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Behind the cover Just like most advanced economies, the trends in Australian manufacturing output and employment are not unique. For more than two decades, economies have seen their manufacturing sectors recede as a share of both output and employment, although Australia has a much lower share, comparatively. With a diverse manufacturing sector consisting of food and beverage, machinery and equipment, petroleum, coal and chemicals, and metal products, these industries account for around 80 per cent of manufacturing output and employment. According to the Reserve Bank of Australia’s report, Conditions in the manufacturing sector, the ratio of value added to total production in the Australian manufacturing sector is broadly comparable to that in other advanced economies’
manufacturing sectors. In addition, increased overseas competition from countries like China’s increasing share of Australia’s merchandise imports has coincided with a fall in the prices of imported manufactured goods relative to domestically produced ones. Yet, with a huge push by the Australian government for the adoption of advanced manufacturing techniques, the slide downwards has been somewhat stymied, according to the analysts at IBISWorld. At the back of these observations, this issue’s 2017 Top 100 Manufacturers list by IBISWorld gives perspective to the performances by the Australian manufacturing sector and once again gives the industry one of the more sought-after assessment of their progress following a rather challenging year.
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Comment
SYED SHAH – Managing Editor, Manufacturers’ Monthly
Meeting the tech crunch with a renewed intensity
W
ITH the speed of change that technology is going at, let’s face it, most businesses are having issues keeping up. Compared to just five years ago, the constant updates to our smartphones, apps, and social media is just incredible. After mastering a newly launched technology, another one appears on the horizon. For businesses, there is no easy way to wrap their heads around this rapid change, but thankfully, it is still doable. Globally, 52 per cent of business and IT leaders rate their organisation’s digital IQ – a measure of an organisation’s capability to get strategic value from technology investments – as strong in PricewaterhouseCoopers’ 2017 Digital IQ survey. This is a significant drop from previous years: 67 per cent in 2016 and 66 per cent in 2015. A couple of years back at EMO Milano, one of the directors at CECIMO (European Association of the Machine Tool Industries) told the reporters at the press club room that the new wave of advanced technology for machining and manufacturing is exciting but compared the excitement around it to being like “the birds and the bees”. Everyone is talking about it, while not having enough knowledge about it and then they jump straight into it, thinking everyone is doing it – a recipe for disaster, according to him. While businesses see the value in adopting new technologies, many of them have not adapted quickly enough to keep up with the technology curve. Technology and business are inseparable, so businesses that neglect to embrace this relationship are sure to fail. For manufacturers, that means understanding the evolving risk landscape related to the business, and learning to use technology in their work. And to understand those risks, that means having access to data. 6 DECEMBER 2017 Manufacturers’ Monthly
IBM is one of a few institutional companies who pride themselves as “constantly” reinventing their vision, and it says the latest gold mine is found in data. “Twenty per cent of the world’s data is searchable. Anybody can get to that 20,” IBM CEO Ginni Rometty told Mad Money, a US talk show, earlier this year. “But 80 per cent of the world’s data, which is, where I think the real gold is whether it’s decades of underwriting, pricing, customer experience, risk in loans – that is all with our clients. You don’t want to share it. That is gold.” Not too long ago, the increased risks from ransomware attacks, data breaches, blockchain adoption, the Internet of Things (IoT), use of artificial intelligence, and data collection and its ethical use, seemed like distant notions for manufacturers. However, the question they are faced today is: Are businesses equipped to handle the advanced technology embedded into business practices? Apparently,
not quite there yet according to this year’s Federal Government report, A patent analytics study on the Australian advanced manufacturing industry. In the report, it is said that Australian research institutions overwhelmingly outnumbered private enterprise in the top 15 patent applicants. It also mentioned that based on average applications per applicant, research institutions were the most active applicant type, leading all technology sectors except for the transport sector. The Commonwealth Scientific and Industrial Research Organisation (CSIRO) led the way as the most active applicant with the organisation in applying for six of the eight technologies: chemical engineering, chemistry, electrical, materials, mechanical engineering and pharmaceuticals. Only a few private businesses like Bluescope, IHI and Nucorp were in the list. Some concerns that local manufacturers have posed (and
rightfully valid ones) are: How do we achieve effectiveness of application? Will we get repeatability and reproducibility of results by using newer technologies and data gathering techniques? How do we integrate these newer technologies into our production, design and engineering processes without overstretching the capabilities of our workforce to absorb this new knowledge? How can we quickly upskill our workforce to make sense of new data, integrate it into our workflow and future support risks? I would say, get it right and you should achieve a winning competitive edge. Moving forward, technology will continue to disrupt and change the business landscape at an increasingly rapid pace – what some futurists call the Fourth Industrial Revolution. Coming back to Rometty’s idea of an ever-changing vision based on the ever changing technology cycle, one thing is certain: organisations that resist that change, will not survive.
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INDUSTRY REPORT
#C1214:
WINE PRODUCTION IN AUSTRALIA
GLASS HALF FULL... Revenue is forecast to reach $6.2 billion in 2017-18 Red wine is benefiting from export demand and premiumisation
Profit margins for wine manufacturers total 3.1%of revenue
Treasury Wine Estates Limited is the largest industry player, accounting for 10.4% of industry revenue
Just over 41% of the industry’s products are destined for export markets South Australia and Victoria make up over 60% of the industry’s establishments
With 1000s of up-to-date industry and company reports, IBISWorld gives you the power to make better business decisions. www.ibisworld.com.au 03 9655 3800
Comment
NIALL BLAIR – NSW Minister for Trade and Industry
NSW Manufacturing: From strength to strength
T
HIS year has been challenging for NSW’s manufacturers, but has also delivered great success. As I travel around the state I am truly impressed at the way our manufacturing businesses, large and small, are responding to the challenges of rapid technological change, global competition, and the pressure of rising energy costs. But that hasn’t stopped the sector continuing to grow, creating new jobs and skills, developing innovative new products, and expanding into new markets across the globe. NSW is the nation’s manufacturing powerhouse. We are home to 31 percent of Australia’s manufacturing businesses - more than any other state. These businesses employ nearly 270,000 people, bridging the divide between city and country. As Minister for Trade and Industry, I’ve had the privilege of witnessing first-hand just how inventive and determined this state’s manufacturers are. From agribusiness to defence, medical technology to plastics, NSW businesses are making their mark on the world stage. This diversity was
on display at the recently held 2017 Premier’s NSW Export Awards, where I was able to congratulate some of our state’s most outstanding businesses on their incredible achievements, both at home and abroad. They included Griffith-based Flavourtech, a manufacturer of specialised food processing equipment. Through its unique technology and innovative applications, Flavourtech has been able to customise its products to satisfy the palates of customers in different regions overseas. This outward-looking approach has seen its export business grow to 90 per-cent of annual sales. Also recognised was PPC Moulding Services, a Villawood-based plastic injection moulder business servicing the medical and related heath industries. The company’s adoption of state-of-the-art machinery and automation has helped it grow from just 20 people in 2007 to over 250 today, with its products winning accolades from as far away as Canada and Turkey. The NSW Government is working
hard to support these businesses and promote them both at home and internationally, and one way we do this is through sponsorship of major trade events. In October, the NSW Government was the principal sponsor of the PACIFIC2017 international maritime expo, which allowed us to showcase the outstanding capabilities of our defence industry firms from around the state. One of them is Wollongong-based Bisalloy Steels, Australia’s only manufacturer of high-tech armour and wear-resistant steel. The company’s advanced products have been used in the construction of the Navy’s Collins Class Submarines, as well as the Army’s Bushmaster and Hawkei armoured vehicles and the company’s armour is now in demand from buyers around the world. Another standout firm at PACIFIC 2017 was Sydney company Ocius Technology that won a $10,000 Defence SME Innovation Grant for its unmanned marine drone the “Bluebottle” that can be deployed at sea for months, using solar, wind and wave power energy.
We are also promoting our thriving food manufacturing sector by showcasing 16 of our best smallscale food manufacturers at Fine Foods Australia, the largest food industry trade event in the Southern Hemisphere. It was a culinary delight to join them at the ‘Flavours of NSW Pavilion’, and this year marked the 17th time the Government has supported NSW businesses to take part. Companies on display included Shoalhaven’s Phyco Foods, which is infusing mineral-rich seaweed into everyday foods, as well as Bodalla Dairy, a small southcoast manufacturer blending bush tucker into cheese. Everywhere I go I see NSW manufacturing striving to improve its competitiveness in smart and pioneering ways. Our businesses are leading the way in developing new skills and adopting new practices and technologies. More and more companies are chalking up success in a tough domestic and international environment. I’m proud of our manufacturers’ resilience, and I look forward to seeing them go from strength to strength
NSW is an Australian manufacturing powerhouse that is home to 31 per cent of Australian manufacturing businesses.
8 DECEMBER 2017 Manufacturers’ Monthly
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News@MM KPMG acquires engineering startup The Relken team will be part of KPMG’s management consulting business.
KPMG Australia announced that it has acquired Relken Engineering. From capital investment strategies to predictive analytics on critical equipment, Relken Engineering helps clients increase the productivity of physical assets and infrastructure, and reduce total cost of ownership. Its team of 41 specialists has joined KPMG, expanding the firm’s asset management and engineering advisory practice to more than 300 professionals, nationally. Announcing the deal, KPMG Australia CEO, Gary Wingrove said: “We’re delighted to welcome Relken’s dynamic team to KPMG. Relken gives us greater scale and diversification in asset management and engineering advisory. It deepens our defence engineering 10 DECEMBER 2017 Manufacturers’ Monthly
capabilities and broadens our expertise into power and water, rail and energy and natural resources. It complements other engineering capabilities acquired over the last three years – namely mining services group, Momentum Partners, and SGA property and environmental consultancy,” he said. Relken’s innovative approach to data-informed decision making has led to an expanding portfolio of clients spanning the maritime, aviation, land, communication, nuclear, water and power industries. New partner, Andrew O’Connor, commented: “We combine our strategic asset management expertise with our modelling and predictive analytics to help our clients make informed decisions for their assets now, and into the
future. With every job we must turn engineering and data analysis into a ‘wow factor’ for clients – realising how their assets are performing and the range of options available to save costs and improve performance. “We’re incredibly excited about joining KPMG. Not only will our analytics further evolve by tapping into the firm’s AI and emerging technology expertise, but our certified asset management assessors will plug right into KPMG’s already mature systems engineering, program management, and commercial and risk advisory to bring a ‘cradle to grave’ asset solution for clients,” he added. The Relken team will be part of KPMG’s management consulting business, led by Ian Hancock. “Last financial year, we saw a $150 billion
marketplace for new infrastructure in Australia[i], and we expect that will continue with large capital programs and smart cities key items on Australia’s productivity agenda,” said O’Connor. He also mentioned that KPMG is extremely well positioned as a large infrastructure and asset management advisory firm. “While our anchor market in this space has been defence, this acquisition allows us to enter emerging markets such as water, power and transport. “Capital intensive businesses in public and private sectors are operating in environments where it is increasingly challenging to balance cost, risk, safety and business performance,” said O’Connor. manmonthly.com.au
News@MM Opportunities for a new era in manufacturing A new industry-led report into Australia’s manufacturing sector has highlighted the opportunity for all firms to move towards advanced manufacturing by adopting more sophisticated business models and production techniques, according to the Department of Industry, Innovation and Science. Citing the report Advanced manufacturing: a new definition for a new era, released by the Advanced Manufacturing Growth Centre (AMGC), Acting Minister for Industry, Innovation and Science, Senator the Hon Michaelia Cash said: “Manufacturing has played a major role in contributing to Australia’s stellar economic performance over the past 25 years. “However, in order for Australian manufacturing to continue to succeed domestically and globally, it must evolve and diversify. “The report emphasises that the continued growth of the sector is dependent upon manufacturers innovating, moving up the value chain For Australian manufacturing to move forward, it needs to diversify and evolve.
and embracing production efficiencies in order to develop new products and serve new markets.” The Federal Government recently announced the $47.5 million Advanced Manufacturing Growth Fund, which is designed to support investment in advanced manufacturing projects in Victoria and South Australia as part of the $100 million Advanced Manufacturing Fund, announced in the 2017-18 Budget. Other measures include the Entrepreneurs’ Program and the Research and Development Tax Incentive, which enables individual companies to invest in research and development, and provide advice and assistance to develop and commercialise new ideas and products. The AMGC is part of the Government’s Industry Growth Centres initiative, which is designed to improve the productivity, competitiveness and innovative capacity of industry sectors of strategic priority in the Australian economy.
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News@MM Digital engagement up with Australia’s $615 billion SMBs: Deloitte Deloitte Access Economics’ Connected Small Businesses 2017 report for Google finds that, in just 12 months, small-medium business (SMB) adoption of digital tools has grown significantly – with 12 per cent of businesses moving up the digital engagement ‘ladder’, and no longer having just “basic” levels of engagement. Half of those SMBs have reached “advanced” or “high” levels of engagement across areas that include social media, e-commerce, websites, online marketing tools and data analytics. Deloitte Access Economics partner, and the report’s principal author, John O’Mahony said: “More than two million SMBs make an important contribution to the Australian economy, accounting for over half of private sector economic activity and over two-thirds of its employment. “And in recent years, digital engagement in the sector has become a critical ingredient to success on a number of fronts – from revenue growth and job creation, to innovation and export opportunities. “We’ve found that since our first report for Google in 2013, SMB take-up of digital tools has been accelerating over time, and that there has been a particularly strong uptake since we last surveyed business operators only 12 months ago.” The report also identifies an improvement in digital engagement across all industries. Despite perceptions of lower digital engagement, SMBs in traditional industries such as mining, manufacturing and utilities, and trade and hospitality, were found to be performing even more strongly on digital engagement than knowledge industries such as professional and financial services, and health, education and public administration. And relative to SMBs with basic levels of digital engagement, SMBs with advanced levels of digital engagement are 50 per cent more 12 DECEMBER 2017 Manufacturers’ Monthly
likely to be growing revenue and earning 60 per cent more revenue per employee. “Engaging with, investing in, and then keeping up with digital can open up significant new opportunities for SMBs in terms of agility, competitive advantage, innovation and growth, regardless of industry and geography,” O’Mahony said. “It’s encouraging that digital engagement has increased across the board, but SMBs in regional areas and those with more established operations have lower digital
engagement on average. “Our research suggests that age of the business owner or manager, their attitude to and use of technology are key factors in determining the level of digital engagement for the business.” SMBs have identified a number of barriers to increasing digital engagement. “While we’ve seen a lot of improvement, nearly 90 per cent of SMBs are still not taking full advantage of today’s digital tools,” O’Mahony said. “There’s still work to be done in
helping some business owners and decision makers to understand the value associated with increased digital engagement. “And education and upskilling is certainly one of the areas that can help build trust in digital tools and address potential issues or perceived barriers to greater engagement. “In the end, there can be a clear financial dividend for those smaller businesses that get things right, just as there are significant risks for those that haven’t yet taken the digital leap. “
SMB take-up of digital tools has been accelerating over time
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News@MM Australian manufacturing at “mission critical” – AMGC
Young students need to be inspired to do more STEM related subjects.
The director of the Advanced Manufacturing Growth Centre (AMGC) has called for a “massive workforce transformation” in Australia, describing the future of the
industry as “mission critical”. Michael Sharpe has called on manufacturers to embrace technological change, which he says is increasingly needed if they are to add
value to the industry. Speaking at Autodesk University 2017, held in Sydney, Sharpe also noted that the sector is actually in demand for workers despite a rapid reduction over the past decade, influenced greatly by the decline of Australia’s automotive assemblies. “There needs to be a massive workforce transformation,” Sharpe told the conference. “Just imagine, by 2027, Australia’s manufacturing workforce will not only have increased in size but will have also shifted in its composition. “[The question will be:] what did we do to contribute to the value of manufacturing, to increase skills and leadership and often exceptional sales and services to back up the performance differentiation? “What actions and pathways can we firmly put in place to develop the highest skills required to meet those
areas of greater added value? “To create the necessary workforce change, we must inspire our young students to study STEM discipline and pursue manufacturing careers. We need to make it inviting.” To do this, Sharpe insists Australia must break away from traditional manufacturing and upskill to meet demands up and down the global supply chain. He noted key “knowledge gaps” in robotics and automatic productions, materials and composites, digital design, bio- and nano-manufacturing, micro- and precision-manufacturing, and virtual reality. “That is all happening now and, for its path, the industry must make sure that graduates are connected to more advanced manufacturing opportunities, meaning the demands of these skills must increase,” Sharpe said.
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Manufacturers’ Monthly DECEMBER 2017 13
2017 TOP 100 MANUFACTURERS The winners take all Despite the restructuring in the automotive space, manufacturing continues its competitive streak with a few bright spots indicating a gradual uptick, according to IBISWorld’s Top 100 Manufacturers List for 2017. Syed Shah reports.
R
ECENTLY, the Advanced Manufacturing Growth Centre (AMGC) stated in its report: Advanced Manufacturing – A Definition for a New Era, that the Australian manufacturing industry is larger and more dynamic than currently estimated. According to the Ai Group, for the last quarter of 2017, the performance of manufacturing index (PMI) of Australia looks to be on the uptick. So, while manufacturing looks to be shrinking in its GDP contributions year on year, there is certainly brighter times ahead. Historically, the manufacturing industry has always been an extremely competitive industry, and despite a difficult 2016 and challenges to the local economic climate for the industry in 2017, the
outlook is a positive one – at least in the longer term. Australia’s traditional manufacturing industry will continue to thrive with more companies embracing newer advanced manufacturing technologies and the power of the IIoT. This is despite the continued lack of outstanding winners in the list. Bao Vuong, senior industry analyst with IBISWorld, one of Australia’s richest sources of business information, says most manufacturing sectors are in the process of restructuring their business processes with more automation and adoption of advanced techniques to boost general productivity. Vuong sees the decline as marginal, and says like last year,
there is a lot of volatility in the market with several factors as reasons these include the value of the Australian dollar and government policies, both at federal and state level. “Compared to the previous year, there is a mix in the number of companies in the Top 100 list who have dropped and increased their revenue. This is due to economic volatility locally and globally, but the trend is moving downwards,” Vuong told Manufacturers’ Monthly. Food manufacturing seems to have bucked the trend from last year with the meat industry benefitting from the increased demand in high quality or premium meat that is popular in the East Asian market. This is because consumers in the East Asian
IBISWorld.com.au
region are swayed by the notion of what they perceive to be high-quality Australian products. As a result, some companies are expanding into the Asian export market even further. “Australian beef is just seen as more high quality as compared to the beef that they (East Asian market) can obtain in other countries,” said≈Vuong. For the rest of the F&B products, a lot of the companies are focusing on the general Asian market, which also points to consumers’ perception of the high quality associated with Australian products like milk powder. According to Vuong, people from China tend to prefer Australian milk powder because they don’t trust the quality of their locally manufactured milk products.
Australia’s traditional manufacturing will continue to thrive at the back of new advanced technologies despite the lack of outstanding performers in the 2017 Top 100 Manufacturers List by IBISWorld.
14 DECEMBER 2017 Manufacturers’ Monthly
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2017 TOP 100 MANUFACTURERS Sourced from IBISWorld: IBISWorld.com.au
New inclusions on 2017 top 100 manufacturing list Company name (2017 rank)
IBISWorld sees local manufacturers competing with low-cost imports and this includes the automotive manufacturing sector.
Revenue change
JBS (12)
N/A
Ingham’s (27)
5.35%
Bindaree Beef Group (75)
N/A
JELD-WEN Australia (87)
37.27%
McCain Foods (91)
-2.44%
Sourced from IBISWorld: IBISWorld.com.au
IBISWorld sees local manufacturers competing with low-cost imports and this includes the automotive manufacturing sector. And because of these lowcost imports, they see it as more strategic to move their production overseas into certain Asian countries where the overhead costs are a lot lower compared to manufacturing in Australia. Even though companies are looking at Asian export markets, the weak Australian dollar has contributed to higher demand for locally manufactured goods in export markets as the weak dollar boosts the attractiveness of the exported goods. “In tandem with the increased use of robotics and 3D printing that will help the manufacturing sector turn around gradually, new technologies will also limit that decline,” said Vuong. With the increased use of automation these days, companies are trying to reduce their reliance on labour and improve their profitability especially when they are in competition with low-cost imports. IBISWorld expects manufacturing to turn around within the next five years but for the moment, the expectation for the sector is to only climb moderately. The Australian government has provided support measures such as the advanced manufacturing fund for local manufacturers here especially for the small-scale manufacturers that would struggle in this competitive environment. “This will hopefully help limit manmonthly.com.au
the decline in this sector and ensure that small scale manufacturers have a bright future in a highly competitive environment,” said Vuong. In other areas, the transition of the mining sector from investment to production has led the mining and construction sectors to have some losers in terms of negative revenue swings in their latest financial reports.
“For the construction industry, they seemed to have scaled back in terms of infrastructure and residential building projects. An example would be Raytheon, where their decrease in revenue was also due to the decrease in construction contract,” said Vuong. Defence companies are doing particularly well in 2017 because of the rise in defence contracts.
Companies out of 2017 Manufacturing list Company name
Revenue change
GUD Holdings
The sale of two underperforming businesses impacted revenue. Additionally, the closer of the Masters hardware brand and the withdrawal of Oates products from Woolworths all contributed to revenue loss.
Joy Global
Rank 106. Just missed the top 100 cut.
Sourced from IBISWorld: IBISWorld.com.au
“Siemens, who provide technology equipment and solutions for the sector has seen their revenue decline because of the transition of the mining sector from investment to production over the past two financial years. This trend has followed across most other technology providers for the mining sector and this transition has affected their revenue,” said Vuong.
Because of this, Australia’s procurement for international shipbuilding has also seen the sector grow to $400 million recently. “Anyone that manufactures advanced components for defence contracts have increased their revenue,” Vuong said.
Bucking the trend In the face of increasing competition from low-cost imports, IBISWorld
expects companies to face downward pressure in terms of profitability with imports intensifying in the manufacturing sector. Prices are expected to be a major point of competition for those that can offer the lower prices, especially those from Asia where it will force local manufacturers to slash prices and profitability to keep up with these low-cost Asian manufacturers. “Conversely, if some of these manufacturers that produce niche goods, like meat processing manufacturers that produce highquality Australian beef, they can have higher profitability levels. They can then charge a premium price for these goods due to the quality because these products are considered differentiated from the market itself. In general, the intensified market competition will force prices down and put a lot of pressure on these manufacturing operators,” said Vuong.
The Winners: Continuing its hot streak from last year, Aristocrat Leisure posted over a 33 per cent increase in revenue in 2017. There was strong performance from the international divisions from (Continued on page 18) Manufacturers’ Monthly DECEMBER 2017 15
2017 TOP 100 MANUFACTURERS Top 100 Manufacturing Companies - As at 28/11/2017 Previous Year's Rank
Current Rank
Trading Name
Balance Date
Revenue ('000)
Previous Year's Revenue
NPAT ('000)
Previous Year's NPAT
Total Assets ('000)
Previous Year's Total Assets
Employees
Previous Year's Employees
1
3
Fonterra Co-op Group
31/07/2017
$18,279,463
$16,407,894
$688,587
$759,885
$16,738,115
$16,058,909
21400
21300
2
1
Caltex
31/12/2016
$17,942,057
$19,955,677
$609,940
$521,507
$5,302,734
$5,104,741
3166
3080
3
2
Viva Energy
31/12/2016
$15,685,200
$16,503,800
$1,219,100
$159,800
$4,263,600
$4,064,000
1023
1114
4
4
BP Australia
31/12/2016
$13,536,000
$15,920,000
-$112,000
$166,000
$13,791,000
$13,824,000
N/A
5514
5
5
Amcor
30/06/2016
$11,974,993
$12,416,089
$776,339
$317,428
$11,811,923
$11,290,203
35211
31761
6
6
BlueScope Steel
30/06/2017
$10,741,300
$9,849,800
$715,900
$353,800
$9,575,400
$9,148,600
N/A
6310
7
7
Perth Mint
30/06/2016
$9,024,726
$6,622,912
$29,540
$14,059
$4,287,151
$3,246,667
441
386
8
9
CSL
30/06/2016
$9,016,583
$8,199,412
$1,739,155
$1,615,617
$11,863,159
$9,834,535
N/A
14000
9
8
Toyota Motor Corporation
31/03/2017
$8,827,889
$8,860,960
$98,727
$236,368
$3,158,428
$3,055,946
N/A
3921
10
10
ExxonMobil Australia
31/12/2016
$7,241,000
$7,433,000
$38,000
-$60,000
$33,227,000
$31,226,000
1665
1711
11
12
Visy
30/06/2017
$6,500,000
$5,700,000
$0
$0
$0
$0
10200
10150
12
N/A
JBS
25/12/2016
$5,662,118
N/A
$130,686
N/A
$2,798,890
N/A
11980
N/A
13
13
Coca-Cola Amatil
31/12/2016
$5,253,200
$5,186,900
$246,100
$393,400
$6,464,200
$6,667,400
N/A
14000
14
11
Orica
30/09/2016
$5,185,600
$5,745,600
$342,800
-$1,267,400
$6,595,800
$7,321,300
N/A
12000
15
15
Sims Metal Management
30/06/2017
$5,137,200
$4,683,300
$203,600
-$216,500
$2,743,000
$2,570,900
N/A
4756
16
14
Lion Nathan National Foods
30/09/2016
$4,901,900
$4,798,300
$400,900
$238,700
$10,856,500
$10,768,700
5466
6356
17
16
Boral
30/06/2016
$4,308,000
$3,997,700
$296,900
$256,000
$9,313,600
$5,800,500
11499
8334
18
18
Orora
30/06/2017
$4,056,400
$3,872,000
$171,100
$168,600
$3,363,200
$3,129,900
6700
6200
19
25
Ford Australia
31/12/2016
$3,602,988
$2,797,292
-$23,715
-$162,255
$771,543
$748,154
2817
2691
20
17
Alcoa of Australia
31/12/2016
$3,480,200
$4,167,900
$249,100
$645,500
$5,291,200
$5,822,800
N/A
N/A
21
19
Incitec Pivot
30/09/2016
$3,410,700
$3,696,900
$128,100
$398,600
$8,666,900
$9,196,300
4500
5500
22
23
Nufarm
31/07/2016
$3,132,970
$2,846,866
$114,467
$27,519
$3,644,888
$3,461,138
N/A
3200
23
27
Treasury Wine Estates
30/06/2017
$2,591,200
$2,362,600
$269,100
$173,300
$5,279,300
$5,286,500
N/A
1882
24
30
James Hardie Industries
31/03/2017
$2,574,274
$2,276,129
$362,362
$320,294
$2,637,704
$2,659,590
3577
3257
25
28
CSR
31/03/2017
$2,501,900
$2,332,800
$177,900
$142,300
$2,097,100
$2,215,800
4193
3578
26
24
Devondale Murray Goulburn
30/06/2017
$2,500,466
$2,801,293
-$370,800
$40,577
$1,675,609
$2,177,833
2100
2500
27
N/A
Ingham's
01/07/2017
$2,438,400
$2,314,500
$59,100
$25,200
$1,073,400
$946,400
N/A
N/A
28
20
GM Holden
31/12/2016
$2,390,637
$3,583,998
$120,187
$114,331
$1,408,208
$2,051,652
2539
3067
29
22
Teys Australia - A Cargill Joint Venture
31/05/2017
$2,322,870
$2,435,970
N/A
$50,703
N/A
$850,822
4265
4307
30
32
George Weston Foods
31/08/2016
$2,281,809
$2,198,804
$24,170
$51,346
$2,685,235
$2,666,816
6553
6661
31
31
Nestle
31/12/2016
$2,226,940
$2,225,985
$156,883
$179,096
$1,450,197
$1,513,490
4461
4369
32
21
ConocoPhillips Australia
31/12/2016
$2,187,204
$3,214,927
-$511,781
-$1,780,831
$20,335,314
$19,823,533
909
883
33
43
Aristocrat Leisure
30/09/2016
$2,140,300
$1,601,800
$350,500
$186,400
$2,987,700
$3,218,700
3200
2912
34
35
Wilmar Sugar
31/12/2016
$2,092,700
$1,880,800
$94,800
$73,500
$2,861,900
$2,662,300
2380
2383
35
34
Goodman Fielder
31/12/2016
$2,014,200
$1,021,900
$48,800
$8,800
$1,905,700
$1,843,100
5912
#N/A
36
40
ResMed Holdings
30/06/2016
$1,996,319
$1,692,309
$472,269
$407,601
$2,646,656
$2,327,925
N/A
2671
37
37
MM Electrical Merchandising
31/12/2016
$1,974,149
$1,805,319
$100,195
$111,705
$2,009,374
$1,920,415
N/A
2200
38
36
Hanson Australia Holdings
31/12/2016
$1,870,500
$1,838,400
$166,900
$152,500
$4,580,000
$4,623,400
3500
3153
39
42
Parmalat Australia
31/12/2016
$1,806,224
$1,660,476
$28,497
$35,305
$1,081,977
$1,009,668
2359
2197
40
33
Ansell
30/06/2017
$1,792,081
$1,777,387
$192,069
$206,894
$3,186,630
$2,978,696
15483
15890
41
29
Carlton & United Breweries
31/12/2016
$1,750,100
$2,321,100
$315,900
$410,200
$13,382,700
$13,724,900
1671
1597
42
41
DuluxGroup
30/09/2016
$1,719,209
$1,691,770
$130,417
$112,773
$1,195,802
$1,159,109
4000
4000
43
44
Unilever Australia
31/12/2016
$1,647,696
$1,567,771
$43,613
$47,914
$996,681
$929,184
1701
1060
44
39
Asahi Holdings
31/12/2016
$1,588,125
$1,618,133
-$122,796
-$256,686
$2,043,476
$2,077,210
2500
2500
45
46
Holcim Australia
31/12/2016
$1,547,296
$1,516,622
$27,823
$81,314
$1,824,489
$2,124,170
2334
2831
46
45
Baiada Poultry
30/06/2016
$1,520,700
$1,520,700
$0
$0
$0
$0
4058
3799
47
47
Mars
31/12/2016
$1,512,078
$1,480,591
$160,916
$134,089
$1,167,920
$1,225,909
1600
1766
48
50
Manildra Group
30/06/2017
$1,500,000
$1,400,000
$0
$0
$0
$0
1100
1400
49
38
Mondelez Australia
31/12/2016
$1,496,562
$1,480,981
$107,369
$118,389
$1,638,786
$1,604,097
2669
2928
50
51
Pact Group Holdings Ltd
30/06/2017
$1,485,237
$1,390,509
$90,341
$85,051
$1,630,390
$1,373,038
N/A
N/A
16 DECEMBER 2017 Manufacturers’ Monthly
manmonthly.com.au
2017 TOP 100 MANUFACTURERS Sourced from IBISWorld: IBISWorld.com.au Current Rank
Previous Year's Rank
Trading Name
Balance Date
Revenue ('000)
Previous Year's Revenue
NPAT ('000)
Previous Year's NPAT
Total Assets ('000)
Previous Year's Total Assets
Employees
Previous Year's Employees
51
57
Boeing Australia
31/12/2016
$1,475,688
$1,221,488
$94,247
$86,742
$1,451,668
$1,360,693
3384
3246
52
48
Adelaide Brighton
31/12/2016
$1,410,700
$1,464,700
$186,300
$207,900
$1,826,700
$1,838,500
1376
1386
53
54
Simplot Australia
03/09/2016
$1,355,149
$1,315,778
$19,041
$87,678
$1,019,178
$919,956
2024
2052
54
52
Austal
30/06/2017
$1,326,782
$1,356,462
$15,350
-$84,281
$960,001
$1,013,126
N/A
N/A
55
49
Johnson & Johnson
31/12/2016
$1,316,607
$1,443,175
$125,305
$99,623
$770,787
$1,028,104
1180
1750
56
61
Cochlear
30/06/2016
$1,259,046
$1,145,176
$223,616
$188,921
$1,136,359
$957,363
3000
2934
57
58
Bega Cheese
30/06/2017
$1,234,180
$1,203,414
$138,748
$28,779
$1,056,260
$586,674
N/A
1650
58
60
Thales Australia
31/12/2016
$1,229,635
$1,158,047
$101,189
$78,070
$1,337,844
$1,235,016
3348
3302
59
55
SunRice
30/04/2017
$1,112,853
$1,270,178
$34,201
$49,077
$810,502
$970,579
2190
2178
60
56
BAE Systems Australia
31/12/2016
$1,084,582
$1,267,098
$65,448
-$64,686
$1,063,152
$1,010,726
3266
3572
61
65
Arnotts
31/07/2016
$1,070,762
$1,090,096
$61,909
$57,968
$1,725,373
$1,653,358
4300
5200
62
59
BOC
31/12/2016
$1,052,799
$1,183,642
$135,145
$169,061
$2,559,842
$2,603,640
2307
2403
63
66
Kimberly-Clark Pacific Holdings
31/12/2015
$1,049,550
$1,032,270
-$57,592
$117,175
$1,853,927
$1,831,195
1026
1106
64
64
AstraZeneca
31/12/2016
$1,034,180
$1,099,972
$55,084
$60,144
$596,179
$564,165
908
720
65
69
GlaxoSmithKline
31/12/2016
$974,824
$947,871
$25,276
$16,158
$1,409,018
$1,331,396
766
829
66
63
NH Foods Australia (NHA)
31/03/2017
$899,366
$1,110,196
-$20,445
$31,946
$400,991
$377,613
1701
1671
67
70
Ridley
30/06/2017
$861,553
$924,865
$25,815
$27,606
$490,603
$484,850
697
676
68
74
O-I Australia
31/12/2016
$857,100
$822,900
$29,800
$33,400
$981,600
$933,400
1632
1004
69
80
Brickworks
31/07/2017
$843,574
$753,113
$186,210
$78,190
$2,719,903
$2,517,211
1511
1598
70
67
ABB Group
31/12/2016
$837,714
$1,030,895
-$98,775
-$33,013
$807,765
$907,759
1607
1897
71
83
Fisher & Paykel Healthcare
31/03/2017
$827,435
$756,133
$155,297
$131,677
$806,258
$703,994
4112
3587
72
84
Sun Metals
31/12/2016
$803,217
$740,005
$51,285
$40,725
$825,508
$711,356
N/A
N/A
73
75
Australian Paper
31/12/2016
$801,365
$813,816
-$19,189
-$60,950
$902,102
$920,005
1203
1191
74
68
ASC
30/06/2016
$800,852
$1,029,231
$26,628
$21,891
$702,581
$683,359
2500
2600
75
N/A
Bindaree Beef Group
30/06/2016
$799,430
N/A
$1,845
N/A
$265,521
N/A
70
N/A
76
72
Bradken
30/06/2017
$781,337
$838,387
-$48,685
-$195,941
$974,440
$1,053,411
N/A
N/A
77
76
Heinz
31/12/2016
$771,582
$783,787
$36,289
$39,037
$824,585
$772,054
770
780
78
95
Kilcoy Pastoral Company
31/12/2016
$767,637
$601,884
$3,510
$24,649
$178,310
$126,505
780
N/A
79
79
PACCAR
31/12/2016
$755,772
$764,497
$63,426
$71,738
$1,004,319
$1,084,152
805
675
80
77
AACo
31/03/2017
$755,011
$781,399
$71,586
$67,807
$1,545,655
$1,383,119
549
592
81
87
Qenos Holdings
31/12/16
$750,370
$705,810
$50,454
$3,921
$894,719
$911,668
704
680
82
71
Siemens
30/09/2016
$734,781
$866,487
$29,233
$43,287
$734,994
$731,203
1291
1903
83
86
Bayer Australia
31/12/2016
$733,272
$718,496
$33,962
$13,465
$490,024
$520,473
585
591
84
81
Airbus Australia
31/12/2016
$727,217
$749,453
$43,357
$31,784
$394,840
$517,184
N/A
N/A
85
92
Warrnambool Cheese & Butter
31/03/2017
$714,710
$653,050
$44,987
$4,218
$559,923
$552,329
778
697
86
88
Bridgestone
31/12/2016
$710,964
$705,266
$29,897
$26,296
$441,886
$447,869
784
795
87
N/A
JELD-WEN Australia
31/12/2016
$695,241
$506,471
$37,653
$30,264
$488,370
$321,149
4139
1765
88
91
Merck Sharp & Dohme (Australia)
31/12/2016
$694,027
$648,064
$24,096
$20,460
$572,003
$605,702
533
450
89
85
Blackmores
30/06/2017
$693,719
$718,759
$59,013
$100,008
$412,174
$443,362
1000
1000
90
90
Honeywell
31/12/2016
$687,956
$675,170
$92,792
$90,182
$439,225
$323,356
1500
1500
91
N/A
McCain Foods
30/06/2016
$642,433
$658,510
$32,400
$29,814
$507,494
$532,649
1156
1181
92
73
Aspen Asia Pacific
30/06/2016
$642,172
$835,887
$93,551
$116,406
$1,121,587
$1,519,700
606
706
93
97
Baxter Healthcare
31/12/2016
$637,726
$586,859
$33,059
$27,903
$373,436
$402,816
1057
909
94
82
Raytheon
31/12/2016
$619,223
$745,276
$49,300
$65,626
$479,228
$361,568
1264
1168
95
93
Asaleo Care
31/12/2016
$606,816
$623,469
$58,955
$75,626
$773,297
$769,551
1000
1000
96
94
Weir Group (Australian Holdings)
31/12/2016
$584,205
$618,762
$15,857
$26,999
$911,326
$912,614
2270
2290
97
100
Bombardier Transportation
31/12/2016
$583,922
$562,580
$56,626
$18,898
$613,102
$511,337
785
697
98
99
Norske Skog Industries Australia
31/12/2016
$578,804
$555,726
-$41,128
-$152,224
$567,535
$684,872
521
520
99
N/A
Pernod Ricard Winemakers
30/06/2016
$572,035
$537,082
-$10,356
-$37,131
$698,634
$736,027
879
898
100
98
BASF
31/12/2016
$557,846
$565,435
$2,674
-$16,634
$352,199
$330,681
393
421
manmonthly.com.au
Manufacturers’ Monthly DECEMBER 2017 17
2017 TOP 100 MANUFACTURERS potential declines in the construction industry. Up six places from last year’s ranking with a revenue increase of 13.1 per cent, leading fibre cement siding manufacturer, James Hardie, has recently agreed to acquire Germany’s Fermacell GmbH from Xella International SA for $723 million. Fermacell is Europe’s number one fibre gypsum board manufacturer, with more than 70 per cent share in this market. According to James Hardie’s CEO Louis Gries, the acquisition would provide the company with a robust growth platform for expanding its fibre cement business into the large and affluent European market.
The transition of the mining sector from investment to production has led the mining and construction technology providers to have less than satisfactory returns.
Losers:
Top losers Company Name
Change in Total Revenue - Swing Factor Down
GM Holden Ltd
-33.3%
ConocoPhiillips Australia
-31.32%
GUD Holdings
-28.54%
SAB Beverage
-24.60%
Aspen Asia
-23.17%
Teys Australia
-20.58%
Sourced from IBISWorld: IBISWorld.com.au (Continued from page 15)
the gaming machine manufacturer. This is due to its American and Asian markets contributing to a significant increase in revenue. Aerospace and defence manufacturer Boeing Australia, who manufactures advanced aerospace components increased its revenue by 20.8 per cent in terms of their revenue – the major reason behind this big increase was due to the rise in defence contracts in the country. Despite the downturn for local automotive manufacturing, Ford proved that its shift in business strategy has paid dividends with the company posting gains in their latest financial reporting year books. These 18 DECEMBER 2017 Manufacturers’ Monthly
profits have been achieved on the dealer’s front, which means they have sold a lot more vehicles in sales terms and their production volume has risen 15 per cent as compared to last year. Their big year is largely attributed to the Ranger vehicle that is assembled in Thailand. Another winner on the list, Kilcoy Pastoral, has improved on its performance with strong investments coming from abroad since the $100 million investment from the New Hope Group in 2013. This has since allowed for growth across all its business units and assets that paved the way for future growth. There are lots of big winners on the F&B front with Fonterra leading
the charge posting a revenue increase 11.4 per cent in their latest financial reporting year. Despite lower milk volumes due to poor weather in parts of the season, the business delivered by prioritising higher value advanced ingredients and growing the sales of these in-demand and specialised products. Agricultural chemical company Nufarm increased its revenue by 10 per cent. The group generated increased sales in both of its crop protection and seed technologies segments across all regions. The Nufarm business executed a strategy to regain volume and market share, and Australia and New Zealand sales increased by 18 per cent. The company restructured manufacturing facilities, which resulted in lower fixed costs; better plant utilisation, and improved efficiencies. This ensured that the company can be price competitive for customers, and furthermore, the higher sales volumes have helped secure more of the benefits from the restructuring. On the constructions side of things, Brickworks benefitted greatly from the construction boom along the east coast of Australia and also pursued land and development activity to offset
Among the losers, with the final closure of its manufacturing facilities in Australia this past October, Holden’s sales have hit a 22-year low because of what the company describes as “insurmountable economic challenges”. This includes the high cost base in comparison to its Asian counterparts, insufficient economies of scale, the fluctuating Australian dollar and competitive market forces. Moving forward, the company hopes to have a resurgence from a lacklustre year by relocating its manufacturing facilities which would in turn help them with their cost base and economies of scale. Conoco Philips’s revenue has decreased by over 31 per cent. This is because of the completion of many large-scale liquefied natural gas (LNG) processing trains in Queensland, Northern Territory and Western Australia. This trend has continued since the previous year’s 30 per cent drop year on year. Dropping off the Top 100 List is GUD Holdings which dropped 27 places to 123rd with their revenue down by 28.5 per cent. The sale of two underperforming businesses coupled with the close of the Masters hardware brand, which they supplied a lot of products to, and the withdrawal of Oates Products from Woolworths, have impacted revenue. ABB Group Holdings have declined due to lower order volumes and variations in the value of the greenback. Although British Petroleum manmonthly.com.au
2017 TOP 100 MANUFACTURERS (BP) still ranked among the top 10 performers for 2017, there was a significant decrease in its revenue. This was probably caused by the delay in the decision of its acquisition of Woolworths, which is still pending a decision on by the Australian, Competition Consumer Commission (ACCC). With the sale of the sexual wellness division earlier this May, Ansell’s revenues have dipped. The medical manufacturer is looking forward to a return into the black following the offloading of the division with a renewed focus on the medical industry market. With supply shortages caused by drought conditions, and increased demand in export markets, which caused the company to scale back its operations, NH Foods’ revenue declined by 19 per cent, according to their latest financial year reports. The result of the decline, according to IBISWorld, is probably due to a decline in meat consumption that was expected in 2016-17 together with the supply shortages affecting this company during the year. Tey’s Australia faced a similar situation with their revenues dipping by nearly five per cent.
Notable new additions to the Top 100 List: Manufacturer of doors and windows, Jeld-Wen, is a newcomer into the list, pushing its way up to 87th. It increased its revenues by nearly $200 million (37 per cent swing) due to its acquisition of Trend Windows and Doors and ArcPac Building Products. Food companies once again lead the host of newer entries into the list. In 2016, Inghams began trading on the ASX and as a result they acquired Inghams Holdings as a wholly owned subsidiary which explains their entry into the list. As a result of the merger between Sanger Australia and Bindaree Beef, Industry Park was formed and the newly formed meat processing business made the list this year thanks to the acquisition of a 50 per cent stake in Scot Technologies, an engineering based company – through this acquisition, Industry Park is now also involved in the manufacturing manmonthly.com.au
and sale of automated process machinery.
Future trends to be looking out for IBISWorld predicts that a lot more manufacturers are looking towards green or sustainable manufacturing. The environmental effects of manufacturing have caused many companies to search for alternative methods of production that are environmentally sustainable while still remaining competitive and keeping up with demand. “While this is not exactly a new trend, IBISWorld sees that this demand for green or sustainable end products will continue to grow as consumers demand for it,” said Vuong. Vuong also added that with factors that include waste pollution and cost reduction, manufacturers must find new ways to sustainably expand. Another ongoing trend that looks to gain even more steam in the years ahead, would be the use of robotics and machines to streamline manufacturing processes. This is because more companies will be looking to use automation in production to reduce their reliance on labour and stay competitive. “What is being increasingly used in America now, that we predict will be widely used in Australia, is co-botics which are essentially robots that can be used in collaborative work environments with human workers,” said Vuong.
Big winners Company Name
Change in Total Revenue - Swing Factor Up
Aristocrat Leisure
33.61%
Ford Australia
28.8%
Kilcoy Pastoral Company
27.73%
Boeing Australia
20.81%
ResMed Holdings
17.27%
Visy
14.04%
James Hardie Industries
13.62%
Brickworks
12.01%
Fisher & Paykel Healthcare
11.30%
Wilmar Sugar
11.27%
Sourced from IBISWorld: IBISWorld.com.au
IBISWorld expects that the automotive manufacturing industry to increase investment and use in robotics especially in tasks that are repetitive and require pinpoint accuracy. With the increased use in robotics in this industry, it will reduce the cost base of employees. “Even if they are working in cohesion with humans, the cost factor will still be reduced because the production process will be more efficient with both sides working together,” said Vuong. Finally, 3D printing looks set to take centre stage according to IBISWorld. The advent of 3D printing will affect many original equipment manufacturers (OEMs). By using 3D printing for prototypes, it enables manufacturers to get to the market
quicker with significantly lower costs and that it will allow for more advanced research and innovative designs to create new products. “3D printing is no longer a niche market. It is experiencing widespread acceptance across the sector as compared to previously when it was mostly used in specialist and niche production aspects. Hence manufacturers are starting to print with graphene which can be low cost, easily recyclable and sourced because of its durability. So, IBISWorld expects that there will be more widespread usage of this material in everyday applications,” said Vuong. IBISWorld IBISWorld.com.au
At the back of the increasing demand for green or sustainable end products and cost reduction, manufacturers must find new ways to sustainably expand.
Manufacturers’ Monthly DECEMBER 2017 19
Issues &INSIGHTS Upskilling the new manufacturing generation As Australia re-invents its position as an advanced manufacturer, Steven Impey considers how the industry’s workforce will change to meet different demands. Michael Sharpe, director of the Advanced Manufacturing Growth Centre speaking at Autodesk University.
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T this juncture – if Australian manufacturers are going to embrace technological advancement on the factory floor – creating a workforce to compliment a flourishing industry is going to be important. Enterprise centres across the nation are there to give engineers hands-on experience with disruptive technologies, whether they are digital, manual or operated by robots. Needless to say, with the industry numbers bouncing back in small pockets, transferring traditional
20 DECEMBER 2017 Manufacturers’ Monthly
manufacturing into a high-value, cutting-edge generation of creation requires re-evaluation, retraining and reskilling. As reported by Manufacturers’ Monthly last month, the Advanced Manufacturing Growth Centre (AMGC) is calling for a “massive transformation” of Australia’s workforce. Michael Sharpe, the AMGC’s director who declared that the state of the industry is at “mission critical”, also said that there is a demand for workers, albeit the skills needed are changing with the times.
Sharpe mentioned that there needs to be a massive workforce transformation. “Just imagine, by 2027, Australia’s manufacturing workforce will not only have increased in size but also shifted in its composition. “[The question will be:] what did we do to contribute to the value of manufacturing, to increase skills and leadership and often exceptional sales and services to back up the performance differentiation? “What actions and pathways can we firmly put in place to develop
the highest skills required to meet those areas of greater added value? “To create the necessary workforce change, we must inspire our young students to study STEM disciplines and pursue manufacturing careers. We need to make it inviting.” Key “knowledge gaps” are apparent in various areas of the industry, according to Sharpe. They include robotics and automatic productions, materials and composites, digital design, bio- and nano-manufacturing, microand precision-manufacturing, and manmonthly.com.au
Issues&INSIGHTS
By 2027, Australia’s manufacturing workforce will not only have increased in size but also shifted in its composition. virtual reality. “That is all happening now and, for its path, the industry must make sure that graduates are connected to more advanced manufacturing opportunities,” he continued, “meaning the demands of these skills must increase.” Research carried out by the Department of Industry has identified a shift in the manufacturing workforce, with the AMGC recognising a shortage in high-value manufacturing roles. “Skills development and deployment relevant to the workplace are vital to the successful transformation of manufacturing into higher value-added services,” a spokesperson for the Department of Industry said. “Recent work by the department has found that Australia’s workforce will need 54,000 new higher skill R&D and design managers in the next 10
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years, while requiring 56,000 fewer low-skill production workers. “It also finds that only four Australian manufacturing sectors are increasing their proportion of higher skilled workers at the rate required over the next 10 years.” There are a number of educational initiatives that are helping to reskill workers and address skills shortages in Australia. For example, the government has established an ongoing $1.5 billion Skilling Australians Fund, with funding prioritised to projects that will support apprentices and trainees. A $60 million Industry Specialist Mentoring for Australian Apprenticeships program will also provide intensive support around 45,000 apprentices and trainees seeking to enter industries undergoing structural change, such as the automotive sector.
Professor Graham Wren joins a manufacturing roundtable at the University of Technology Sydney business school.
In addition, the $24 million Commonwealth Scholarships Program for South Australia offers support for 1,200 undergraduate, postgraduate and vocational education and training students to undertake state study, training and internships. “In order to meet these changes and remain competitive against the commoditisation of many products manufactured in low-cost countries,
the future of manufacturing in highercost countries such as Australia lies in moving up the value chain from production activities,” the Department of Industry said. “These include high value-added manufacturing services for niche markets in global supply chains. Some 70 per cent of global trade is intermediate goods in global supply chains.”
Manufacturers’ Monthly DECEMBER 2017 21
Issues &INSIGHTS The Australian Government’s policy focus is on enabling industry to succeed through differentiating its market offerings with a range of policies to encourage innovation and advanced manufacturing. They also focus on the uptake of digital technologies and skills development to allow any sector of the manufacturing industry become “more productive, competitive and export capable”. Professor Graham Wren, a special advisor to the principal and major projects director at the University of Strathclyde in the UK, joined a manufacturing-focused roundtable at the University of Technology
Sydney’s business school to discuss ways Australia can optimise the future of its industry. In 40 years of science and engineering, Wren has been a member of more than 30 company and research centre boards and has represented the UK Government on OECD and NEA committees. Now an adjunct professor to the Faculty of Engineering and IT at UTS, he has also given evidence to UK parliamentary select committees and has sat on numerous government and industry committees. “One of the challenges in a country like Australia – and to some extent the UK – if you look at a
specialised industry, unless you are one of the champions or among the people at its forefront, it is quite challenging,” said Wren. “Much of innovation works around recruiting good people and exchange programs. We are always talking about how Germany are doing things well, so why don’t you recruit some Germans? What would be wrong with that? “A truly successful international board should have someone who is good at finance but it should also have somebody who can understand the other markets. “You can imagine a board who has the best people [from around
the world] and, if you want to be manufacturing experts, you will probably have a German manufacturer there and perhaps a Italian branding specialist.” Australia’s manufacturing industry provides more than 905,000 direct jobs and supports hundreds of thousands of indirect jobs through related industries. Sharpe says there are three areas of importance that Australia must address if its manufacturing industry is going to increase its competitiveness in the next decade. “We need to focus on three things: the value we add, where we will sell and what our products will cost,” Research shows a shortage in highvalue Australian manufacturers.
22 DECEMBER 2017 Manufacturers’ Monthly
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Issues&INSIGHTS
Sharpe continued. “Most importantly, we need to ensure that the next decade guarantees our continued prosperity and creates the right conditions for the next generation. “What you will hear is that value is the most important by a long shot. Today, the manufacturing sector is larger and stronger than most people think and is one of Australia’s largest employers.” Sharpe insists Australia must break away from traditional manufacturing and upskill to meet demands up and down the global supply chain. “The first key point in our research is that manufacturing is changing rapidly and nations like Australia need to focus on where we can add the best value,” Sharpe continued. “Value has shifted from its traditional production phases to research and design to the latest age of sales and service. “If we want to compete, we need to be strong on both sides of that and also need to recognise that manufacturing doesn’t only mean production. “It is much more than production and is, in fact, an amazing opportunity for Australia because R&D, sales and service are much
less geographically dependent than just production. “It means that the tyranny of distance that has traditionally constrained Australian manufacturing matters a whole lot less, which is great news for those who use technology-based systems.”
A truly successful international board should have someone who is good at finance but it should also have somebody who can understand the other markets.
Today, the manufacturing sector is larger and stronger than most people think and is one of Australia’s largest employers.
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Manufacturers’ Monthly DECEMBER 2017 23
Industry FOCUS Redefining the Australian manufacturer The dawn of digital and advanced manufacturing is changing the way things are built. Although manufacturing is moving offshore, Steven Impey takes a look at how Australia is changing to become an innovation nation.
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OUPLED with the disruption of new technologies, the changing demand of the global supply chain is driving Australia to adapt, according to the Federal Government. The nation’s manufacturing industry has experienced continuous growth for 13 months, according to the AiGroup’s Australian Performance of Manufacturing Index (PMI). In the wake of closure of Australia’s automotive sector, the transfer from traditional to advanced manufacturing is already apparent and is forcing the
government, academics, and the industries they serve to rethink and repurpose their foundations. With change, the perception of what Australian manufacturing represents is evolving too. Whereas before, the industry was measured on the wealth of its workforce and the production of hand-made materials, funding is now geared towards more additive manufacturing where investment is intended to inspire ideas rather than the mass production of something all under the same roof. Six industry-led Growth Centres are said to be a “strategic priority”
Covestro managing director Rebecca Lee discusses the future of the automotive industry and solar power.
to yield Australia’s industrial future, according to the Department of Industry. These include work around advanced manufacturing, cyber security, food and agribusiness, medical technologies and pharmaceuticals, mining equipment, as well as the energy sector. “Australia has established world leaders who provide innovative and high-quality products,” a department spokesperson told Manufacturers’ Monthly. “The Australian resources sector is at the cutting edge of the application of automation and advanced technologies.
“Additionally, Australian food manufacturing has a number of pioneers. The skills, knowledge and capabilities of Australians are globally recognised and respected, and are a valuable export commodity in their own right.” The opportunities that a new Australian space agency present the industry will also position the country as an innovator in the realm of space exploration and observation, which, in turn, can further advancements in new technology. According to the Federal Government, Australia owns “key competitive advantages” in research, design (R&D) and engineering, and this is illustrated by the level of private investment they are attracting. When Ford halted its production line last year, it established a high-tech Asia-Pacific Product Development Centre in Melbourne, where it has increased its R&D investment in Australia by 50 per cent to $450 million in 2017. “Many automotive-related firms are utilising government assistance to help businesses innovate, collaborate and invest, to improve productivity and growth,” the department added. Among them, IMR Technologies recently received an Entrepreneurs’ Programme Accelerating Commercialisation grant to develop car crash alert devices. Quickstep Automotive and Futuris Automotive Interiors also received funding for a CRC project with Deakin University, to develop bespoke, lightweight carbon-fibre seats for the automotive industry.
Material thinking Commodities is going through a transition too, with the advent of electric vehicles expected to enhance the production of lithium batteries. 24 DECEMBER 2017 Manufacturers’ Monthly
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IndustryFOCUS
The Australian Federal government said that Australia holds key competitive advantages in R&D compared to its global counterparts.
At the German materials solutions company, Covestro, its engineers are looking at ways lightweight bodywork can boost, not only battery-powered vehicles, but also the pursuit of solar travel, which requires smarter materials to allow a car to travel further using renewable energy solely. Rebecca Lee, the manufacturer’s Melbourne-based managing director, explained how Australia’s resource sector is driving change in the automotive sector. “From an Australian perspective, it is really about finding out what is cutting-edge in terms of the country’s technology,” she said. “What we still have here – even though the manufacturing and assembly of car parts has gone – are engineers that represent a real commitment to industry quality.” In October, Covestro teamed up with Team Sonnenwagen, a group of students from Germany, to take part in the 2017 World Solar Challenge – a 3,000km solar-car race from Darwin to Adelaide using nothing but the manmonthly.com.au
sun’s energy to complete a race through Australia’s outback. Lee said the project is aimed at “changing the way we think about sustainability” and to test materials that will be used on vehicles of the future. “One thing that businesses are changing is how they think about materials and how we can solve the sustainability challenges that are in front of us,” Lee continued. “When you start to think about other lightweight materials and how they can benefit the industry, from a holistic point of view, that is going to have an impact along the supply chain. “In Australia, there has always been an uptake of new technology and one thing I have noticed is that, as a multinational company, that is why we [Covestro] have a footprint here in Australia. “It is about looking for that new technology we can create awareness around and I think that sustainability as a concept in industry is really going to bring some new opportunities to the fore.”
Intellectual property Another of Australia’s strategic manufacturing advantages is centred around its protection of intellectual property, at a time when Australian businesses are seeking security for their innovations and products. This, according to the government, reflects the growing influence advanced manufacturing
is having on the national economy. Speaking at Autodesk University, Michael Sharpe, director of the Advanced Manufacturing Growth Centre (AMGC), considered the industry’s trajectory. “Let’s look 10 years into the future. It’s October 2027; we all came here by driverless car and your children are going into jobs that you just don’t understand,” Sharpe said. “Where is Australian manufacturing [going to be] and what impact will this industry have had on Australia over the past decade? “Is Australia a place that offers high-wage and high-skill jobs? Are we still one of the world’s wealthiest nations or have we slipped behind? “These are all big questions but they shouldn’t seem too big for us today? Our manufacturing sector and the advanced work it does has a critical role in terms of answering these questions. “Most importantly, we need to ensure that the next decade guarantees our continued prosperity and creates the right conditions for the next generation.” Sharpe was also unfazed by the offshoring of manufacturing, claiming that production of an idea doesn’t necessarily have to belong in Australia for Australians to reap its rewards.
Manufacturers’ Monthly DECEMBER 2017 25
Industry FOCUS
Australian businesses are not only doing well but many are leading the world in their respective categories. Taking Apple as an example, Sharpe explained that, while the product’s assembly takes place in China, nobody considers the iPhone as a peace of Chinese engineering. Instead, he insists Australia should take stock of its own expertise in the pre- and postproduction markets, where highertech roles will lead a new generation of manufacturers. “As we know, manufacturing is not only about making whole products,” Sharpe continued. “Manufacturers – and especially advanced manufacturers – tend to make items that feed into the operations of other manufacturers and assemblers. “In fact, such intermediate goods now account for more than 41 per cent of global trade while Australia’s share is only about one per cent, so we have a massive opportunity for growth in this country. “Even though we have seen massive disruption in sectors like 26 DECEMBER 2017 Manufacturers’ Monthly
automotive, I know that many jobs remain in that area but are directed towards high-skill areas such as engineering, design and research.” Many Australian businesses are not only succeeding but are leading the world in their category, according to Sharpe, who believes the industry is now at a crossroads. “We could either find out what is working in manufacturing and try to encourage more of it,” he said, “or find out what isn’t working and try to stop it. “We are taking the first route, which means looking at why some companies are doing so well. Seeing lots of good things happening in manufacturing, we are asking questions around what has proven most effective and how we can accelerate that.” Since January 2014, Australia’s manufacturing industry has seen its share in the country’s export value climb to almost a third, making it
It is about looking for that new technology we can create awareness around and I think that sustainability as a concept in industry is really going to bring some new opportunities to the fore. the nation’s second-largest export behind mining.
Additive manufacturing To boost productivity, the government’s Growth Centres are seeking to align industry and innovation policy with the help of bodies such as the CSIRO and Corporate Research Centres (CRCs). “This is already proving successful, with innovation hubs in carbon fibre, additive manufacturing and Industry 4.0 stimulating collaboration between researchers
and firms,” a spokesperson for the Department of Industry added. At Atlas Copco Compressors, the compressed air and vacuum systems manufacturer, its solution around air compression is disrupting the industry for the better. In Australia, Atlas Copco is primarily a sales arm to the wider brand, relying on its knowledge and manufacturing centre in Antwerp, Belguim. As well as the manufacture of its products overseas in countries including China, India, Italy and Brazil. manmonthly.com.au
IndustryFOCUS
By investing in R&D, manufacturers are now finding alternative solutions that have a wider impact and are easily customisable. “Australia’s main change in the supply chain over the years has simply been around cost-cutting but, at the same time, higher attention has been paid to highest possible quality and efficiency,” said Nash Bakhit, product manager for Atlas Copco’s compressors division. “That doesn’t mean our quality is being compromised, not at all. With time, the time it takes to achieve that quality has improved.”
The difference between Atlas Copco compared to other manufacturers is that, while using a third party to build machines is a common practice elsewhere, wherever in the world its products are built, they are built by Atlas Copco owned factories that are run and managed by Atlas Copco employed teams. “For us being a sales company, we are striving to support the local manufacturing industry and
to make it more competitive,” Bakhit continued. “By providing a solution at a competitive price that saves on ownership costs to the manufacturing industry, it helps it get better and gives it the motivation to keep going. “At the moment, the trend for manufacturing is to have a one-stop shop that supplies the industry with specific solutions that add more quality to manufacturers by providing a
more optimum product.” One of the main issues local manufacturers have, besides the cost of labour, is the cost of energy, which Bakhit says is “going through the roof”. By investing in R&D, manufacturers are now finding alternative solutions that can impact the wider industry and provide a more tailored service to their customers. While its products are made overseas, Atlas Copco’s VSDplus air compressor machines are proven to cut a factory’s energy consumption by an average of 50 per cent. “We are supplying the backbone to the manufacturer’s operations,” Bakhit explained, “and the costefficiency and the availability of the new technologies that we bring to the market can really help manufacturers develop longer IPs because they have the tools at hand. “In the same way that computers helped businesses develop new ideas, our innovative product such as our onsite nitrogen generators, for example, are much more refined and technologically advanced these days than they were before and help the industry to be more innovative.”
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Manufacturers’ Monthly DECEMBER 2017 27
CAD /CAM
Machine learning: a risk or revolution? CAD technology has the potential to revolutionise the speed and precision of engineering design, yet some believe it poses a threat to the wider industry workforce. Manufacturers’ Monthly reports from Autodesk University on both the possibilities and the implications.
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IKE most disruptive discoveries, the dawn of machine learning is doubleedged; from the big dreamers who recognise its potential for limitless creation, to those daunted sceptics who fear its “destructive” power. For now, computer-aided design (CAD) is still led by human direction. Yet, the speed in which artificial intelligence changes the way the industrial world is engineered is picking up at such a rate that some believe the mortal face of manufacturing could disappear altogether. The debate continues. Should scientific discovery endure even if it puts the livelihoods of traditional engineers at risk? All the while, planes in the sky are becoming more streamline
28 DECEMBER 2017 Manufacturers’ Monthly
due to stronger yet lighter designs composed by split-second algorithms, and the places we live, work and travel are being made more connected through the introduction of augmented and virtual realities. For Autodesk, this is a common question. Is the intuition of its workforce putting its very existence in the balance? Or, by reinventing the way things are designed and manufactured, can machine learning open doors to a world their predecessors could only imagine? Patrick Williams, Autodesk’s senior vice president for Asia-Pacific, is excited by the possibilities. “Intellectual production is changing and today it is common to work on teams that are not just local but sometimes global,” he told the annual Autodesk University
conference in Sydney. “Using technologies like augmented reality and virtual reality are going to allow us to change how we understand designs. “How we predict and make decisions and, ultimately, how they are going to get to a better design in a more collaborative design environment.”
Optimising design In the future, machine algorithms will completely automate the process – spanning design, engineering and fabrication – according to Williams. In theory, this will offer optimal designs for anything from the composition of a lightweight chair to the infrastructure of an integrated city, all at the push of a button. “I think that it is clear all the
things we make – whether they are buildings, cars or highways – are all deeply connected to each other and do not function in isolation anymore,” Williams continued. “They talk to each other and generate a tremendous amount of data and insights, which change over time. It is a combination of these things that, when combined with a third disruption, it creates a significant disruption for all of us.” That third disruption is machine learning, which Williams says is accelerating at an “alarming rate”. “It is changing what we design and make,” he said, “and also how each and every one of us works. “There has been expressed concern that these types of technologies are going to take away jobs. At the same time, they are also enhancing the way manmonthly.com.au
CAD/CAM
Engineers and architects attended Autodesk University in Sydney. we work and what we produce. “Human and machine partnerships are now allowing us to create smarter and better products than ever before.” The biggest disruption, according to Williams, is also a burning issue beyond industry. “Climate change is forcing each and every one of us – and each and every industry that we design in – to think differently about what we design and how we design it,” he continued. “Everyone has to ask the question of what we should do in a world where climate change and resource constraints are rampant. “This is where sustainable design comes in. It’s about creating designs that are better for the world, for us today and for the children of tomorrow.”
Motivating the manufacturer So, where does the manufacturer fit in? The industry in Australia has been presented with a choice: whether manmonthly.com.au
to seek a cheaper production line abroad so to avoid rising labour costs at home; or alternatively to stay put and reconfigure the workforce to meet changing technology. Eric Begeja, an executive advisor for the industry consultancy firm, GHD Australia, insists modern-day engineers need to embrace it. “I am originally from a manufacturing background,” he said, “and the manufacturing sector, over the past 30 to 40 years, has gone through a lot of technological change. “Labour costs are going up in Australia and there is cheaper labour in Asia, so they have to decide whether we close our facilities here in Australia or to stay back and automate.” From an Australian perspective, he says parts of the industry have lost its income to the economy, while those who have stayed in Australia have reskilled and retrained a lot of their workforce. “We have obviously lost a lot of jobs, but we have kept a lot of jobs too, by retraining the workforce,” Begeja said. “As an engineering consultancy, we have got this dilemma: do we carry on the way we are, do we utilise lowcost sensors, or do we transform our workforce by utilising some of these newer technologies? “I have to make a confession. I am also one of those poor engineers that is potentially facing extinction and it is really in my best interest to make sure I understand where that technology is going, so that I can adapt, evolve and keep my species going, too.” In his opinion, there are two scenarios that could play out. Where computer technology is far more intuitive, the human engineer has to think smarter too, which means understanding his or her own strengths over artificial intelligence. While, on one hand, machines work infinitely faster than any human can, understanding a problem and where to place most of your energy are key human traits that may never be replaced. Another is the eye for a beautiful design, in addition to understanding efficiency.
“Do we embrace this change, resist it, or collaborate,” Begeja said. “There is an inherent fear in all of us that means, when we are threatened, we go in to this defensive mode where we try to discredit or put down the technology that threatens us. “If you think it is a threat, you should really know your enemy, which is important for all of us. If you can’t beat them [machines], then join them.”
Infinite ideas In the past, the role of CAD used to be passive and, ultimately, owned a finite function. When building a car seat for example, traditionally, an engineer would have had to run a simulation of a model, which could take hours before he or she received valid feedback on the design’s performance. A further redesign would follow and, unless the car seat passes the next simulation, the cycle continued and, even then, didn’t necessarily mean an optimal design had been achieved. Bupesh Lall, Autodesk’s Field marketing director for Asia-Pacific, discusses the opportunities smart computers can present the industry – especially coupled with the role of 3D printing. “In a sense, what I was doing
[as an engineer] was proposing and disposing designs to get something better,” Lall said. “Now we can flip the whole thing around. Instead of trying designs one at a time, we can explore many different options with no physical risk or cost. “The value of infrared computing is that is can extrapolate, mutate and mash up an infinite number of options for a design simultaneously, which is the world we call ‘generative design’. “Using intelligent algorithms that are based, in some part, on evolutionary patterns of nature, it opens up the design space to many new solutions.” In aerospace, Autodesk is working with Airbus around the cost efficiency of its planes by considering how different designs can shed the weight of a fuselage and, effectively, long-term fuel consumption. “The relationship between us, the software and the tool used to be very directed [but] this relationship, courtesy of generative design, has evolved to be much more adaptive,” Lall explained. “The generative design tools anticipate our design needs and, in doing so, have discovered the best designs that we may never have discovered alone.” Patrick Williams discussed the future of machine learning in manufacturing.
Manufacturers’ Monthly DECEMBER 2017 29
Internet OF THINGS Disruptive manufacturing is a good thing The global manufacturing industry has undergone an era of profound upheaval (or disruption), according to integrated enterprise management specialist, Sage.
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ISRUPTION, according to Sage, can come in many forms such as pressure from foreign imports or even currency fluctuations, all of which have impacted on global manufacturing over the past two decades. However, this disruption, will also prove to be its saviour For its part, Australia’s manufacturing sector has also suffered from a disruptive economic climate throughout that time, despite some tinkering with microeconomic policy initiatives that has impacted positively on the industry overall, such as labour market reform, research and development grants, and the occasional export drive into a particular market.
Disruption in the form of the IoT With the IoT, the manufacturing sector has been experiencing changes with it becoming one of most disruptive forces in Australian industrial businesses. The modern manufacturing plant floor is a hub of technology, sensors, electronic controls and automated equipment. These interconnected devices drive efficiency, quality as well as flexibility. This is where manufacturers will see the biggest impact of this disruption. Fast, efficient and flexible computerised machines are providing instructions for the exact requirements for each product at each moment of production. This is a fullscale transformation of the old-style “economies of scale” approach that drove mass-produced consumer goods. Connected tools and machines are a key aspect of these changes. Take an IoT-enabled torque wrench in the assembly of a complex part, as a simple example. When connected to the cloud, a torque wrench can capture the torque applied to a specific part, as well as information such as the specific wrench that was used, when 30 DECEMBER 2017 Manufacturers’ Monthly
that wrench was last calibrated and the employee(s) who used it. Faults can be detected in real time, and even when they’re missed, the cloud can trace every part affected back to the root cause. Quality and speed are the first things that will be improved in such a hyper-connected environment.
Using ERP solutions to exploit advantages the IoT offers In order to capitalise on all the benefits of the IoT, the implementation of new technologies such as enterprise resource planning (ERP) is the best way for manufacturers to improve and increase their efficiencies. Manufacturers need to understand that improvements in efficiencies will only come when they think outside the box and embrace the notion that disruptive technologies are not only good for their business, but will also help improve the outcomes in a sector that is in a continual state of flux. Therefore, by adopting faster, simpler and more flexible business management solutions, manufacturers can keep well ahead of the huge changes that are happening right now across a range of industries, including manufacturing. However, getting the right solution is half of the battle and experience suggests that success is down to procuring the right software from the right provider.
Sage X3, for example has been designed with powerful functionality that can be configured to meet your unique way of doing business. Its flexible data model supports complex organisational deployment and reporting structures, simplifying management across multiple facilities, companies or business units, regions and countries from a common installed instance of the solution. Unlike other solutions that rely heavily on add-on software integrations to support industryspecific processes, Sage X3 includes in-built functionality that’s ready to use in today’s complex manufacturing industries. It also uses flexible web service technology that enables easy access of complementary cloud-based solutions when necessary – a must with the many requirements and facets of the IoT. Sage X3 offers rich functionality to support all your core business processes with minimal IT investment and resources. As a customisable solution, Sage X3 offers powerful functionality that can be configured to meet a company’s unique way of doing business. Its
flexible data model supports complex organisational deployment and reporting structures, simplifying management across multiple facilities, companies or business units, regions and countries from a common installed instance of the solution. Sage X3 eliminates the complexity of managing an international business. It simplifies the management of international trade—suppliers, contractors, partners and customers (multi-language, multi-currency)— and can manage a global business from one common installed instance (global compliance, multi-legislation, multi- ledger). With built-in functionality for manufacturing, distribution and services tasks, Sage X3 accommodates a company’s unique rules and processes. Most of all, for the requirements of the IoT, Sage X3 is also easily scalable and quickly adapts to the needs of large volumes of acquitted data, growing with a business as it expands to new markets or geographies, and making it simple to manage a global business while at the same time navigating the new universe that is the IoT.
Harnessing the power of disruption Customers also recognise that ERP solutions can help them overcome the barriers they are likely to face in the future, but the key is getting the right one. An ERP solution with a strong manufacturing foundation that supports many of the best practices required to align business processes is what is required.
With built-in functionality for manufacturing, distribution and services tasks, Sage X3 accomodates a company’s unique rules and processes.
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Sustainable PRACTICES Shifting the power into the hands of the manufacturer Amid a government directive to reduce industry carbon emissions, one Australian manufacturer is making it its mission to turn power into profit.
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manufacturer of good stock, Radcoflex is questioning its own energy values in order to improve its industry standing. For 60 years, the Australianowned business has manufactured and supplied a selection of metal and non-metal expansion joints and flexible hoses for industries ranging from automotive and roads, to the mining and defence sectors. Director Mat Carroll has only been in the role for just over six months. Despite his commitment to sales and production tasks, he has coupled innovation and adoption of energy with environmental efficiency strategies as a mutually beneficial task. In addition, the company is addressing its carbon footprint to reduce cost and has already shown substantial short-term gains during its pursuit of long-term sustainment. “We have, to date, commenced three principle energy management strategies in Radcoflex,” Carroll said. “These include the modernisation and implementation of more efficient machinery, the first of which was the change our constant speed compressor to a Variable Speed Compressor.” Radcoflex identified that its old compressor was only being loaded for short periods of time per week. Yet, due to the constant operation, the company was using 27,512 kWh of energy which less than a third was attributable to loaded operation. “With the adoption of a variable speed drive (VSD) compressor, our total power usage is estimated to drop to approximately 7,800 kWh,” Carroll continued. “This was a greater than 70 per cent reduction in power on a single machine modification. “By continuing down this avenue to modernise – not only our machinery for energy
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efficiency – but, more broadly, manufacturing practices, we can maintain a competitive advantage in our industry.” The next change the company has sought is around the type of lighting it uses across Radcoflex’s New South Wales manufacturing, which has produced some “quick but significant wins”. “Our existing lighting solution was largely based on old halogen or fluorescent globes, which were costing our business approximately $7,000 per annum,” Carroll explained. “However, with the substitution to LED lighting, we have seen approximately a $5,500 reduction in annual fees, which, when factoring in the cost of the change over of equipment, will be repaid within 13≈months.” The final component was the adoption and installation of solar power on Radcoflex’s head office and manufacturing sites. An industry advisor projected that a 60kW system would provide the company the most optimal solution when coupled with its operating hours of manufacture. “This system effectively will reduce our power reliance from the grid by just over 60 per cent,” Carroll said, “which will facilitate a return on investment in four-to-six years and effectively enables us to invest capacity into further innovation, or purely reduce our outgoings.” The decision to change the company’s approach to energy consumption wasn’t entirely profitdriven, either. Carroll explains his passion for the environment and a belief that, in whatever walk of life, “we should always try to leave somewhere better than how we found it” and that profitability and social conscious are compatible.
“I believe that the capacity for industry to be profitable as well as sustainable for the future are intrinsically linked to businesses – small to large – across all sectors finding innovative solutions to challenges that are ultimately and holistically beneficial,” Carroll said. “It is the capacity of an individual and group to innovate and therefore be the disruptor in their own market sector, so to be continually viable.” Australia is ranked in the top 10 countries in the world for renewable energy investment, according to the E&Y’s Renewable Energy Index In addition, the Federal Government’s Renewable Energy Target is on track to source 23.5 per cent of Australia’s electricity from renewable sources by 2020. To meet this, the government is rewarding Australian businesses, which actively reduce carbon emissions through the federal Emissions Reduction Fund. Carroll, however, believes the
manufacturing industry needs to act in unison to crack down on energy consumption at a time when power prices are going up in a country rich with commodities dug up for export. “Realistically, it is up to you [the company] to engage with a supplier or another company in that domain to discuss what you want to achieve and trust the information that you are given,” he continued. “From that point onwards, it is crucial to be savvy with the process and to take the right measures for your site. In our case, there are limits to the amount of solar power we can have before you become a major supplier, which would prohibit our power use and savings. “These weren’t decisions I made easily but, it came down to the age-old commentary that says, as an ‘early adopter’ – while it can be a risk – we can better position ourselves, and the industry, for the future by finding other means of doing manufacturing now.”
Installing solar panels will reduce Radcoflex’s power reliance from the grid by just over 60 per cent.
Manufacturers’ Monthly DECEMBER 2017 31
Manufacturing STRATEGIES Managing the risks of global supply-chains, equipment failure and cyber-threats Lyndon Broad, operations manager at FM Global, brings focus to the most pressing risks to business performance in the 21st century
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combination of factors is driving risk management and insurance up the list of priorities for manufacturers in Australia and beyond. Cyber threats are increasing in number and sophistication, the financial and reputational impact of equipment failure is rising and the globalisation of supply chains is exposing many manufacturers to political, social and economic factors they may not be fully aware of. Overlooked exposures can quickly become front of mind for many manufacturing executives. In 2011, many computer manufacturers became acutely – and painfully – aware of their reliance on manufacturers of hard disks and hard disk components in the region around Bangkok, in Thailand. Damage caused by flooding in the area impacted the ability of these manufacturers to acquire a vital component needed to make their indemand products. The lesson for manufacturers is that many of these suppliers to the suppliers – or even suppliers to the suppliers to the suppliers – may have exposures that the manufacturer may deem unacceptable in its own operations. To properly understand their risk profiles, manufacturers should undertake assessments that span the entirety of their supply chains. They should also consider reviewing their insurance policies to ensure those policies adequately cover losses incurred due to incidents involving second-tier manufacturers. As cyber-threats become increasingly prevalent and technology systems – industrial as well as IT – are targeted by criminal elements, manufacturers may also need to reevaluate their cyber-risk policies. At present, many manufacturers work with brokers to purchase
32 DECEMBER 2017 Manufacturers’ Monthly
policies that protect them against liabilities associated with the loss of confidential data. However, many of these policies do not feature first-party property coverage. To properly cover the damage caused when a malicious device or code is introduced to the manufacturer’s systems, these policies should view data and software as property and treat them similarly to other property assets. Furthermore, insurance policies need to cover losses incurred due to interruptions to the manufacturing process. For example, when malware is introduced into a Computer Numerical Control (CNC) machine, it damages the data and program. This may mean the machine is unable to continue to create or manufacture product. The policies should also cover any resulting physical damage incurred due to an attack. For example, if a control system that stops a turbine from over-speeding is disrupted, the catastrophic damage that is likely to result should be insured by the property policy. Policies should also cover the costs of different types of disruption caused by malicious software or intrusions. For example, denial of service attacks can prevent access to corporate systems and data, impeding a manufacturer’s ability to carry out important run-of-business activities. The broader issue of equipment failure-related disruptions is key to manufacturers in Australia and beyond. According to a recent Deloitte report, the cost of unplanned downtime for industrial manufacturers can be as high as US$50 billion (A$65.8 billion) per year. However, manufacturers can take a range of steps to minimise disruption caused by equipment breakdowns, such as implementing predictive
FM Global’s engineers work to minimise risk for manufacturers in Australia and beyond.
maintenance systems that analyse data from connected equipment to determine when parts may fail and enable the business to take proactive maintenance steps. However, perhaps the most important is to work with a partner with the skills, resources and business model that can help the manufacturer focus on the factors that lead to breakdowns and other disruptions and prevent the loss occurring. A partner that employs highly trained and skilled engineers can properly review relevant equipment hazard factors, such as maintenance environment operations, operating conditions, history, contingency planning and safety devices. They can then identify deficiencies and the likelihood of one or multiple factors contributing to financial losses and the scale of those losses. By using analytics (rather than relying on best practices alone) to help the manufacturer prioritise investments, the partner can play an active role in minimising risk. FM Global adopts a three-pronged approach to protect its manufacturing clients from cyber-intrusion. Field engineers review security risks such as physical access to computers, data centres and phones; technical experts
work through a series of specific questions with clients about security processes and procedures; and an elite team provides high level consulting services to help clients manage complex environments requiring detailed security management. To minimise the risk of equipment disruption, FM Global’s engineers work through risk factors and apply detailed analytics to prioritise what its clients should be working on to improve risk. Finally, FM Global’s insurance policies cover ‘the supplier of the supplier of the supplier’ to the extent they impact the client’s business. The coverage goes back to but does not include an unincorporated entity and goes all the way through to the customer. For example, in the case of a computer manufacturer, the policy would cover the impact arising from loss at the component manufacturer who supplies the hard disks to the hard disk manufacturer, who supplies the computer manufacturer. For manufacturing businesses aiming to thrive in globalised, competitive markets, managing and mitigating risk – and taking out comprehensive, relevant insurance – are essential to success. manmonthly.com.au
AUTOMATION & ROBOTS Jan/Feb 2018 Issue Whether operating a small company or a big business, there are a number of robotic component solutions that can perform a number of different functions. Industrial robots can assist in reducing costs, improving quality, increasing production and addressing safety issues on the factory floor. While a complete automation solution might not be appropriate for smaller businesses, industrial robotic components and machinery can be added as needed, and customised and expanded for business requirements. In the February edition of Manufacturers’ Monthly, we profile the companies offering customised robotic solutions.
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Manufacturing IN TRANSITION Reaffirming the positives While the economic landscape for manufacturers has not been smooth sailing, it is important for businesses to remind themselves that there are always positive takeaways in any situation.
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HE global manufacturing climate has moved towards a digital age and work practices are also changing rapidly. New advanced manufacturing processes like 3D printing are replacing older, slower ones – an example of a process that is dramatically changing the way a supply chain works. With these new changes, manufacturers abroad and locally are diversifying so they can add value at different stages of the manufacturing process. That being said, manufacturing in Australia is highly dynamic. There are many companies making valuable contributions to the country’s economic output through product innovation, employment and exports. And while the portion of GDP contributions by the manufacturing sector has been decreasing, the positivism emerging from the manufacturing community through its openness to adopt and adapt new technologies has seen that shrinkage being under control. According to a report by the
Australian Manufacturing Growth Centre (AMGC), the Australian Government, including both the Australian Bureau of Statistics (ABS) and the Department of Industry, Innovation and Science, currently defines advanced manufacturing by “two ‘input’ proxies for ‘advanced’ which were the relative research and development and skill level intensity of each sub-sector”. While Australia has again ranked outside the world’s 20 (rank 21) most competitive countries according to the recent 2017-18 World Economic Forum (WEF) Global competitiveness report, it moved up one place from last year and has the potential to move up further if the manufacturing space continues to innovate. Ai Group chief executive, Innes Willox, said that despite the overall ranking, there are a number of positives in this year’s WEF Competitiveness Report. He said, “Australia continues to rank in the top 10 of global economies for our financial markets (6th best) and
higher education and training (9th best). But while we should celebrate our strengths, the WEF rankings illustrate that our competitiveness performance is well short of our aspirations. Australians in general are not comfortable sitting this far off the leaders’ board.
Taking stock of our achievements Since it is important to bring out the positives in our business, the industry needs recognition for both the regular and new prospective players into the market. There are many standout marquee events to celebrate the best in the manufacturing business, and the annual Endeavour Awards leads the way in reminding the industry that it is still growing, reinventing itself and keeping production local, moving forward. The winner of the coveted Manufacturer of the Year award, Redarc Electronics, attributes its success to being able to keep Australia continues to move up the ranks of the WEF Global competitiveness index.
its manufacturing local despite competition against imported products from low-cost overseas competitors. Anthony Kittel, managing director of Redarc told Manufacturers’ Monthly after the 2017 Awards, “We must continue to provide a compelling value proposition to our customers in the face of cheap imports by ensuring we maintain our leadingedge technologies, products and relationships through sustained high-levels of research and development, employing highly skilled staff and customer service excellence.” United Forklift and Access Solutions, who was awarded the Safety Solution of the Year award, was thrilled to be recognised at such an awards ceremony. Mark Versaci, marketing and CRM manager at United Equipment said that the award is a strong affirmation of this vision in delivering innovative solutions to the industry. “We look forward to growing our business by supplying new innovative products and developing solutions that will further benefit the industry,” said Versaci. The feeling of being rewarded for the effort put in to deliver the best quality product is second to none. This was the case with Enerpac, solutions and manufacturer of highforce tools and equipment used in industrial markets. Managing director at Enerpac, Denis Matulin remarked, “Receiving such a prestigious award (Australian Industrial Product of the Year) is a testament to the hard work and dedication to the entire team.” Nominations and sponsorship for The Endeavour Awards 2018 is now open. Visit endeavourawards.com.au/ for more details.
34 DECEMBER 2017 Manufacturers’ Monthly
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Mentorship&DEVELOPMENT Taking it to the next level Earlier this year, at the Women in Industry Conference and Awards, industry leaders found common ground in the benefits good mentorship when growing an organisation.
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ENTORING programs essentially help newer employees connect quicker with senior employees and set the standard for future growth, both for the individual and the business involved. With an effective program, the employee performs more effectively and with greater satisfaction. Of course, the benefits to the employee are obvious, but what is there for the organisation that has a firm mentoring program? In a McKinsey report called Diversity matters, the analyst company insists that more must be done to take full advantage of the opportunity that diverse leadership teams represent. This includes looking at talent pipelines; as well as attracting, developing, mentoring, sponsoring, and retaining the next generations of global leaders at all levels of organisations. During this year’s Women in Industry Conference and Awards, one of the speakers, Vanessa Kearny, commercial manager of Geelong Refinery, Viva Energy Australia, spoke of the importance of mentoring and retraining workers at a previous job. “I wanted to mentor some people and that they were given the best opportunity to redeploy,” she said. In this case, mentoring is also about leaving a positive legacy not just for the organisation, but also to the industry as a whole. The mentoring process speeds up the process of bringing on new hires and redeploying existing employees into new lines of work. Deloitte’s Emerging Leaders Development program is all about developing its future leaders. Its program lies in its focus and commitment. According to the Deloitte website, each program participant is assigned a partner, principal, or director sponsor who commits to at least two years to help their protégées drive their own manmonthly.com.au
careers by helping them understand how to navigate their organisation. Furthermore, generally, the first month of a new hire is critical to the overall success of that employee’s tenure with the organisation, so mentoring provides a key resource to these employees during this crucial learning phase. In addition, employees who participate in mentoring programs have a higher job satisfaction. Higher job satisfaction leads to increased productivity and reduced turnover. This could also come during internships that could lead to the securing of future hires. Lisa Lamb, manufacturing director, Seqirus, who won the Excellence in Manufacturing Award at the Women in Industry Awards 2017 said that part of her success as a manager to the business
was fostering an environment of collaboration and learning within her manufacturing team. She mentioned the importance for industrial organisations to offer work experience placements or internships. Coming from a company that prides itself on a culture of equal opportunity and diversity, she said, “It is essential that every person is valued for their contributions, and by creating a connection between the manufacturing operator and the product they are making, it can drive behavioural change and decision-making throughout the manufacturing process and in turn improve productivity and quality.” In terms of career growth and succession planning, a proper mentorship program, is also an effective way to provide a career
growth path to employees. In order to reduce hiring and turnover costs while keeping employees constantly motivated to grow, companies need to chart out growth paths for employees to moving into leadership positions down the road. Forward planning for an organisation’s succession strategy is important. Penelope Twemlow, CEO of Energy Skills, Queensland, said that one of the things she tells her mentees is that, if they don’t keep up with the changing trends of the industry, they will find themselves lagging behind in terms of the required skills for the industry. She credits her leadership style to the leaders that have shown her the way before her. “It is my job to ensure that we pass on the experience to improve and advance our future workforce,” she said. Employees who participate in mentoring programs have higher job satisfaction.
Manufacturers’ Monthly DECEMBER 2017 35
Lubricants Hot tips for summer survival from CRC Industries Lubricants specialists, CRC Industries, insists that having good maintenance of machines with the right lubricant is essential for different climate conditions.
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HE Australian summer and build-up to the Christmas period poses unique challenges for the manufacturing sector, ranging from compressed workloads and increased pressure on production schedules to threats from extreme weather events. According to CRC Industries, summer is a crucial time to audit repair and maintenance programs to ensure equipment is running at its peak. Manufacturers should also take the necessary precautions to protect plant and fleet equipment from the harsh seasonal conditions and verse themselves in the correct procedures for restoring water-damaged equipment in the event of a severe storm or cyclone. As a leading supplier of ISO accredited lubricants, aerosols and chemical maintenance products to the manufacturing sector for more than 50 years, CRC understands the demands that summer time brings. “Much focus goes on personal safety during summer, and rightly so,’’ said CRC Industries Australia managing director, Shona Fitzgerald. “The importance of sun protection, proper hydration, fatigue management and the like cannot be overstated. “However it is also extremely important to focus on the procedures, products and equipment used to maintain manufacturing machinery to ensure the highest standards for reliability and safety are being met. “The onset of summer drives home the importance of asset protection and performance and the detrimental effects poor lubricants, inefficient lubrication techniques and substandard anti-corrosion programs can have on machinery and engine wear, safety and workplace productivity.” CRC’s products and industry best practice are giving companies peace of mind and – particularly when incorporated into planned
36 DECEMBER 2017 Manufacturers’ Monthly
maintenance programs – the ability to drive up economic and competitive advantage while extending the life of machinery and equipment. The company also offers comprehensive suite of specialty products, services and advice to assist in the restoration of water damaged equipment, and to help eliminate the need for costly replacement and repairs in the aftermath of an extreme weather event. In the USA, the company has issued a how-to guide for salvaging water damaged equipment in the wake of recent major hurricanes, which can be equally applied in Australia. The six-step process involves cleaning the equipment, applying cleaner or degreaser, applying a moisture displacing lubricant, measuring resistance, applying a precision cleaner and ensuring minimum resistance levels are obtained before energising motors and pumps. CRC recommends the following steps with regards to removing dirt, mud, oil sludge and other contaminants deposited by water: 1. Remove end bells from electric motors and pumps. 2. Remove covers from switch gears and control panels. 3. Flush or spray equipment with generous amounts of clean water and a water-based cleaner to remove contaminants. 4. Stand motors and pumps on end and allow to drain. To remove oil, grease and sludge not removed by water flushing, equipment can be dipped in a heavy duty degreaser or sprayed thoroughly. A good option is the Lectra Clean – an electric motor and equipment cleaner and degreaser. The TCE free product effectively removes grease, oil, wax dirt and other contaminants from motors, parts and other electrical and mechanical equipment. The next step is to apply a moisture displacing lubricant such as CRC 2-26
multi-purpose lubricant and corrosion inhibitor, and to continue spraying until the run off is clean and clear. Once the equipment has properly drained, it is important to take Megger readings to measure insulation resistance and if readings are not up to minimum resistance levels, applications should be repeated. When minimum resistance levels are reached, it is time to spray low-voltage contacts with a precision cleaner such as CRC CO Contact Cleaner - a high purity, nonstaining, cleaning solvent with rapid evaporation. After following these steps it is vital that machinery is not energised until minimum resistance levels are obtained. When Megger readings indicate minimum resistance levels have been reached, motors and pumps can be energised under no-load conditions. “Allow to run for a period of time to continue drying under normal conditions. When readings return to normal, motors can be used in a normal loaded manner,’’ Fitzgerald said. Summer storms and cyclones can not only cause extensive damage to electrical and electronic equipment, but their aftermath can be devastating, requiring a massive cleanup effort. CRC understands that maximum performance from motors, pumps, machinery, plant equipment and power tools is a must. The company offers a range of additional specialty products to keep manufacturers performing at their best under Australia’s harsh summer conditions. It offers a selection of greases, products for general purpose cleaning, degreasing and disinfecting, heavy duty lubricants and penetrants, smart washers and more. CRC Industries Tel: (Karen Heidtmann, Marketing Services Manager) 0411 313 741 www.crcindustries.com.au
To remove oil, grease and sludge not removed by water flushing, equipment can be dipped in a heavy duty degreaser or sprayed thoroughly.
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With over 6,000 units sold world-wide the Octopus is an automatic rotary ring stretch wrapper capable of wrapping up to 135 pallets per hour. The Octopus ring wrappers are a fully automatic incorporating the latest technology and its ring type method. The wrapping film reel is suspended from a ring and revolves around the pallet. The ring is raised and lowered according to the wrapping program. The pallet remains stationary, which makes the wrapping of unstable and lightweight products considerably easier. There are no centrifugal forces to cause stress or strain on the load or on the equipment. As the ring can be accurately positioned in the vertical direction, wrapping can be started and finished at any height required. The Octopus provides optimal load containment while optimising film usage. It features medium to high speed wrapping loaded with features. Superior tension control allows for customised wrapping and an easy S film carriage design offers unmatched performance. Its options also include a load stabiliser which ensures unstable loads remain intact throughout the wrapping operation, an integrated top sheet dispenser which provides automatic weatherproofing without taking up floor space, a No Touch-NoTail (NT2) seamer that offers high quality, low maintenance seaming without touching the pallets, a Corner Post Device (CPD) cost saving system that automatically inserts four solid corner posts at the pallet corners, a LogoWrap System that automatically inserts printed stretch film to a pallet load during the normal wrapping cycle, four-sided brand identification. The OctoMax performance monitoring system reduces film costs, eliminates downtime and simplifies maintenance. Signode Australia & NZ www.signode.com.au 1800 685 824
Phoenix Contact’s Push-in contact inserts for heavy-duty connectors Phoenix Contact has released the new PT-TWIN Push-in contact inserts for heavy-duty connectors expanding its existing range of contact inserts that feature push-in technology for this category. In addition to offering push-in connection technology, the new device comes with a double conductor connection – a world first. This feature provides additional user convenience as two conductors can now be wired into one contact point quickly and easily to save time. The double conductor connection also eliminates the need for an additional marshalling level, further simplifying the installation process and minimising the time required. The double conductor connection capability, together with the PT-TWIN’s Push-in connection technology, not only simplifies the connection process for the user, it also ensures greater choice. The new option expands the existing range of contact inserts with Push-in for heavy-duty connectors of common housing lines, and adds to the wider portfolio, which includes Crimp and Screw connection technology. Created for fast assembly, the device features tool-free installation. The technician simply pushes the wires in, thereby setting up the connection, and then places the PT-TWIN Push-In contact insert into the connector, making the process hassle free and quick, to help save on time. Ideal for control and power transmission, the unit also provides user flexibility, as it is available with a fixed number of positions and in a modular design for series B housing
Konecranes VFD Capacitor Reforming service identifies faults Konecranes is introducing to Australasia a new Variable Frequency Drive (VFD) Capacitor Reforming service that utilises a proprietary, portable, fully automatic DC power source to reform stored VFDs at a customer site, ensuring that they are in top condition when they are needed in service. The VFD Capacitor Reforming service is designed to reform spare drives without ever removing them from the facility. A certified/qualified electrician will reform the capacitors in the DC-bus of a VFD using a fully automated portable DC power source. As an additional part of the service, a visual inspection to identify faulty devices and recommendations for corrective actions is included. Companies that use VFDs almost always keep spare units on-site in case one breaks down. These spares can remain dormant for years before being put into service. After the drive has been reformed, the electrician will issue a certificate of inspection and label the VFD. The certificate includes the date of the next recommended reform, should the VFD remain idle for another year. Spare VFD’s are there to minimise downtime, when the main VFD isn’t working. The last thing a company needs is for a spare part to also fail, causing additional unnecessary downtime. Konecranes
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38 DECEMBER 2017 Manufacturers’ Monthly
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