients looking to onshore work. We would like to think this is a nice problem to have and highlighted the broad capabilities that do already exist onshore. Is this the end of globalised supply chains?

With a domestic market of 25 million people, Australia will always need to be a player in the global economy. It is unthinkable that Australia, as a trading nation, would ever be disconnected from global markets.

© metamorworks/ AdobeStock_164023618

While COVID-19 exposed gaps in our manufacturing industry, complete selfsufficiency is not viable. There are many things that Australia cannot and should not make. Instead, we must focus on our areas of comparative and competitive advantage, and compete on value—not on cost—within these areas.

Australia must have a broad, vibrant, competitive manufacturing industry that can pivot and respond to any type of crisis. And concerning supply chains – don’t rely on one supplier, but two and in different countries of origin.

The Mittelstand model promotes the collaboration between manufacturing and research partners. Is this spirit prensented in Australian Manufacturing? The overall funding for research and development in Australia is sufficient, but it is ineffectively allocated—there is too little focus on commercialisation and already identified areas of national strength.

AMGC’s projects commercialise innovation and demonstrate how to enhance Australia’s competitiveness. AMGC projects encourage deeper collaboration between industry and research partners for greater commercial outcomes, as well as increased connections into global supply chains, development of advanced skills, and knowledge sharing. In every project, research collaboration is a key ingredient and must involve a research partner. Our frank mandate to research partners is to solve an industry problem, not for us to solve their funding problem. Australian industry needs much greater commercialisation of applied research. To our delight, we do hear the term “Fraunhofer Society” more often. ABOUT JENS GOENNEMANN

Dr Jens Goennemann has been Managing Director of the Advanced Manufacturing Growth Centre (AMGC) since 2016. He brings extensive experience from overseeing large manufacturing operations in Australia and Europe. AMGC is an industry-led, not-for-profit organisation established through the Australian Government’s Industry Growth Centres Initiative.

AMGC’s vision is to transform Australian manufacturing to become an internationally competitive, dynamic and thriving industry with advanced capabilities and skills at its core.

Through the delivery of its worldleading research, Manufacturing Academy, workshops, and groundbreaking projects, AMGC aims to develop a highly skilled and resilient local manufacturing industry that delivers high-value products – via the integration of innovative technology – to domestic and international markets.

Has COVID-19 changed perceptions about the need and value of Manufacturing? The ability of Australian manufacturers to get the job done — including complex manufacturing, such as building ventilators onshore — has impressed the public. It reinforces the value that the industry provides unseen every day. It has also been rewarding for AMGC to see the years of research and effort around advanced manufacturing come to life during COVID-19. It is important to use this momentum positively and further reinforce the industry and scale-up. Australian manufacturing consists of 45,000 companies, 95% of which employ less than 20 people. Compared with Germany and their Mittelstand, which employs near 50% of the workforce, Australia has a way to go. That said, Australia already has the fundamentals in place. Manufacturing capability exists. We just need to build on it. To that extent, we are now looking at models to raise capital from the market so that our manufacturing superstars can scale up.

Provided by Advanced Manufacturing Growth Centre (AMGC)