Call 13 26 96 nswbusinesschamber.com.auManufacturing 
futures 
A paper by the 
Australian Business Foundation 
for the NSW Business Chamber 
April 2011 
Invigorating business 
Call 13 26 96 nswbusinesschamber.com.auManufacturing 
futures 
A paper by the 
Australian Business Foundation 
for the NSW Business Chamber 
April 2011 
Invigorating business 

2 
NSW Business Chamber 
2 
NSW Business Chamber 

Table of contents 


Executive summary 2 
1 Introduction 8 
2 The contribution of Australian manufacturing 9 

Overview 9 
Output 10 
Employment 10 
Exports 11 
Productivity 12 
Research and development 12 
Profits and investment 12 
Manufacturing in NSW 13 

3 The changing face of manufacturing 14 

Disappearing boundaries between manufacturing and services 15 
Knowledge driving innovation and productivity 19 


4 Future manufacturing 23 

More intensified competition 23 
More complex and varied opportunities for doing business globally 24 
New manufacturing – shift from mass production to customisation and personalisation 25 
Growing importance of the low-carbon economy 27 
Changing skills needs and imperatives 27 
Technology transforms entire business models, as well as products and processes 30 
Collaboration and connectivity accelerates innovation and competitiveness 32 

5 The productivity challenge 34 

Productivity and innovation 34 
Policy perspectives 37 


6 Platform for action 40 

Headline insights 40 
Priorities for action 42 
Help wanted 46 

7 References 48 


NSW Business Chamber 


Executive Summary 
Manufacturing matters 
to Australia... 

even though it makes 
a smaller contribution 
to economic activity 
relative to services and 
other sectors... 

the same applies to 
most industrialised 
countries. 

Manufacturing in Australia makes a vital and significant 
contribution to the economy. 

The sector has been growing at an average rate of 0.9% for 
more than a decade, employs almost 1 million people, 
accounts for 8.7% of GDP, and for most of our high value 
exports. 

But, manufacturing’s relative contribution is declining. This is 
largely due to the higher growth rates of other sectors, 
especially mining and services. In line with the changing 
global economic landscape, this trend is observed across 
most other advanced economies. 

Importantly, there is also evidence that manufacturing has a 
multiplier effect on the rest of the economy by driving jobs, 
investments and sales in other sectors. 

Australian manufacturing 
is confronting fierce 
and growing global 
competition. 

It is a stark reality that Australian manufacturers will continue 
to be pressured by a more intensified competitive 
environment - from low cost manufacturing economies, the 
strong Australian dollar, import penetration, the softening of 
domestic demand, rising input costs, narrowing profit 
margins and increasing social and environmental 
expectations. 



Simultaneously, 
the character of 
manufacturing 
itself is fundamentally 
changing... 

and 

...the forces shaping 
manufacturing’s future 
environment are 
also shifting. 


Chief among the changes that are redefining 
manufacturing are the following: 

• 
the disappearing boundary between manufacturing 
and services; 
• 
new niches to be exploited through outsourcing and in 
wider and more distributed global value chains; 
• 
new understandings of innovation based on smart 
problem-solving for customers which are accessible to 
all companies, not just those who can afford formal R&D 
and frontier technologies; 
• 
manufacturing is no longer characterised by standardised 
mass production; 
• 
intangible assets, like know-how and know-who, are 
increasingly important to the sustained success of 
manufacturing firms. 
The key forces of change likely to shape the future 
environment for manufacturers are: 

• 
More intensified competition. 
• 
More complex and varied opportunities for doing 
business globally. 
• 
Shift from mass production to customisation and 
personalisation. 
• 
Growing importance of the low carbon economy. 
• 
Changing skills needs and imperatives. 
• 
Technology that transforms entire business models. 
• 
Collaboration and connectivity that accelerates innovation 
and competitiveness. 

NSW Business Chamber 


Executive Summary 
This ‘morphing’ of 
manufacturing opens 
up new prospects 
and opportunities for 
Australian manufacturers 
receptive and capable 
of riding the wave 
of change. 

Don’t under-estimate the whole range of green, ‘cleantech’ 
business prospects for first movers from the push for a low 
carbon economy. 

Add services to products, which create innovative and valued 
new solutions for customers that others can’t easily copy. 

Enter and extend the reach of Australian manufacturers into 
international markets by capitalising on the variety of new 
niches in products and services available in unbundled 
global value chains, and the possibilities afforded by trends 
in offshoring, outsourcing and other multi-country 
collaborations. 

Make use of the technologies which have lowered transport 
and communication costs and which are enabling previouslyunimagined 
new approaches to doing business competitively 
anywhere in the world from Australia. 



New angles on 
innovation and 
productivity are the 
key to profitability 
and longevity for 
Australian 
manufacturers. 


There is a wealth of authoritative analysis and thinking that is 
questioning conventional understandings of innovation and 
productivity. 

Innovation is more about problem-solving and learning than 
about scientific discovery, more about the customer than the 
producer, more about the marketplace than the laboratory 
and more about business transformation than technology. 

Productivity is not about doing more with less, nor about 
working people harder for longer. Productivity improvement 
is not generally the result of greater capital investment to 
replace labour. Productivity does not equate with efficiency; 
it centres on innovation and transformation – of business 
capabilities, skills, technology and competitiveness. 

In practical terms, the productivity gains that matter to 
manufacturers come from increasing revenue, not just 
cutting costs. 

Anticipating and better serving customer needs and creating 
skilled, high performance workplaces provide the key to the 
profitability and longevity of manufacturing. 

Vital ingredients are problem-solving for demanding 
customers; organising people and operations for agility and 
flexibility; smart use of market and customer knowledge; and 
adapting existing technologies and processes to new uses. 

Manufacturers can innovate on many dimensions, not just 
through R&D: new delivery and distribution channels; new 
attributes of their business offerings; new organisational 
arrangements; improvements in products and processes; 
more beneficial ways of managing customer relationships; 
and providing better customer experiences. 

Innovation is the chief weapon in the ‘productivity revolution’ 
and the battlefront is where business enterprises and their 
workforces intersect with customers in the marketplace and 
the community. 



NSW Business Chamber 


Executive Summary 
Reviewing all the issues covered in this paper as a whole, 

To secure their future, 

three priority areas for action are suggested for Australian 

Australian manufacturers 

manufacturers. 

should act to... 

• 
Experiment with 
business innovations. 

Consider making innovative changes to the standard 
business model, i.e., in how firms create and capture value 
for their customers, their partners and themselves. 

To help choose from the many options for business model 
innovation, try out disciplined experiments. More potent 
ways of engaging customers will be central to these business 
innovation experiments. 

Improvise and learn about what works for the individual 
manufacturing enterprise. 



• 

Invest in 
people and skills. 
Manufacturers are challenged by skills shortages, growing 
competition for talent, wage pressures, and the need for 
continuous upskilling of the manufacturing workforce and 
management. 

Intensifying competition and the changing models for 
business success in the manufacturing sector present even 
more urgent and critical skills imperatives. 

Deepening and expanding the skills, capabilities and 
adaptability of manufacturing managers and workforces is 
essential for enterprises to profit from innovative 
manufacturing business models. 

Manufacturing enterprises must urgently invest in the new 
constellation of skills required for high-performance and 
empowered workplaces. Not only technical skills, but 
creative thinking and problem solving and skills in global 
collaboration and partnering. 

• 

Multiply knowledge 
connections. 
In the modern era, manufacturing is not a solitary pursuit. 

Being well-connected and highly proficient at collaboration 
is a key attribute allowing manufacturing enterprises to 
access and absorb knowledge and to transform it into new 
competitive capabilities. 

In the global internet age, knowledge is an asset that can 
depreciate rapidly and needs to be continually refreshed. 
Flows of knowledge are critical and these only happen 
through people, their networks and relationships. 

Being connected counts. Manufacturers must position 
themselves in rich webs of relationships and knowledge 
flows. 



1 Introduction 


The NSW Business Chamber has commissioned the Australian Business Foundation to 
research and prepare this paper on Manufacturing Futures. 

The intent is to produce a status report from desk-based research on current thinking 
about Australian manufacturing’s economic contribution, present circumstances and 
future prospects. This status report aims to pull together current understandings about 
manufacturing and its future as a platform for immediate action. 

The NSW Business Chamber has asked the Australian Business Foundation to distil 
recent research and reports into a coherent paper illuminating and making sense of the 
key contemporary issues and themes for maximising the future growth, productivity, 
profitability, longevity and competitiveness of Australian manufacturers. 

Further, the paper aims to draw out from this review of local and international research a 
small number of key themes about the attributes Australian manufacturers will likely need 
to compete successfully and to sustain themselves in the future. Particular attention is paid 
to the role of productivity growth. 

The paper on Manufacturing Futures is intended to provide guidance to manufacturers, 
their representatives and governments to accelerate the uptake of practical change, 
and exploit opportunities for growth. Specifically, the paper is a contribution to a 
signature initiative by the NSW Business Chamber to assist its manufacturing members to 
develop and improve their businesses, while strengthening the Chamber’s position as a 
manufacturing advocate. 

Australian Business Foundation 

The Australian Business Foundation was established as an independent, not for profit spin-
off company from the NSW Business Chamber more than a decade ago and tasked with 
researching and detecting the emerging issues likely to impact on Australian businesses 
‘ahead of the curve’. 

The Australian Business Foundation is a unique collaborative research body at the centre of 
a vibrant community involving Australian and international scholars, policy makers, opinion 
leaders and business executives. 

Its research has focused on business innovation and sustainability, emerging models of 
business competitiveness, and opportunities arising from a knowledge economy. The 
Foundation has produced research studies on Australian manufacturing innovation and on 
changing patterns of competitiveness in Australian manufacturing. 

This paper on Manufacturing Futures has been authored primarily by Narelle Kennedy, the 
Chief Executive of the Australian Business Foundation, with significant research support 
from market analyst and international trade adviser, Rab Memari. 


2 The contribution of 
Australian manufacturing 

Manufacturing matters to Australia, even though it represents a smaller 
proportion of economic activity relative to services and other sectors. This is 
the case for most industrialised countries. 

Overview 

Manufacturing has played a critical role in the economies of developed countries for over a 
century, in many cases being one of the primary factors leading their development and 
modernisation. There are barely any examples of countries with high incomes and living 
standards that did not have a manufacturing sector accounting for a quarter to a third of 
economic output1. 

In Australia, the manufacturing sector makes a vital and significant contribution to the 
economy. The sector has been growing at an average rate of 0.9% since 1999-00, 
accounting for 8.7% of GDP as at December 2010, or $111.1 billion2. The sector also 
continues to be an important contributor to employment, employing almost 1 million 
people or 8.7% of the workforce, and exports, accounting for 36.1% of total exports3. 

The Australian manufacturing sector has been increasingly integrated into global value chains, 
which have exerted competitive pressures resulting in the sector’s gradual transformation by 
adapting to a continuously changing environment. Despite its remarkable resilience and 
strengths, manufacturing in Australia has been on a continuous decline as a proportion of the 
total economy since the middle of the twentieth century, largely due to the higher growth rates 
of other sectors, especially mining and services, and in line with the changing global economic 
landscape, a trend observed across most other advanced economies. 

The Global Financial Crisis (GFC) had an especially negative effect on the manufacturing 
sector and the recovery is on a slower trajectory compared to other sectors. According to a 
survey conducted by the Department of Innovation, Industry, Science and Research (DIISR), 
the manufacturing sector is the most over-represented in terms of firms facing profit falls, 
lower employment and bankruptcy4 as a result of the crisis. Sectors that have closer 
linkages to the government and minimal exposure to financial and international markets 
were the least affected by the GFC. 

Manufacturing also has a multiplier effect in its impact on the rest of the economy. The US 
Bureau of Labor Statistics has, for example, calculated that each dollar worth of manufactured 
goods creates another $1.43 of economic contribution towards other sectors, the highest 
multiplier out of any sector. This is, for example, double the multiplier effect of services at $0.715. 
This provides an interesting metric demonstration of the importance of the manufacturing 
sector to the economy by creating jobs, investments and sales in other sectors. 

To draw greater insight into the role and contribution of manufacturing to the Australian 
economy, it is informative to examine the following key indicators of the sector. 

1 See Australian Department of Industry, Tourism and Resources, May 2007. Background Paper 2: Australian Manufacturing 
Sector Trends, Commonwealth of Australia. 

2 Australian Department of Innovation, Industry, Science and Research March 7th 2011, Manufacturing Fact Sheet, http://www. 
innovation.gov.au/Industry/Manufacturing/Pages/default.aspx 

3 From unpublished Department of Innovation, Industry, Science and Research background material. 

4 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: Overview of 
Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

5 King, H., 29th May 2010. Council of Industry, in a speech at the Council of Industry’s Manufacturing Champions Award, May 

29th, New York, http://www.councilofindustry.org/documents/MfgChampionAwardBreakfastpressrelease.pdf [Last viewed: 

29 March 2011]. 


Output 

Although manufacturing output has been experiencing steady real growth rates, growing 
at a rate of 4.9% on an industry gross value added basis between calendar years 2009 and 
2010, its contribution towards overall GDP has been in decline. The Productivity 
Commission attributes around 30% of the declining share of manufacturing in GDP to 
“slower growth in manufacturing prices relative to prices of other goods and services”6. 
Increases in labour productivity as well as outsourced manufacturing have also contributed 
towards this trend. 

The Commission goes further to identify two groups of manufacturing industries that have 
fared well over the long-term: Manufacturing activities with strong links to Australia’s natural 
endowments of food, forests and minerals, increasing from 36.5% of manufacturing value 
added in 1968-69 to just under 44% by 2000-01; and manufactures with more differentiated 
products with higher skill and R&D intensities such as Medicinal and pharmaceutical goods, 
Photographic, scientific and medical equipment and, to a lesser extent, Electronic 
equipment7. 

Employment 

The manufacturing sector is a significant contributor towards overall employment, with 
approximately 995,000 persons working in the sector as at the February quarter 2011. 
Employment in the manufacturing sector shrank by 0.4% (3,600 people) from November 
2009 to December 20108. 

Over the last 20 years manufacturing employment has declined slightly, most of it 
attributable to labour productivity growth rates and significant falls in employment in the 
Textile, Clothing, Footwear (TCF) industry since the late 1980s9. The sub-sectors with 
highest employment growth rates have been Primary Metal and Metal Product 
Manufacturing, Transport Equipment Manufacturing and Food Product (see Figure 1). 

Furthermore, the effects of import competition from developing economies and rising 
terms of trade have increased the importance of skilled labour, increasing educational 
requirements and changing the occupational mix of jobs10. This has “undercut low-skilled 
manufacturing in Australia and driven an increase in the returns on skilled labour relative to 
unskilled labour”11. 

6 Australian Department of Industry, Tourism and Resources, May 2007. Background Paper 2: Australian 
Manufacturing Sector Trends, Commonwealth of Australia. 

7 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

8 Australian Department of Innovation, Industry, Science and Research March 7th 2011, Manufacturing Fact Sheet, 
http://www.innovation.gov.au/Industry/Manufacturing/Pages/default.aspx 

9 Australian Department of Industry, Tourism and Resources, May 2007. Background Paper 2: Australian 
Manufacturing Sector Trends, Commonwealth of Australia. 

10 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

11 Australian Department of Industry, Tourism and Resources, May 2007. Background Paper 2: Australian 
Manufacturing Sector Trends, Commonwealth of Australia. 


Figure 1. Total Manufacturing Employment by Industry, Original (‘000) 


Nov 2000 Nov 2010 
Annual Change 
Nov 09 to Nov 10 
Manufacturing, nfd 24.2 67.5 -13.3 
Food product 180.7 215.9 9.2 
Beverage and tobacco product 24.8 22.3 -6.5 
Textile, leather, clothing and footwear 87.2 41.8 -1.1 
Wood product manufacturing 42.9 37.0 -9.2 
Pulp, paper and converted paper product 26.0 16.7 2.53 
Printing (including the reproduction of recorded media) 60.7 56.6 5.4 
Petroleum and coal product manufacturing 11.9 7.2 1.5 
Basic chemical and chemical product manufacturing 48.0 46.3 -3.7 
Polymer product and rubber product manufacturing 42.8 31.4 -2.9 
Non-metallic mineral product manufacturing 40.8 37.5 3.8 
Primary metal and metal product manufacturing 71.9 93.8 12.8 
Fabricated metal product manufacturing 100.4 53.7 -6.0 
Transport equipment manufacturing 95.5 91.0 10.2 
Machinery and equipment manufacturing 117.9 120.0 -7.4 
Furniture and other manufacturing 84.4 55.6 1.1 
Total manufacturing 1,059.9 994.4 -3.6 
Total – All industries 9,010.8 11,395.4 402.8 
Manufacturing share 11.8% 8.7% n/a 
Source: ABS, Labour Force, Australia (Cat No 6291.0.55.003) 

Exports 

The manufacturing sector in Australia has increasingly become integrated with global value 
chains, making it prone to fluctuations in global input costs and the Australian dollar. 
Manufacturing is now the second largest contributor to exports after having been 
overtaken by the mining sector. The manufacturing sector accounted for 40% of total 
exports and 88% of total imports in 2009-10, demonstrating the importance of 
manufacturing within Australia’s international trade activities. Over calendar year 2010, 
Australian manufacturing exports increased by 2.4% to $83.4 billion12. 

Manufacturing exports have been strong due to the internationally competitive nature of 
manufactures and the shift towards higher-value added products. However, the strong 
Australian dollar is having a constraining impact on manufacturers. 

In 2008-09, around 62% of manufacturing exports were elaborately transformed 
manufactured (ETMs) products, with the rest being simply transformed manufactures 
(STMs)13. STMs are manufactures that have only been taken through one or two stages from 
their raw material state, whereas ETMs incorporate higher value added stages of 
manufacturing. This is in line with the manufacturing sector’s transformation towards higher 
value added products. 

12 From unpublished DIISR background material. 

13 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

Manufacturing futures April 2011 



Productivity 

Manufacturing is a highly productive sector compared to other sectors. This is attributable 
to efficiencies it has gained through increased exposure to international competition, its 
effective adoption of technologies and high levels of labour productivity. Productivity in the 
manufacturing sector, as a measure of Gross Value Added (GVA) per hour worked, fell by 
1.7% in 2008-09 from the previous year, compared to a slight increase of 0.1% across the 
overall market sector. However, from 1999-00 to 2000-10 the labour productivity in the 
manufacturing sector increased by 2.2% on average, compared to an average increase of 
1.5% for the overall market sector14 . Manufacturing’s comparatively high productivity levels 
are a critical factor in its resilience and continued growth rates. 

Research and development 

Manufacturing is the primary source of technological innovation in the Australian business 
sector15. It had the highest expenditure on R&D in 2008-09, comprising 26% of the total, 
followed closely by mining at 25%. Much of Australia’s higher value added activity is as a 
direct result of R&D activities of manufacturing firms. R&D expenditure was highest in the 
Transport Equipment sub-sector, followed by Machinery and Equipment. Fabricated Metal 
Products had the highest growth rate with an increase of 39.4%, followed by Basic Chemical 
and Chemical Products at 27.3%16. 

Profits and investment 

The strength and volatility of the Australian dollar, import penetration and rising input costs 
have put strain onto manufacturers’ profit margins17. Gross operating profits in the 
manufacturing sector (that is, profits from the business’ core operations rather accounting 
for profits from other investments, interest and taxes) have grown at an annual compound 
growth rate of 4.6% in the ten years since 1998-99. Gross operating profits in the sector are, 
however, under pressure, having decreased by 19.4% in 2008-09 over the previous year 
primarily due to the GFC. More recently, gross operating profits rose by 3.2% in the year to 
the December quarter 2010, this compares to an increase of 14.7% for all other industries in 
the same period18. This disparity in relative growth rates can be attributed to changing 
commodity prices that are increasing profits for the mining sector and increasing input 
costs for the manufacturing sector. 

14 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia; and from unpublished 
DIISR background material. 

15 Australian Department of Industry, Tourism and Resources, May 2007. Background Paper 2: Australian 
Manufacturing Sector Trends, Commonwealth of Australia. 

16 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

17 From unpublished DIISR background material. 

18 From unpublished DIISR background material and Australian Department of Innovation, Industry, Science and 
Research, July 2010. Manufacturing Sector: Overview of Structural Change - Industry Brief 2008-09, 
Commonwealth of Australia. 


More efficient, deeper and innovative capital markets have also enabled more 
opportunities for business to invest, which benefits the manufacturing sector due to its 
capital intensive nature. This has been compounded by lower real interest rates leading up 
to the GFC. Furthermore, private new capital expenditure in manufacturing declined by 

1.5% from 2007-008 to 2008-0919. 

Manufacturing in NSW 

Manufacturing is a vital component of the NSW economy with deep and long standing 
roots in the State. Manufacturing contributed $32.8 billion in 2010 to NSW’s economy, 
around 10% of total industry value added, which is forecasted to grow by 19% in 2020. 
Manufacturing in NSW has an important role in the overall Australian manufacturing sector, 
contributing around 32% of Australia’s manufacturing output, the largest of any State, 
followed by Victoria20. 

NSW-based manufacturers include world leading and globally competitive firms, with 
manufacturing exports constituting 19.4% of total NSW merchandise and services exports, 
or $11.7 billion. The skilled manufacturing workforce, despite skills shortages in certain 
areas, is a key competitive strength that will ensure the sector’s ability to apply advanced 
information technologies and lean manufacturing techniques to improve productivity and 
remain competitive in Australia and globally. The NSW Business Sector Growth Plan also 
points out the sector’s competitive strengths in design and development capabilities by 
being a “provider of training and employment for marketers, engineers and designers, 
including software and system designers”.21 

According to Access Economics, strong international competition will encourage NSW 
manufacturers to continue their transition to higher value and more complex manufacturing 
activities which embody new knowledge and technological change, eg green building 
materials, some forms of renewable energy, higher value added processed and semi-
processed food. Continued innovation will be critical for the manufacturing sector to 
remain globally competitive as emerging economies shift in line with this trend as well.22 

19 Australian Department of Innovation, Industry, Science and Research, July 2010. Manufacturing Sector: 
Overview of Structural Change - Industry Brief 2008-09, Commonwealth of Australia. 

20 NSW Government, September 2010. NSW Business Sector Growth Plan, 
www.business.nsw.gov.au/innovation [Last viewed: 28 March 2011]. 

21 Ibid 

22 Access Economics, August 2010. The NSW economy in 2020 – A foresighting study, a report for the NSW 
Innovation Council. 


3 The changing face of manufacturing 


Australian manufacturing is confronting fierce and growing global competition. 
Simultaneously, the character of manufacturing itself is fundamentally changing 
and the forces shaping manufacturing’s future environment are also shifting. 

Reports of the death of Western manufacturing are greatly exaggerated. These are the 
words of PricewaterhouseCoopers in their paper, The Future of Manufacturing – Taking a 
Global Perspective (2009). They advise against accepting the misconception of 
manufacturing in inevitable and terminal decline as the basis of future action. 

There is a widespread belief in many high-wage countries that we ‘don’t make anything 
anymore’. According to this myth all manufacturing has either moved to China already, or soon 
will, with the rest of the world becoming purely service economies. This is factually incorrect.


 Western manufacturing is neither dead, nor dying. It has survived over the past 30 years by 
delivering extraordinary improvements in productivity, combined with high levels of specialised 
skills built over decades that cannot easily be relocated wholesale somewhere else. And, the 
coming explosive growth of Clean Technologies and Renewable Energy offers a unique (albeit 
limited) window of opportunity for Western manufacturing to move beyond ‘hanging on’ 
against low-cost competition back to a real renewal. 


Assessments from the Australian Department of Innovation, Industry, Science and 
Research, from both published and unpublished sources, show that Australia’s 
manufacturing industry has continued recently to demonstrate strong growth. Performance 
has been positive across a range of indicators including output, exports and productivity. 

While the overall contribution of manufacturing to GDP in Australia is declining relative to 
the services sector – as it is in all industrialised nations – its absolute contribution is 
increasing. 

The relative decline is explained in part by increased productivity and the outsourcing of 
services by manufacturing firms. It also reflects changing consumer preferences as incomes 
increase and higher proportions of consumer income is spent on personal services, 
entertainment, travel, health and the like. 

Manufacturing industry continues to make a vital and integral contribution to the Australian 
economy. 

But fundamental changes are afoot. There is evidence that manufacturing is evolving to 
meet the challenges and realities of a knowledge-based economy. 

Two key features of this hidden transformation underway in Australian manufacturing are: 

• 
The increasing interdependence between manufacturing and other sectors of the 
economy, particularly services. 
• 
How the knowledge economy operates in practice as a potent driver of new sources of 
business innovation and productivity for manufacturing. 

Disappearing boundaries between manufacturing and services 

The forces of globalisation that ‘shrink the world’, advances in technology and 
communications and the rise of outsourcing and distributed supply chains, are re-defining 
what it means to be a manufacturer. The classic definition of manufacturing as production, 
ie. the transformation of raw materials into finished products, is becoming increasingly 
inaccurate and outdated. 

The Institute for Manufacturing at the University of Cambridge in its 2006 paper on 
Defining High Value Manufacturing offered the following extended definition of 
manufacturing: 

… the full cycle of activities from research and development, through design, production, 

logistics and services, to end of life management. 

On this definition, manufacturing and production are not the same. Production is only one 
activity of a manufacturing firm, and it may not even be its primary activity. The Institute for 
Manufacturing argues that a company is still a manufacturer if it has outsourced all of its 
production activities and is focusing on brand management or R&D. 

They conclude that in today’s globally competitive landscape, manufacturers are inventors, 
innovators, global supply chain managers and service providers. Manufacturers are now 
engaged not only in production, but in research, design and service provision. In essence, 

manufacturing is the collection of activities that is required to develop, produce and deliver 
goods and services to customers. 

The Institute for Manufacturing has developed a framework for understanding the different 
ways manufacturing firms create value. It is based on two most basic and easily measured 
dimensions, cost and revenue. It is possible to group manufacturers on the degree to which 
their costs are derived from production, and their revenues from products or services. The 
Institute for Manufacturing’s framework produces the following matrix. 

SERVICES 
PRODUCTS 
Service led 
producers 
Product 
manufacturers 
Service 
manufacturers 
System 
integratorsMajority of revenues from... 
Majority of costs in... 
PRODUCTION NON-PRODUCTION 

Types of manufacturers 

Manufacturing futures April 2011 



This frameworks results in a more informed and useful description of the nature of 
manufacturing firms: 

• 
Service led producers who provide customers with services based on a significant 
production capability. 
• 
Product manufacturers who focus on generating value through production. 
• 
Service manufacturers who have little or no production and generate value from services 
which are based around a product. 
• 
Systems integrators who control the channel to customers and manage an external 
production network. 
Manufacturing and services are increasingly and ever more tightly being bound together. 
This phenomenon is worth a closer look because it opens up new opportunities and new 
pathways to competitiveness and profitability for Australian manufacturers. 

Considerable evidence of the interdependencies between manufacturing and services has 
been compiled internationally in a variety of academic, government-commissioned and 
private sector studies, including the Centre for Business Research at the University of 
Cambridge, specific research centres at the University of Sussex, Imperial College and the 
University of Brighton, the UK Business Department, Pricewaterhouse Coopers’ 
manufacturing report, the OECD, the Ministry of Economy, Trade and Industry in Japan and 
the Singapore Trade and Industry Ministry.23 

The Minister for Trade and Industry in Singapore recently noted that the important 
consideration is not to make a choice between manufacturing and services, but to position 
themselves within the spectrum spanning manufacturing and services in order to take 
advantage of the growth opportunities there. 

The Australian Business Foundation partnered in a 2002 ARC-funded research study led by 
Professor Jane Marceau and colleagues at the University of Western Sydney, investigating 
over 500 Australian manufacturing and related firms on their linkages between products 
and services. 

The study sought to get a handle on a major international debate about whether 
manufacturing matters in modern economies. It concluded that current perceptions of the 
decreased importance of Australian manufacturing and the arrival of the ‘service economy’ 
are too simplistic. The headline findings uncover a rich dynamic between manufacturing 
and services in Australia and new capabilities that are emerging. 

23 See Japanese Ministry of Economy, Trade and Industry, 2002; BERR, 2008; Monetary Authority of Singapore, 
1998; OECD – various; PwC, 2009; Coutts and Rowthorn, 2009; Davies, Brady et al, 2003. 


• Australian firms are successfully competing by creating fresh customised business 
offerings by linking products and services together in diverse ways to meet customer 
needs. 
• Australian firms are successfully competing by creating fresh customised business 
offerings by linking products and services together in diverse ways to meet customer 
needs. 
Product-service packages were found to be widespread and diverse. Nearly 75% of the 
manufacturing firms surveyed as part of the study reported that they incorporated and sold 
services in their product offerings to customers. 

Typically these included engineering, prototyping, design and testing services during the 
production process, and services like maintenance, training and information/help desks at 
or close to point of sale. This was the case across the board – from metal manufacturers to 
electronics firms to pharmaceutical companies. 

Service firms were also adding value to physical products acquired from manufacturers by 
bundling them with a vast array of services. Typical cases include computer and 
telecommunications companies selling total solutions of hardware, customised software, 
finance, technical support and upgrades. Another example is that of the hospital surgical 
supplies provider now sourcing a variety of products and linking them into packages which 
have just the right number of sutures, instruments and so on for a given surgical procedure. 

Large scale, complex and unique construction or infrastructure projects (like building, 
owning and operating an airport or a sports stadium) provide yet another example of the 
mixing of products and services to deliver an entire, highly customised, once-off or small 
batch project. 

Marceau et al found several key factors shaping these product-service packages, including: 

• 
the increasing power of the client and demands for customisation; 
• 
the shift towards outsourcing; 
• 
new products, especially radical or risky ones, generating customer demands for 
information, training, help desks and similar services; 
• 
efforts to capture distant markets through collaborations with local servicing companies; 
and 
• 
compliance with regulatory requirements stimulating new services in areas like design, 
technical and quality assurance, training and environmental impact assessments. 
• 
This emerging pattern of product-service linkage is a sign of Australian firms getting 
smarter and transforming themselves to provide not just products or services, but 
solutions to customers. 
Firms are blending and bundling products and services to: 

• 
retain their customers; 
• 
add value, while reducing costs and risks; and 
• 
differentiate themselves by expanding and customising their offerings and looking for 
niches which give them long-term advantage. 

18 
NSW Business Chamber 
It is a smart move to add services to products because it is less risky to develop new 
services than new products. Services have ever-expanding boundaries and are not 
constrained by what the product can be first seen to do. Provision of services means that 
firms do not have to retool or invest in expensive and untried technologies. It is in effect a 
risk management strategy. 
It is also a competitive response so that firms can succeed in an increasingly volatile and 
globalised business environment of cheaper products, shorter product cycles, faster 
business imitations and saturated markets. 
One Australian case example is a Sydney-based subsidiary of a US multinational, a modern 
high performing company that both sells and services planetary gearboxes to customers 
mostly in the mining, agriculture and construction industries in Australia and offshore. 
The case study company told the story of its efforts to ensure its survival and growth in a 
climate of intense competition, of customers with little loyalty buying on price and the 
company’s profitability becoming increasingly marginal. 
The company changed their approach, transforming themselves from a manufacturer of a 
single product to a unique and customised total package service provider. They first added 
value to their gear boxes with new features and capabilities. They then engaged further 
with their customers in understanding the end uses of the gearbox and became involved in 
problem-solving and design. They then added services to the package, including 
maintenance and upgrades. 
Their journey proved successful, though not easy. It required a cultural shift in 
management, sales team changes, major efforts to win customer confidence, a 
commitment to forming alliances and reorganisation of the capabilities of the business so 
they could consistently offer a high quality total package of solutions to customers. 
• Competing by linking products and services drives Australian firms to be more 
innovative and knowledge-intensive. 
Devising new product-service packages stretches the technical, managerial and marketing 
capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives 
their innovation and competitiveness. 
Innovation through product-service packaging has far reaching effects on business 
competitiveness as the firms involved tend to: 
• collaborate with others, including customers, at home and abroad and so, increase their 
level of knowledge or technical proficiency; 
• retain customers and thus spend less energy on recruiting new ones; 
• generate new skills inside their enterprise, notably through different mixes of technical 
and market-related skills; and 
• be flexible in reorganising their operations to suit and satisfy customer needs. 
Such innovation, because it does not always require R&D investment, often goes unrecognised 
in official statistics and in popular understanding of innovative behaviour in firms. 
18 
NSW Business Chamber 
It is a smart move to add services to products because it is less risky to develop new 
services than new products. Services have ever-expanding boundaries and are not 
constrained by what the product can be first seen to do. Provision of services means that 
firms do not have to retool or invest in expensive and untried technologies. It is in effect a 
risk management strategy. 
It is also a competitive response so that firms can succeed in an increasingly volatile and 
globalised business environment of cheaper products, shorter product cycles, faster 
business imitations and saturated markets. 
One Australian case example is a Sydney-based subsidiary of a US multinational, a modern 
high performing company that both sells and services planetary gearboxes to customers 
mostly in the mining, agriculture and construction industries in Australia and offshore. 
The case study company told the story of its efforts to ensure its survival and growth in a 
climate of intense competition, of customers with little loyalty buying on price and the 
company’s profitability becoming increasingly marginal. 
The company changed their approach, transforming themselves from a manufacturer of a 
single product to a unique and customised total package service provider. They first added 
value to their gear boxes with new features and capabilities. They then engaged further 
with their customers in understanding the end uses of the gearbox and became involved in 
problem-solving and design. They then added services to the package, including 
maintenance and upgrades. 
Their journey proved successful, though not easy. It required a cultural shift in 
management, sales team changes, major efforts to win customer confidence, a 
commitment to forming alliances and reorganisation of the capabilities of the business so 
they could consistently offer a high quality total package of solutions to customers. 
• Competing by linking products and services drives Australian firms to be more 
innovative and knowledge-intensive. 
Devising new product-service packages stretches the technical, managerial and marketing 
capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives 
their innovation and competitiveness. 
Innovation through product-service packaging has far reaching effects on business 
competitiveness as the firms involved tend to: 
• collaborate with others, including customers, at home and abroad and so, increase their 
level of knowledge or technical proficiency; 
• retain customers and thus spend less energy on recruiting new ones; 
• generate new skills inside their enterprise, notably through different mixes of technical 
and market-related skills; and 
• be flexible in reorganising their operations to suit and satisfy customer needs. 
Such innovation, because it does not always require R&D investment, often goes unrecognised 
in official statistics and in popular understanding of innovative behaviour in firms. 

• Manufacturing remains central to much productive activity and is not in decline, just 
changing configuration to increase the levels and variety of services. 
• Manufacturing remains central to much productive activity and is not in decline, just 
changing configuration to increase the levels and variety of services. 
Marceau’s study holds a warning against making public policy or business strategy 
decisions based on a simplistic view of manufacturing in decline and services on the rise. 

The lessons for business from this, irrespective of their sector of the economy, are: 

• 
Collaborate with other firms and organisations, like research and education bodies. 
• 
Increase the number and broaden the range of services you offer. 
• 
Stay close to customers. 
• 
Re-think the internal organisation of your firm’s activities. 
• 
Invest in new skills. 
So, the blurred boundary between manufacturing and services is being manifested in these 
new hybrid business offerings that solve customer problems in more imaginative and 
valued ways. This in turn, results in more competitive capabilities in the enterprises 
involved, adding to the resilience of Australian manufacturing. 

Knowledge driving innovation and productivity 

To better understand the morphing of manufacturing, it is important to appreciate the 
reality and potency of the knowledge-based economy. This is not just the province of the 
technology whizz kids or the science elites. Its key feature is not high technology, but the 
smart application of knowledge. This use of knowledge to transform the capabilities of an 
enterprise is a decisive factor both in generating maximum commercial value in individual 
businesses and in driving long run economic and productivity growth for the nation. 

In short, know-how and know-who is more important than what you own and make. The 
knowledge and relationships that firms have are increasingly significant in how they can 
deliver value to customers and make money from their businesses. 

Businesses succeed in a knowledge economy not by “building a better mousetrap”, but by 
using their brains, know-how, intelligence and connections. 

Intangible assets can create wealth too. Firms and nations can capture value not only from 
exporting products and services, but also from leveraging capabilities and ownership of 
global assets and intellectual property. 

For example, the Bishop Technology Group does more than export its world-class, 
technologically advanced steering components for motor vehicles; it holds over 180 patents 
and successfully licenses its technology to corporations throughout the world. As a result of 
Bishop’s proficiency at leveraging its intellectual property, over 20% of all passenger cars 
produced globally each year incorporate some element of Bishop steering technology. 

Another example is the case of Australian SME, Aeronaut Automation (previously known as 
Aeronaut Sails) which changed its business from sail making to the manufacture of cutting 
machines for industrial and technical fabrics in response to customer demand and the 
difficulty in sourcing reliable and high quality cutting machines. They capitalized on their 
own superior industry and user knowledge to create an entirely new and successful 
business model, one which served to replace imported machinery. 


Low on research, high on knowledge 

In papers for the Australian Business Foundation by international innovation researcher 
Professor Keith Smith on Innovation and the Knowledge Economy in Australia and in 
subsequent writings, he cautions against equating knowledge and innovation just with 
research and development. 

Professor Smith puts the case that low and medium technology industries, many in mature 
and traditional sectors like manufacturing, are in fact, knowledge-intensive, innovative and 
growing steadily. For example, food processing, metal products, wood and timber 
products, chemicals, printing and publishing, transport, mechanical engineering, mining, 
hospitality industry, health, financial services and the like. 

These industries are low on research, but high on knowledge. Their knowledge takes the 
form of market research, design skills, customer relationships, engineering development, 
in-house training and operational skills from new capital goods. Their knowledge also 
comes indirectly, from their associations with universities, researchers, industry and 
professional organisations, standards bodies, consulting engineers and the like. 

The knowledge behind the innovation in so-called low-tech, low-R&D industries is not 
visible in current innovation indicators. 

Their innovation comes from learning, re-use of knowledge and experimentation (eg. by 
prototyping and trial production), not from the discovery of entirely new scientific or 
technical principles or inventions. 

The installation and operation of new machines and equipment is knowledge-creating, 
because it results in new capabilities. Similarly, firms can purchase licences to use protected 
knowledge created or discovered by others, or can explore and learn about markets and 
consumer preferences by investing in market research and other intelligence-gathering 
exercises. 

Furthermore, firms can gain the benefit of new knowledge through their association with 
others, eg. personnel movements, inter-firm cooperation, strategic alliances, links to 
professional and regulatory bodies and so on. 

GPC Electronics is case example of a manufacturing firm growing and competing 
successfully with global competitors through the smart application of distinctive knowledge 
in project and supply chain management and in customer relationships. 

GPC Electronics in Penrith is one of the largest contract electronics manufacturers in 
Australia. It designs, manufactures and markets interconnected products and related 
services for the electrical power, automotive, consumer, communication and contract 
electronic manufacturing industries, with an impressive client list that includes Nortel, 
Toshiba, Ericsson, Siemens, NEC and Alcatel. They provide manufacturing solutions at low 
overall cost and risk to their clients. 

Like many Australian enterprises, GPC realises that it could never compete in a globalised, 
fast-paced world economy as a high-volume, low cost producer. GPC needed to distinguish 
its products and services by harnessing knowledge, in particular, market and industry 
knowledge, market intelligence, process knowledge and supply chain knowledge. GPC 
competes by its superior use of knowledge, particularly about industry and market trends, 
customer needs and competitiveness drivers. 


GPC’s managers characterise the relationship with a customer as a partnership, from which 
develops a deep and detailed understanding of the customer’s business priorities, strategic 
imperatives and competitive environment. This close-contact, collaborative approach 
allows GPC to gain a key strategic advantage over its often larger global competitors, 
because it understands and can respond even anticipate, its customers’ needs more 
effectively. 

They describe their model as making their customers more competitive by managing 
complex business issues. Their approach to outsourcing rejects the traditional model that 
relies on cheap labour and the relentless driving down of costs. Rather, GPC’s outsourced 
offerings are based on understanding what makes their customers competitive in the 
marketplace and tailoring their manufacturing and business processes accordingly. This 
could be helping their customers in winning greater market share, minimising working 
capital, fast time to market, reducing overall cost, capturing high margins, response to a 
fast changing market, short lead-time opportunities, or many others. 

Knowledge as a competitive edge 

Knowledge and its use can give companies a decisive competitive edge. Today assets are 
mobile, so knowledge that makes you distinctive really counts – market intelligence, 
‘ownership’ of customers, tacit know-how and skills. Knowledge is not just from R&D, but 
from learning. Fundamentally different business strategies, based on innovation and 
knowledge, are vital for a competitive edge. It involves applying knowledge to better meet 
market and customer demands. The knowledge driving innovation comes from learning by 
doing, learning by using technology and equipment and learning by interacting with others. 

Invariably, business enterprises do not steal a march on their competition just because they 
invent a better product or a new generation technology. They survive and attract the 
resources to grow and sustain their enterprise by how well they organise and deliver 
business offerings that provide a solution someone is prepared to pay for. 

Firms create competitive advantage by perceiving and discovering new and better ways to 
compete and bringing these to market. This involves innovation, but it is innovation that can 
occur in a number of dimensions: new delivery and distribution channels; new attributes of 
their business offerings; new organisational arrangements or changes to products and 
processes; new ways of managing customer relationships and providing better customer 
experiences. 

Innovation shifts competitive advantage when rivals fail to perceive the new way of 
competing or are unwilling or unable to respond. The most potent forms of innovation that 
make it difficult for rivals to compete are business model innovation and organisational or 
managerial innovation. Business model innovation happens when firms find a whole new 
recipe for business success that changes the game. Managerial or organisational innovation 
occurs where resources and people are deployed more imaginatively in ways that depart 
from traditional practices and forms and that achieve better results. 

In short, competing through innovation and knowledge present new sources of productivity 
for manufacturing firms, when they understand and activate wider concepts of innovation. 
Innovation, contrary to popular perceptions and much government policy, is more about 
problem-solving and learning than about scientific discovery, more about the customer 
than the producer, more about the marketplace than the laboratory and more about 
business transformation than technology. 


This is the yardstick against which to judge the nature of change underway in Australian 
manufacturing. 

Transforming businesses and workplaces is the key to manufacturers unlocking innovation 
and enhancing their productivity. Innovative managers and workplaces become more 
productive by transforming the capabilities of their businesses: finding imaginative new 
ways of problem-solving; collaborating with customers, suppliers and even competitors; 
adapting existing technologies and processes to new uses; and devising fresh solutions to 
meet the needs of demanding customers. 

Innovation should be seen as a means to an end, not an end in itself. And the end is: 
generating new sources of enduring competitive advantage. Innovation in its market-led, 
close to customer form, involves the change and dynamism that can give manufacturing 
businesses a lasting competitive edge. 


4 Future manufacturing 


Given the changing nature and dynamics of manufacturing outlined earlier, this 
section draws on recent research to identify the possible shape of the future 
environment for manufacturing firms. 

Canvassing the literature on ‘manufacturing futures’ uncovers considerable commonality 
around the themes of globalisation; changing demographics, skills and workplaces; 
challenges of climate change and resource use; technology advances; business model 
transformations; and new configurations of manufacturing industry driven by different 
demands, customers, competitors and the geopolitical landscape. 

In this paper, particular attention has been paid to the operating environment, markets, 
skills, technology and business models Australian manufacturers are likely to confront in the 
foreseeable future. There is a focus on what is known about enhancing productivity growth 
to maximise the profitability and longevity of manufacturing firms. 

Given this lens and with an eye to identifying the attributes that Australian manufacturers 
will likely need to compete successfully and sustain themselves in the future, the following 
seven forces for change are highlighted: 

• 
More intensified competition. 
• 
More complex and varied opportunities for doing business globally. 
• 
Shift from mass production to customisation and personalisation. 
• 
Growing importance of the low carbon economy. 
• 
Changing skills needs and imperatives. 
• 
Technology that transforms entire business models. 
• 
Collaboration and connectivity that accelerates innovation and competitiveness. 
These forces for change are each described in the following sections. 
More intensified competition 

Notwithstanding manufacturing’s significant economic contribution, it is facing more 
intense and increasing competitive pressures. Chief among these are the rise of low wage, 
low cost manufacturing economies, increasing levels of global competition and the effects 
of a strong Australian dollar. Further pressure comes from moves to introduce a price on 
carbon, the first of many similar calls given community expectations for greater 
environmental sustainability and social responsibility. These, in turn, will weigh on the 
strategies, operations and investment decisions of manufacturing firms. 

A strong and volatile Australian dollar, import penetration and rising input costs are likely to 
continue to squeeze profit margins and reduce the competitiveness of Australian 
manufacturers for the foreseeable future, notwithstanding solid demand for domestically-
focused manufacturers servicing the mining and resources industries. 

This picture is reinforced in the Performance of Manufacturing Index for February 2011 from 
the Australian Industry Group and PwC. While this Index showed a moderate monthly 
improvement in the performance of the manufacturing sector, many respondents remained 
cautious about the business outlook. The primary reasons they cited inhibiting the 
manufacturing sector were softening of domestic demand, the level of the Australian dollar, 
strong overseas competition and bad weather. 


Increased wages and input costs, coupled with moderate increases in selling prices, 
resulted in a narrowing of profit margins in February. New South Wales and Victoria were 
the only States recording a contraction in manufacturing in February and Western Australia 
experienced the strongest expansion. Generally, the Textiles, Clothing and Footwear 
sub-sectors experienced the most significant declines. 

More complex and varied opportunities for doing business globally 

Increasing globalisation is not a new phenomenon, but the current wave of globalisation is 
resulting in unprecedented changes to how businesses define and access markets and how 
they organise themselves to operate and compete profitably. The International Monetary 
Fund describes globalisation as the process through which an increasingly free flow of 
ideas, people, goods, services and capital leads to the integration of economies and 
societies.24 

Globalisation has been accelerated by increasing openness to international trade, the 
recent spectacular economic rise of emerging economies like China and India, and rapid 
technical progress especially in information and communications technologies, which has 
lowered transport and communications costs and increased the range of goods and 
services that are now tradeable internationally. 

This combination of factors shape new global labour markets and open up more varied 
ways of doing business globally through off-shoring, outsourcing, and other multi-country 
strategies, including the relocation of some activities abroad. These processes are likely to 
intensify in the future. 

One particularly significant effect is the growth of distributed global value chains, where 
different stages of the production process are being unbundled around the world. This 
includes not only the fabrication of physical components, but the accompanying 
knowledge-intensive services, such as research and development, inventory management, 
quality control, and other professional and technical services.25 

The UK Department of Business Enterprise and Regulatory Reform goes on to describe this 
phenomenon and its effects cogently as follows: 

The result has been an increase in both outsourcing, which typically involved switching from 
in-house provision to purchasing intermediate goods and services from outside specialist 
providers, and off-shoring, whereby firms purchase intermediate goods and services from 
foreign providers or transfer particular tasks to a foreign subsidiary. 


The phenomenon of off-shoring has given rise to the term ‘global value chain’, whereby 
different businesses add value by different processes or activities at each stage of production. 
In this respect, the traditional production model whereby firms were responsible for all stages of 
the production process of a particular product has changed. Many manufacturers now choose 
to specialise on particular steps in the production process, such as design, research and 
development or sales and marketing, either within individual geographic locations or through 
participation in (a) sort of stylised global value chain. 

24 Quoted in BERR (2008) 
25 BERR (2008) 


The growth of global value chains present both opportunities and challenges for Australian 
manufacturers. The key challenge is the entry of additional firms competing in the global 
economy and their ability to specialise in high value-added manufacturing and related 
service activities, not just in traditional low-cost production. 

The opportunities come from the prospect of increased sales through successful 
specialisation, management of wider networks of distributors and resellers to help meet 
local demands in new foreign markets, and reduced costs through more efficient 
outsourcing. 

There are benefits for both multinationals and small and medium sized enterprises. The 
global reach of multinationals allows for coordination of production and distribution across 
many countries, and shifting activities according to changing demand and cost conditions. 
For SMEs, global value chains provide niche opportunities to expand into international 
markets and extend their business activities across borders for a multi-country presence, 
without the need for ‘full-service’ international trade operations. 

New manufacturing – shift from mass production to customisation and 
personalisation 

The disappearing boundary between manufacturing and services, evidenced earlier in this 
paper, is an early warning signal of a fundamental shift in manufacturing itself. From the 
Industrial Revolution, mass production has been synonymous with manufacturing, 
emerging from the cottage industries and subsistence agricultural economies that 
preceded it. 

Manufacturing is now no longer about mass production, but about providing solutions for 
customers that are tailored to their needs and even personalised. There is a shift to a new 
manufacturing, not mass produced and standardised products, but customised and 
personalised goods and services. Manufacturing industry is responding to intensified 
global competition by differentiating itself by shifting away from traditional business 
strategies of selling particular products to a new model where the sale of products is 
combined with associated services making the manufacturing companies more attractive, 
helpful, and valued by customers. 

One of the five global megatrends, A Personal Touch, identified in the CSIRO’s global 
foresight project captures this element of the future environment for Australian 
manufacturers.26 The CSIRO report comments on the rapid growth of the services sectors in 
Western economies; the blurring of boundaries between products and services which 
generate new business models; and a second wave of productivity-enhancing innovation 
that is market and customer-centred and based on customers being fully engaged in 
decisions about the business offering they purchase and consume. It involves tailoring and 
targeting services. 

The CSIRO reports that in 1970 the services sector represented 55% of the Australian 
economy. Today it is over 75%. 

One of the aspects pushing this trend is the increase in computer power and the rise of the 
internet in recent decades. Information is increasingly accessible to both individuals and 
companies. 

26 CSIRO Foresight project reported on in Hajkowicz and Moody, CSIRO, 2010. 


This development has provided marketers with the opportunity to customise products for 
demanding customers increasingly overwhelmed with choice. 

As companies and organisations know more about their customers they can provide 
services that they already know are right for them. 

J. Robins is now the only volume producer of women’s shoes remaining in Australia. They 
are succeeding with a business model than combines mass customisation and lean 
manufacturing. J. Robins can meet the changing demand for designer fashion shoes with 
rapid supply of high quality shoes to the specifications of their retailer customers in a 
fraction of the time it takes offshore producers to supply. Key to this is the combination of 
flexible teams of multi-skilled workers, use of high quality German and Italian machinery 
and superior supply chain and customer relationship management processes.27 
The import of this fundamental shift for manufacturers is that it requires new and different 
business relationships and models. Mass customisation, together with flexible specialisation 
and lean manufacturing, have changed the nature of relationships of firms with their 
customers, suppliers and partners. As Mark Dodgson and Peter Innes note in their 2006 
study of Australian Innovation in Manufacturing: 

Mass customisation entails producing in both volume and to the requirements of individual 
customer needs. Flexible specialisation particularly involves smaller firms in evolving production 
networks. Lean production involves the elimination of waste in a production system, in part from 
highly efficient supply chain integration, through mechanisms such as just-in-time delivery – 
often on an international scale. The key features of all these approaches are the production of 
high volume and high variety, maximised efficiencies and minimised costs, combined with 
continual and rapid innovation. 

The story is one of manufacturers benefiting from increased opportunities for outsourcing 
from global value chains and from their growing recognition of the importance of user-
centred, open source approaches. This allows them to create and tailor innovative business 
offerings that anticipate needs and solve customer problems. 

In short, new manufacturing has the potential to create new business growth and value 
from the re-design of business relationships and models necessitated by forces of change 
that include: 

• 
greater trends to outsourcing and specialisation; 
• 
niche customised products and services, not standardised mass production; 
• 
customers making production decisions and employees who are also entrepreneurs; 
• 
hybrid business offerings that merge both products and services; and 
• 
one dimensional buyer-seller relationships giving way to diffuse and changing economic 
webs of buyers, partners, alliances, stakeholders, suppliers, distributors and resellers. 
27 Cited in Don Scott-Kemmis (2011) 


Growing importance of the low-carbon economy 

There are divergent opinions about the implications for Australian manufacturing industry 
of the increased demand for environmental sustainability through higher environmental 
standards, regulation for resource efficiency, establishing a price on carbon, options for 
emissions trading schemes and the relative utility of market mechanisms and direct action 
and awareness programs. But, there is unanimity that action by manufacturers to achieve 
environmental sustainability, resource efficiency and a lower carbon footprint is both an 
urgent and necessary business priority. 

The CSIRO’s global megatrend, More from Less, and the book by James Bradfield Moody 
and Bianca Nogrody, The Sixth Wave – how to succeed in a resource limited world argue 
that we are on the cusp of the next wave of innovation based on a transformation from a 
world heavily addicted to the consumption of resources to one where resource efficiency is 
paramount. Economic growth will be decoupled from resource consumption and waste 
production. Resources will be valued and priced on the basis of a shift in the assumption 
that resources are cheap and plentiful to resources being seen as scarce and valuable. 

The European Commission’s scenarios for the Future of Manufacturing in Europe 2015202028 
are centred around the concept of sustainability. Their scenarios for successful 
sustainable manufacturing are found to depend on the alignment of consumer behaviour 
and market demand for green products, prevailing public values, and acceptance of 
policies and business action on sustainability and technological advances and their 
effective execution. Societal and organisational factors count more than technology alone 
in shaping the future for sustainable manufacturing. 

According to Capgemini’s study of how 150 manufacturers in eight countries see 
‘manufacturing in 2020’, they are uncertain about what actions to take on green issues, but 
agree that urgent action is necessary in the face of political and societal pressure around 
emissions reduction. 

There is a consistent thread of argument in the commentary and research that the new 
focus on climate change, greener supply chains, waste reduction and resource efficiency 
opens up a whole new range of ‘cleantech’, low carbon prospects for manufacturing firms. 

The evidence suggests that the most viable way for manufacturers to develop and pursue 
‘green economy’ opportunities is to focus on green products and services in areas where 
the country already holds a competitive advantage. In the UK, design and production of 
clean technologies and renewable energy generation, like tidal energy, are seen as the best 
bets. While in Australia, opportunities are identified in solving water scarcity and allocation 
problems such as the Murray-Darling Basin, or in technologies for the minerals and mining 
industries for the more efficient exploration, extraction and use of high grade ore deposits. 

Changing skills needs and imperatives 

The 2010 Global Manufacturing Competitiveness Index by Deloitte and the US Council on 
Competitiveness is a report based on a survey and some interviews of more than 400 CEOs 
and senior manufacturing executives worldwide. The report’s headline finding is that access 
to talented workers capable of supporting innovation is the key factor driving global 

28 European Commission (2003) 


competitiveness at manufacturing companies – well ahead of ‘classic’ factors typically 
associated with competitive manufacturing, such as labour, materials and energy. The 
availability of talented people extends to scientists, researchers, engineers, production 
workers and technical personnel. 

The 2011 Environmental Scan report from Manufacturing Skills Australia documents the 
recent experiences of manufacturing enterprises based on interviews, site visits, surveys, 
feedback and industry research, with a particular interest in skills, education and training 
issues. 

Among the key findings of the 2011 Environmental Scan were the following: 

• 
Competition for skills with the resources sector is a major issue for manufacturing and is 
affecting the willingness of enterprises to engage in training. 
• 
Skills shortages are already intensifying and are expected to become worse than ever 
before. This is set against the backdrop of an ageing workforce and inadequate numbers 
of people entering the manufacturing workforce. 
• 
While rebuilding after the Queensland and Victorian floods will create short-term 
opportunities for many manufacturing enterprises, it will also further intensify skill 
shortages and complicate workforce planning. 
• 
Many enterprises report than the downturn has made them leaner and more efficient 
– however, for most it appears that intentions in 2010 to upskill and develop the workforce 
were not actualised. It seems that enterprises held onto employees as a top priority 
during 2010 and employees were more reluctant to follow other opportunities. However, 
this is starting to change and anxiety about attracting and retaining skills is on the rise. 
New skills needs 

In short, skills shortages, growing competition for talent, consequent wage pressures, and 
deficiencies in responding to the need for continuous upskilling of the manufacturing workforce 
and management are enduring issues for Australian manufacturing. But over and above these 
fundamental concerns, intensifying competition and the changing models for business success 
in the manufacturing sector present even more urgent and critical skills imperatives. 

Deepening and expanding the skills, capabilities, and adaptability of manufacturing 
managers and workforces is essential to profit from new manufacturing business models. 
Even more in the future, manufacturers will compete and succeed by their proficiency in 
innovating by the smart application of knowledge and providing valued solutions to the 
needs and problems of demanding customers. This requires new constellations of skills in 
manufacturing enterprises. 

As globalisation drives down the costs of manufacture, the industries that harness and 
deploy creativity and tacit knowledge best will generate new sources of competitive 
advantage and productivity. This covers not only expertise in high level technical, scientific, 
and engineering disciplines and in new and emerging technologies, but the ability to build 
the firm’s intangible assets that are increasingly decisive to competitiveness and 
sustainability. These require skills in areas such as design, software and other aspects of 


product development, brand-building, improvements in business processes, market 
intelligence and customer relationship management, training, problem framing and problem 
solving, collaboration and partnering. Further, strong management and leadership skills are 
vital for the operation of global value chains and for motivating and making the most effective 
use of the skills of the workforce to deliver high value added products and services. 

Innovation and Business Skills Australia (IBSA) with the Society for Knowledge Economics 
prepared a paper on Enterprise Innovation for a Canberra summit in June 2009 in which they 
compiled a body of evidence about best practice management and workforce skills to enhance 
productivity through innovation and continuous learning at the level of the enterprise. 

They highlighted the concept of ‘learning organisations’ that encourage interactions 
between people with diverse skills and competencies, delegate problem-solving, sanction 
informed risk-taking and discretionary effort, experiment with new offerings and services 
and are generally more responsive, flexible, and agile in their operations and relationships. 

Workforce changes 

A further dimension of change is occurring in the composition and aspirations of the 
workforce. Both workers and patterns of work are changing. With an increasingly mobile 
global workforce, language and inter-cultural skills will become more important, as will 
managing different attitudes to and expectations of work from younger generations of 
workers. 

Manufacturers can be expected to confront structural changes such as the growth of part 
time jobs and contractual work; a changing industry mix with the rise of services; altered 
demand for different types of skills especially for knowledge workers with problem-solving, 
conceptual and interpersonal skills; more flexible working arrangements; and demographic 
shifts creating new cohorts of workers with different perceptions and aspirations for their 
working lives – the global generation, career-step employees and free agents, portfolio or 
self-determined careerists, and older, ‘wisdom’ workers and mentors. Moreover, tougher 
standards are increasingly being expected of businesses if they are to become employers 
of choice based on their social, ethical, health and safety and environmental records. 

Finally, manufacturing has a perception problem that impacts on its skills and people. The 
Manufacturing Alliance of the Australian Manufacturing Workers Union and the Australian 
Workers Union summarised it as follows in their 2009 paper, A Country That Makes Things: 

In part the problem relates to stereotype ‘perceptions’ of manufacturing as ‘an old smokestack 

industry’, or a ‘dirty’ industry with boring repetitive tasks and one with little by way of high 

paying jobs or career paths. 

Such perceptions are unhelpful in attracting young Australians into the industry. It also makes it 
difficult for manufacturing to attract and keep the best and brightest people to build a career in 
an Australian manufacturing firm or even start a new manufacturing business. 

Beyond that, the old-fashioned image of manufacturing does not do justice to the industries 
and workers who currently drive such a significant sector of our economy. Nor does it reflect the 
modern, innovative and sustainable future for manufacturing that is already taking shape. 


Technology transforms entire business models, 
as well as products and processes 

Advances in technology have long been acknowledged as a key contributor to the health 
and survival of manufacturing firms, and remain so. The introduction of the latest plant and 
equipment has increased the productivity of many manufacturers as well as reducing set-up 
times and costs. Access to and take-up of new and changed technologies, either through 
investment in R&D or through technology transfer strategies, are central to the ability of 
manufacturers to survive in an increasingly competitive environment. 

But the transformative effects of technology are no longer centred just on the production 
process and advances in next generation products. New technologies can transform the 
organisational capabilities of firms, the nature of their competitive strengths, and their 
entire model for doing business profitably over the long term. 

Innovation technologies 

Dodgson, Gann and Salter (2005) identify a new class of technologies which they term 
‘innovation technologies’. These include simulation and modelling, visualisation, rapid 
prototyping and virtual reality immersion environments, together with developments in 
e-business, logistics and other operations technologies. They argue that such advanced 
technologies are the tools of innovation – reducing the cost, increasing the speed and 
improving the processes of innovation and experimentation by manufacturers. 

Siemens in its recently released report on Picture the Future 203029 pointed to technology 
and innovation as the key to productivity growth, specifically the effects of digitisation and 
the greater power to manage and process information at ever decreasing costs. 

Mark Dodgson and his colleagues make the case that these ICT-based innovation 
technologies allow manufacturers to design more elaborate products and services through 
collaboration, experimentation and simulation. There are firms that now have virtual 
collaboration rooms where engineers from anywhere around the world can come together 
to design a product in 3D. Latest developments even allow for 3D printing, digitally 
producing physical products and prototypes.30 

Business model change 

Such new technologies, more importantly, can be essential tools for manufacturers to 
identify and execute new ways of creating and capturing value from meeting customer 
needs. In other words, these technologies enable innovation in business models. A 
business model is the ‘recipe’ for how an enterprise creates value for customers, partners 
and itself, based on its distinctive and superior skills and competencies. New technologies 
can change one or more of the elements where value gets created and captured by the firm 

- namely, customer relationships, the value proposition for customers, distribution channels, 
core skills and know-how, collaboration with partners, cost structures, the configuration of 
the business, financial and organisational processes, the revenue model. 
Sometimes, business model innovation changes the game like online travel and 
accommodation services such as Wotif and Webjet impacting on retail travel agents; 

29 Siemens (2011) 
30 The Economist, 10 February 2011 



low-cost airlines like RyanAir or Jetstar against full service airlines; customised computer 
production from Dell; Apple’s design and marketing alternatives to MP3 players and mobile 
phones; JB Hi-Fi’s new mixture of discount and branded products as a value retailer to the 
youth market; the shift to digital photography services instead of the production of film by 
companies like Kodak.31 

Mastery of technology-enabled business model innovation provides an edge for 
manufacturers as it creates a distinctive source of competitive advantage that is difficult for 
others to imitate or erode. 

Don Scott-Kemmis’ current study on Australian business model innovation for the Australian 
Business Foundation highlights several case examples of Australian manufacturers 
innovating in their business models. For example, Ballina-based Kimberly Kampers serves 
the off-road travelling and camping needs of ‘grey nomads’ with a customer-focused, 
design-led, supply chain business strategy. Their formula for success mixes their investment 
in design capability and patents; lean manufacturing processes and high level customer 
value (eg ease of use, good resale value, environmentally friendly features); flat organisation 
structure and team-based, highly trained workforce; and extensive use of integrated design 
and manufacturing software and IT systems. 

Another case is Beacon Lighting with its business model focused on strong product design 
and quality control, closely-managed outsourced manufacturing, customer engagement 
and continuous investment in new business developments such as specialised new lines of 
business in solar power offerings or lighting advice services. 

A 2005 global survey of over 4,000 senior managers in 20 sectors by the Economist 
Intelligence Unit reinforced the role of information technology as a strong driver of business 
model innovation into the future. The majority of respondents thought that information 
technology (the internet, digitisation and communications) would be a key factor in the 
capability of firms to effectively develop and implement new business models over the next 
five years and beyond. 

IBM’s 2006 Global CEO Survey found that given the pace of globalisation and technology 
advances, CEOs were placing more attention on innovation in their business models: 

Leaders frequently define their businesses in terms of the products and services they take to 

market and naturally focus their innovative energy there. But with technological advances and 

globalisation presenting so many new opportunities – and threats - CEOs are now giving 

business model innovation as prominent a place on their agendas as products/services/market 

innovation and operational innovation. 

In summary, advanced technologies supporting innovation in products, processes and 
business models have the potential to transform the profitability and the competitiveness 
of Australian manufacturers. 

31 Don Scott-Kemmis (2011) – to be published by the Australian Business Foundation in May 2011 


Collaboration and connectivity accelerates innovation and competitiveness 

Related to the earlier trend of mass customisation and personalisation of products and 
services is the rise of user-centred and open source approaches to business development. 
Firms access critical knowledge about opportunities, changing markets and customer 
needs and preferences from outside the firm. How well firms are connected into latest flows 
of knowledge and how proficient they are at collaborating to turn this knowledge into fresh 
competitive capabilities is key to their innovation, productivity and profitability. 

Knowledge flows, not knowledge stocks 

There is an extensive body of literature and case examples of open-source innovation, 
where customers are close to being the top source of knowledge for innovation in business 
enterprises.32 The ‘wisdom of crowds’ is also harnessed through use of social networking 
media and engagement of ‘lead users’ to provide a virtual R&D team outside the firm for 
new business offerings that satisfy often previously unrecognised market needs and niches. 
See for example, Proctor and Gamble’s ‘connect and develop’ initiatives, Lego’s community 
of users in new product development, IBM’s involvement of global staff, customers, family 
and stakeholders in an Innovation Jam and Deloitte’s Intensive Learning Campaigns of 
‘action learning’ sessions between cross-disciplinary staff teams and prospective clients. 

Therefore, it is vital that manufacturers capitalise on this force for change by positioning 
themselves as key contributors in rich networks of relationships and knowledge flows. Being 
connected counts. 

John Hagel III and John Seely Brown, authors and practitioners on knowledge 
management, innovation and strategy, presented to the World Economic Forum in Davos in 
2006 where they argued that ”who we know is more important than what we own”: 

Traditional business strategies are delivering diminishing returns…We need to harness the 

potential for innovation, rather than simply focusing on our existing assets and cost-cutting 

initiatives. As change accelerates, our stocks of physical assets and knowledge depreciate at a 

more rapid rate. Flows of new knowledge become critical to competitive success and these 

flows occur only in the context of relationships. Successful strategies will depend on privileged 

positions in rich networks of relationships. 

Hagel and Seely Brown note that creative business activity (that results in both learning from 
the “productive friction” of multiple and diverse parties and in more imaginative and valued 
business offerings) is shifting beyond the boundaries of the firm and is spanning national 
boundaries as well. They point to the twin trends of open innovation (‘learning from the 
edge’) and more distributed modular global networks where centres of specialisation for 
business processes are found across many locations and mobilised in different combinations 
as needed. This is a similar concept to Robert Reich’s “global webs of enterprise” where 
business activities are geographically and functionally distributed as virtual business units 
that cross the boundaries of both firms and nations where it makes sense to do so. 

People factors 

The Australian Business Foundation’s book of 14 papers by 26 expert authors, Inside the 
Innovation Matrix: Finding the Hidden Human Dimensions makes the case for the pivotal 

32 Chesbrough (2003); Eric von Hippel (2005); Cosh et al (2005); Australian Business Foundation (2008) 


role of people as innovation carriers – their networks, collaborations, knowledge flows, 
interactions and tacit knowledge – and how innovation itself is a potent competitive force 
that drives productivity. 

A number of contributors to the Innovation Matrix collection of expert papers substantiate 
the critical contribution of connectivity and relationship-building between enterprises and 
between business enterprises and other economic actors. 

For example, John Bessant, Professor and Chair of Innovation Management at Imperial 
College London summarised a wealth of international academic scholarship about the 
concept of “learning networks”. 

John Bessant cites research on learning networks that show that shared and cooperative 
inter-firm learning greatly assists enterprises to organise and manage the acquisition and 
absorption of new knowledge and to transform it into competitive capabilities. The value of 
action or experiential learning comes from the participation of others in the process of 
challenge and support. It also marshals the benefits of ‘comrades in adversity’, of working 
together to tackle complex and open-ended problems. 

Bessant cites various examples of effective learning networks, such as Toyota’s active supplier 
association, Marsh & Shaw’s study for the Australian Business Foundation on collaborative 
learning experiences in the Australian wine industry, and supply chain learning networks in 
the Dutch and UK food industries, the construction sector and in the aerospace industry. 

Economist and urban planner, Marcus Spiller explores the role of knowledge-intensive 
advanced business services as agents of innovation, critical to the creation and diffusion of 
ideas and problem-solving in other business enterprises. For example engineering, IT and 
technical advisors, design services, specialised legal and human resources services, 
financial brokers and venture capital services. 

To achieve their potential as innovation agents with other businesses, these advanced 
business services are dependent on trust-based relationships, which in turn, rely on face to 
face contact, personal referrals and recommendations and mastery of local business 
cultures and mores. 

Spiller therefore puts the case for creating geographic clusters of advanced business 
services, as their innovation catalyst effect depends on physical proximity. 

John Steen, Sam Macaulay and Tim Kastelle of UQ Business School share their scholarship 
on social network analysis as a powerful tool to understand, measure and manage 
innovation networks. They argue that innovation in modern economies is less about 
discovery, and more about making new connections throughout the value chain. 

Their evidence-based intelligence suggests some networks support innovation better than 
others, and it revolves around analysing the number, depth, distance and flow of 
connections. To paraphrase, it turns out that “friends of friends” matter – the more friends 
you have and the more diverse sets of friends they have, the greater the innovative 
performance and competitive advantage. 

In the next section, we reflect on the implications of these potent forces for change 
confronting manufacturers and link them to prescriptions for productivity growth, including 
what can be expected of government policy makers. 


NSW Business Chamber 


5 The productivity challenge 


New angles on innovation and productivity are the key to profitability and 
longevity for Australian manufacturers. 
Productivity and innovation 

Innovation is the chief weapon in the ‘productivity revolution’ and the battlefront is where 
business enterprises and their workforces intersect with customers in the marketplace and 
the community. 

In its Venturous Australia report, the Review of the National Innovation System emphasised 
the point that “the miraculous alchemy of innovation occurs close to the customer”. The 
core of market-driven business innovation is responding with agility and intelligence to 
deliver well-executed new products and services that better solve customer problems and/ 
or meet market needs and preferences. The focus for innovation-led productivity must shift 
from action to increase the supply of knowledge (from researchers and scientists) to the 
smart absorption and use of knowledge by enterprises to meet the demands of customers 
and communities. 

In the context of a decline in Australia’s productivity over the last decade after a surge in 
the 1990s, perhaps the most important factor determining the future success and growth of 
Australia’s manufacturing sector will be its ability to sustain and increase its productivity 
growth rate. As Saul Eslake and Marcus Walsh of the Grattan Institute point out in their 
recent study, Australia’s Productivity Challenge: 

… higher productivity growth offers the best means of ensuring the survival of businesses and 

jobs in sectors of the economy likely to be adversely affected over the next decade by some of 

the side-effects of the present ‘resources boom’. Although the resources boom will generate 

substantial income and wealth for Australia, and Australian citizens, it is also likely to result in a 

higher exchange rate for the Australian dollar, which will undermine the competitiveness of 

trade-exposed sectors of the Australian economy, such as manufacturing… 

In fact, as manufacturing accounts for a disproportionally large amount of total imports 
(almost 90%), its level of productivity directly affects Australia’s trade balance with wider 
economic consequences. Labour productivity in the manufacturing sector has performed 
strongly compared to other sectors, resulting in a relative higher rate of decline in 
manufacturing’s contribution to employment compared to output. 

It is important to be clear about what constitutes productivity improvement in an economy. 
Too often the indices of productivity are confused with the determinants of productivity. 
Traditional measures of productivity such as output per hours worked (labour productivity) 
or output per unit of labour and capital used (multi-factor productivity) are the score card. 
That is, they show the productivity outcome of an economy, but not what actually drives 
these results. 

Research for the Australian Business Foundation by Cambridge Professor and Director of 
the UK Innovation Centre, Professor Alan Hughes33 about the sectors contributing most to 
Australia’s notable high productivity growth period of the 1990s found that it was the high 
technology users, not the high technology producers that were key. The business 
transformations and new capabilities behind their productivity gains come from their use of 
enabling technologies like information and communications technologies, strong 
management capabilities and capitalising on the benefits of regulatory reform. 

33 Hughes and Grinevich (2007) 


Productivity improvement is not generally the result of greater capital investment to replace 
labour. Productivity is not about doing more with less, nor about working people harder for 
longer. Contrary to conventional wisdom, productivity does not equate with efficiency; it 
centres on innovation and transformation – of business capabilities, skills, technology and 
competitiveness. 

Accessing and adopting technology will continue to be a primary contributor towards 
productivity growth in manufacturing. But, ensuring the right organisational structure, 
culture, finance and managerial skills will be critical in enabling manufacturers to 
continuously respond to technological changes fast, efficiently and effectively. 

Management and productivity 

There is substantial evidence pointing to the increasing role of managerial skills and teams 
in achieving productivity gains. A joint study by Stanford University and Columbia 
University34 demonstrates the critical role of teams due to the increasingly complex and 
challenging manufacturing environment, requiring a group of highly skilled individuals to 
solve complex problems to increase productivity. The European Central Bank35 goes further 
to say that “both labour productivity and total factor productivity changes are mostly driven 
by firm learning”, emphasising the importance of a firm’s ability to operate in a knowledge 
intensive environment. 

Managerial practices in Australian manufacturing have been found to be mediocre in an 
international comparison study reviewing management skills in manufacturing firms and the 
clear link between the quality of management and enterprise productivity. This is reported in a 
2009 multi-university research study led by UTS Professor Roy Green benchmarking the 
management practices of 439 medium and large manufacturing firms in Australia against the 
results of a 16 country study by the London School of Economics and McKinsey and Company.36 

The study found that while Australian management practices are not in the top rank of 
performance worldwide, they are also not among the worst. Some Australian manufacturing 
firms are as good as any in the world, but there is still a substantial ‘tail’ of firms that are 
mediocre, especially in their approach to people management. This was found to be a key 
differentiating factor between Australia and better performing, more innovative countries. 

The study also shows that the quality of management practices has a measurable impact on 
labour productivity. It concluded that a cost-effective way of improving the productive 
performance of Australian manufacturing firms is to promote a transformation in the calibre 
of the management and leadership of these organisations. 

The Australian and foreign economic and regulatory environment will also continue to 
affect manufacturers’ productivity, through factors such as: ease of investments, foreign 
trade activity, domestic and international technology spill-overs and efficient capital 
markets. Furthermore, labour issues, such as industrial relations policy, skills and 
immigration policy will determine the adequate supply of highly skilled and flexible 
workforces to meet changing demands of manufacturers. 

34 Boning et al, 2007. 

35 Giannangeli and Gomez-Salvador, 2008. 

36 Study undertaken for the Australian Department of Innovation, Industry, Science and Research by a research 

team from University of Technology Sydney, Macquarie Graduate School of Management and the Society for 

Knowledge Economics and reported in Management Matters in Australia: Just How Productive Are We? (2009) 


The increased interaction with other sectors, especially services, can boost productivity 
through collaborative arrangements such as integrated supply chains and technology 
absorption. The collaborative use of knowledge-intensive services will, for example, play a 
greater role in the manufacturing process, providing direct productivity increases through 
increased innovation activity, and knowledge and technology transfer. 

This view of the importance of business innovation to productivity has been endorsed in 
public statements by the Productivity Commission37 and is a central feature of the 
recommendations put by Saul Eslake and colleagues at the Grattan Institute in their 
Australia’s Productivity Challenge report. 

Manufacturing and innovation 

If innovation is central to productivity growth, it is useful to take a reality check on how far 
Australian manufacturing firms are innovating. This has been done in a report on Australian 
Innovation in Manufacturing by Professor Mark Dodgson and Dr Peter Innes of the 
University of Queensland Business School as part of an international comparison survey. 

In section 2 of this paper, evidence was cited of the significant investment by manufacturing 
firms in R&D and technological innovation. Dodgson and Innes, however, interviewed a 
sample of Australian manufacturing firms to develop a more finely-grained view of the 
nature of innovation in these enterprises beyond the aggregates of R&D expenditure and 
new products. 

Their key findings were as follows: 

• 
Firstly, innovation is defined as the successful application of new ideas – in products, 
processes, organisation and business models. Examples of the application of new ideas in 
products and services is teleservicing; in production and operations, it includes using 
automated equipment and robotics; in organisation, the use of outsourcing and 
teamwork. 
• 
A critical dimension on which to analyse innovation is the way it supports competitive 
strategies in firms in a coherent way. Competing on innovation provides an alternative to 
competing either primarily on quality (which is a given) or on price (being eroded by low 
cost suppliers globally). This requires appropriate integration of innovations in products, 
operations and organisation overall. 
• 
The study identified three particular innovation challenges confronting manufacturers in 
terms of 
-new technologies; 
- new internal organisational and work practices for agility; and 
- new business relationships and models with customers, suppliers and partners. 
• 
Overall, Dodgson and Innes paint a picture of Australian manufacturers investing in 
innovation to gain operational improvements in existing businesses, rather than preparing 
to deal with a shifting competitive environment. 
37 Productivity Commission (2002) 


• 
The innovative practices most evident in this sample of Australian manufacturing firms 
involved production efficiencies. They focus on reducing the costs in production and 
assembly and balancing the investments in technology and organisational changes 
needed to respond to customer demands quickly and effectively. Dodgson and Innes 
also highlighted the restructuring and redesign of jobs and the encouragement of 
teamwork and employee consultation, as innovation activities performed well by 
Australian manufacturing firms. 
• 
The key shortcomings in the approach to innovation by this sample of Australian 
manufacturers involved little evidence of investment in advanced technologies for 
product design, techniques for organising new product development, effective linkages 
with innovation-demanding customers, and the relative importance being placed on 
packaging of services around product offerings. Australian manufacturers in this study 
have short-term planning horizons and are not adopting the continuous improvement 
processes that drive sustained incremental innovation as a deliberate business strategy. 
• 
Dodgson and Innes conclude that the Australian manufacturers in this study generally fail 
to appreciate and employ innovation as a decisive competitive strategy. Unlike their 
European counterparts, there is little evidence that these manufacturers see innovation as 
a tool to transform the way they do business or to respond proactively to the problems or 
the opportunities presented by an increasingly globalised knowledge-intensive 
marketplace. 
In the face of this understanding of innovation-led productivity, manufacturing businesses 
themselves must be the prime architects of their own future. But, in the modern era, what 
role can public policy play in securing a productive and sustainable manufacturing sector? 

Policy perspectives 

There is extensive debate within OECD countries around the future role of manufacturing. 
Is manufacturing something that all advanced economies require to ensure the health of 
the overall economy or is it a sector continually marginalised that will inevitably shift 
towards low-cost developing countries? 

The declining share of GDP represented by manufacturing has been a trend across 
developed economies. This has primarily been due to the rise of the services sector, 
offshoring of production and increases in productivity. Developed countries raise issues 
such as terms of trade, capital control measures, tariff and non-tariff barriers, foreign 
exchange mechanisms, intellectual property rights, national standards and free trade 
agreements as important factors affecting the competitiveness of their manufacturing 
sectors. Developing countries (responsible for increasing proportions of global production) 
are also now a more significant force in international forums where trade and commercial 
policy affecting manufacturing is considered, e.g. the WTO, UN and World Bank Group, 
and their representation in the G20 shifts the balance from the G8 industrialised nations. 
This demonstrates the shifting global economic order that is directly affecting the global 
manufacturing sector and its implications for both developed and developing countries. 

Consequently, given these structural changes affecting manufacturing, policy responses 
differ. There is the non-interventionist approach that views manufacturing’s relative decline 


as simply economic evolution and a positive consequence of the economic development of 
advanced economies. Other policy responses seek to protect and support manufacturing 
for its disproportionate contribution to the tax base, to middle class jobs and higher wages, 
and to the skills and knowledge base of the nation. Others recognise the futility of seeking 
to turn back the tide of industries in decline, but favour action to speed up the sector’s 
transition to other more profitable and fast growing economic activities. 

Framing contemporary manufacturing industry policy presupposes an understanding of the 
seismic shifts that are playing out in the structure of manufacturing itself, in its competitive 
environment and therefore in the prescriptions for productivity in the future. 

Productivity hinges on manufacturing firms transforming themselves and innovating to 
deliver more competitive products, services and solutions that serve paying customers 
worldwide. 

To secure productivity outcomes, manufacturing industry policy must act to boost 
innovative practices directly in business enterprises and workplaces and at the point they 
engage with markets and customers. 

But this direct engagement with business enterprises can prove problematic with policy 
makers, who are often more comfortable with intervention to influence framework 
conditions based on the rationale of ‘market failure’. Action is limited to work on 
macroeconomic stability, openness to trade, deep financial systems, competitive markets, 
labour market flexibility and low taxes. 

A credible alternative ‘systems thinking’ policy framework is offered in a 2010 joint paper 
from the University of Queensland’s Department of Economics and the Centre for Business 
Research at the University of Cambridge by Mark Dodgson, Alan Hughes, John Foster and 
Stan Metcalfe. The authors argue that there is a strong body of scholarship and evidence 
showing that innovation contributes to economic growth in an evolving, dynamic process of 
collaboration and knowledge-sharing across a system that involves business enterprises, 
researchers, government, customers and other institutions and actors. This is a system with 
multiple contributors and connections that allows for variations in the conditions and 
frameworks for innovation. Despite this evidence, they comment that most innovation 
policies are uniform, static, dominated by the USA’s model of commercialisation of public 
sector research and entrepreneurship and justified only on the grounds of ‘market failure’ 
where price signals are distorted and resources misallocated. 

The authors point out that ‘markets’ are imperfect constructs by definition when you are 
dealing with innovation. Markets don’t prosper in conditions of uncertainty where players 
can’t evaluate risk. Innovation is by definition uncertain and risky. There are unknowables 
and there are failures. Innovation is about improvisation and learning. These conditions call 
for an alternative logic than market failure to inform and guide government action on 
innovation, based on understanding how systems work and how systems failures can occur. 

Maximising benefits in conditions of uncertainty in complex, evolving situations provides 
the logic for more contemporary and relevant innovation policy. This means policy action 
that encourages enterprises in their efforts to create and share knowledge, forge multiple 
connections and collaborations, continually learn and detect market and community 


changes and engage in serial business experiments to absorb, combine and reuse 
knowledge to solve customer problems and meet needs creatively. 

Yesterday’s industry policy is today’s innovation policy and becomes tomorrow’s policy to 
enhance productivity. The question is not whether or not policy should be aimed at keeping 
Australia as a country that makes things. Rather, the issue is how Australia will position itself 
in mobile and volatile global value chains through effective economy-wide partnerships 
between industries, governments, and other community stakeholders. 


6 Platform for action 


To secure their future, Australian manufacturers should act to: 

Experiment with business innovations. 

Invest in people and skills. 

Multiply knowledge connections. 

This paper on Manufacturing Futures aims to summarise a small number of essential themes 
evident in the latest thinking on the position and future shape of Australian manufacturing. 
These themes focus on the attributes that successful manufacturing firms will likely need to 
compete and prosper. They also serve to guide those supporting the manufacturing sector 
to identify and accelerate action on the most potent areas for practical change and growth. 

Headline insights 

To this end, reflecting on the issues as a whole covered in this paper, the headline insights are: 

Manufacturing matters 

While under considerable and growing competitiveness pressure, it is a misconception that 
manufacturing is in inevitable and terminal decline. Similarly, popular perceptions of the 
decreased importance of Australian manufacturing and the arrival of the ‘service economy’ 
are too simplistic. In absolute terms, manufacturing continues to represent a substantial 
segment of Australian output, employment, exports and productivity and there is evidence 
of multiplier effects and important interdependencies between manufacturing and both 
the resources and services sectors. 

Opportunities from the ‘morphing’ of manufacturing 

On a number of critical dimensions, the fundamental character of manufacturing is 
changing. These changes offer unprecedented ways for Australian manufacturers to create 
new value for customers and generate and sustain new sources of revenue and profit for 
themselves. 

Chief among the shifts that are redefining manufacturing are the following: 

• 
the disappearing boundary between manufacturing and services; 
• 
new niches to be exploited through outsourcing and in wider and more distributed global 
value chains; 
• 
new understandings of innovation based on smart problem-solving for customers which 
are accessible to all companies, not just those who can afford formal R&D and frontier 
technologies; 
• 
manufacturing is no longer characterised by standardised mass production; 
• 
intangible assets, like know-how and know-who, are increasingly important to the 
sustained success of manufacturing firms. 

Forces for change 

There are common threads in the literature about what is likely to shape the future 
environment for manufacturers. These can be summarised as: globalisation; changing 
demographics, skills and workplaces; challenges of climate change and resource use; 
technology advances; business model transformations; and new configurations of 
manufacturing industry driven by different demands, customers, competitors and the 
geopolitical landscape. 

This paper identifies seven key forces for change operating now and likely to accelerate in 
the foreseeable future for Australian manufacturers. They are: 

• 
More intensified competition. 
• 
More complex and varied opportunities for doing business globally. 
• 
Shift from mass production to customisation and personalisation. 
• 
Growing importance of the low carbon economy. 
• 
Changing skills needs and imperatives. 
• 
Technology that transforms entire business models. 
• 
Collaboration and connectivity that accelerates innovation and competitiveness. 
Productivity rules 

Productivity growth is essential for a viable and high-performing manufacturing sector. But 
the productivity gains that matter to manufacturers come from business transformation and 
innovation, not just from efficiencies and cost-cutting, nor from the intensification of work. 

Manufacturers can unlock these transformative productivity improvements by creating 
increased value for customers and capturing part of this value. In financial terms, it means 
growing topline revenue relative to costs. This is an essential and under-recognised 
element of productivity, beyond the productivity gains that can be achieved by efficiencies 
alone. Innovation is the means to this end of achieving productivity benefits that come from 
transforming the operations and capabilities of a business enterprise and its ability to meet 
the needs of paying customers in a superior way. 

Transforming businesses and workplaces is the key to manufacturers unlocking innovation 
and enhancing their productivity. Innovative managers and workplaces become more 
productive by transforming the capabilities of their businesses; finding imaginative new 
ways of problem-solving; collaborating with customers, suppliers and even competitors; 
adapting existing technologies and processes to new uses; and devising fresh solutions to 
meet the needs of demanding customers. 

Innovation empowers new approaches to manufacturing 

A wider angle on innovation – being more about the customer than the laboratory and 
more about business transformation than technology – empowers manufacturers to be 
bolder and more expansive in their choices of business strategy and activities. 


Manufacturers can do more to make innovation a distinctive competitive strategy to drive 
profitability and longevity in the face of faster and greater global competition. 

Innovation in agile work practices, better business relationships and novel business models 
is vital. There are many dimensions on which manufacturers can innovate: new delivery and 
distribution channels; new attributes of their business offerings; new organisational 
arrangements; improvements in products and processes; more beneficial ways of managing 
customer relationships; and providing better customer experiences. 

The end result is that manufacturers are empowered with more choices and greater flexibility 
in how they structure and execute competitive lines of business and sustain future growth. 
Innovation provides the power for Australian manufacturers to succeed against the odds. 

Priorities for action 

Australian manufacturers would be well-served to focus on three attributes or areas for 
action: 

• 
Experiment with business innovations. 
• 
Invest in people and skills. 
• 
Multiply their knowledge connections. 
Experiment with business innovations 

Innovation has been described by researcher Don Scott-Kemmis as a series of continuous 
business experiments in creating and capturing value. What motivates enterprises to 
experiment is their assessment of the risk versus the rewards – how likely it is that the 
enterprise can capture the benefits and extract value from experimenting. The answer lies 
in the effects of the experiment on the enterprise’s particular formula for success, in other 
words, its business model. 

Making innovative changes to a business model allows an enterprise to transform itself and 
its ability to create and capture value. An enterprise can create or secure its particular 
competitive advantage by innovations in its business model. This is because it is difficult for 
others to replicate all the elements of value creation and appropriation and their distinctive 
combination. 

Business model innovation is fruitful ground for manufacturers seeking to differentiate 
themselves and to gain a distinctive and lasting competitive edge. 

Perhaps the most immediate, tested and practical business model change open to 
manufacturers is to add service to their products, thereby providing new tailored and 
valued solutions to customers. Some, like the Singaporean Trade and Industry Minister, see 
the space between products and services as a new area of economic endeavour and 
growth opportunities for nimble and intelligent firms to specialise in and make their own. 

This paper has described the many opportunities and sources of prospective business 
innovation for Australian manufacturers, derived from the fundamental changes underway 
in manufacturing and its future competitive environment. The prescriptions for success, 


however, are neither obvious nor easy for any individual manufacturer. So, the starting point 
is an organised effort to undertake a series of deliberate strategic and operational 
experiments, testing and learning from potential business model changes for their 
particular enterprise in real time. 

Individual manufacturers, as a first step, could engage with customers to trigger possible 
business innovations to give them a lasting competitive edge. There are lessons from what 
others have done. For example, earlier the paper summarised the case of GPC Electronics, 
which learns from its customers to build its distinctive business edge. As a contract 
electronics manufacturer, GPC rejects the industry norm of competing on cheap labour and 
low costs. Rather, GPC competes by understanding what drives the competitiveness of their 
customer and by tailoring GPC’s products and associated services to ensure it adds to their 
customer’s performance. Staying connected to their customer and understanding market 
and industry trends is vital to GPC’s success. 

Kimberly Kampers, a case example in Don Scott-Kemmis’ business model innovation study 
for the Australian Business Foundation, focuses on providing a product of high value 
especially to their ‘grey nomad’ customers. What constitutes high value features of their 
product is researched and well-understood. Kimberly Kampers provide a greater level of 
customer option choice, but within a limited product range. They succeed because they 
consult with and understand their customers. They provide customers with a better 
experience, not an open-ended choice of products. 

The lesson from these two examples and the wider literature is to make customers part of 
an enterprise’s virtual in-house R&D and production team. Social media, customer loyalty 
and feedback schemes, prizes for problem-solving, customer to customer ‘extreme users’ 
clubs, action learning teams, are all vehicles to bring customers inside the circle and to 
embed and engage them in the business. The end result is not just a flow of new ideas for 
business innovations, but increased knowledge and ‘ownership’ of customers that is 
decisive to competitive success in footloose, globalised economies. 

Invest in people and skills 

The evidence is in on how decisive the quality and competence of people working in 
manufacturing are to the success of manufacturing firms and the sector as a whole. 

Skills shortages exacerbated by the growth and competition from the resources sector is 
invariably the highest top of mind issue for Australian manufacturers. This priority concern 
has been substantiated in the 2011 Environmental Scan by Manufacturing Skills Australia, 
particularly that: 

• 
skills shortages are intensifying and expected to get worse than ever before, especially 
with an ageing and static manufacturing workforce; and 
• 
competition for skills with the resources sector is a major issue and one affecting the 
willingness of manufacturers to train and upskill their workforce. 
As outlined earlier in this paper, the 2010 Global Manufacturing Competitiveness Index by 
Deloitte and the US Council on Competitiveness puts access to talented and innovative 
workers as a top factor driving manufacturing’s global competitiveness. Innovation and 


Business Skills Australia’s Canberra summit in 2009 recommended priority action for firms 
to invest in continuous learning and diverse, multidisciplinary skills in its workforce. A joint 
study by Stanford University and Columbia University38 demonstrated the vital role of teams 
of highly skilled individuals in solving manufacturing’s increasingly complex problems, with 
enhanced productivity outcomes. The European Central Bank39 has taken the view that 
both changes in labour productivity and total factor productivity are mostly driven by 
learning by firms. 

The importance of skills to manufacturing’s success goes beyond relieving the shortage of 
technical and professional skills, or even deficiencies in the numbers of maths, science, and 
engineering graduates. The Australian Industry Group in its 2007 report on industry agility 
marshalled the evidence from sources including its own research, the OECD, the Boston 
Consulting Group and the Business Council of Australia to show the importance of skills in 
knowledge capture, management and transfer, as well as conceptual skills like creative 
problem-solving and diagnostic thinking. 

The quality of management and leadership skills at the enterprise level is increasingly 
recognised as key to how well enterprises can manage and secure pay-offs from their 
business innovations. Management capabilities are also directly connected to the 
productivity performance of enterprises. The IBSA and SKE paper on Enterprise Innovation 
(2009) cites a series of studies to substantiate this, eg. Black and Lynch’s (2003) study on 
What’s Driving the New Economy? The Benefits of Workplace Innovation; two projects in 
2003 and 2005 by the UK Work Foundation on Cracking the Performance Code; and Watson 
Wyatt’s study in 2008/09 entitled WorkUSA Survey. Their evidence shows that improving 
management practices and workforce skills and engagement is decisive to improving both 
innovation performance and productivity. 

This is borne out in recent Australian research, notably the multi-university benchmarking 
study of Australian manufacturers’ management practices with a 16 country study by the 
London School of Economics and McKinsey referred to earlier. It pointed to middle-range 
performance by Australian manufacturers that detrimentally affects labour productivity. 
Particular deficiencies in people management were reported. This was recommended as a 
critical area for change that would flow onto productivity improvements. 

Further, it has been observed that Australia seems to assign lower priority to programs for 
lifelong learning and continuous upgrading of the skills of the workforce post formal 
education, than is evident in many other countries. 

At the same time, one constant element in successful business model innovation is the right 
team of skilled, well-trained, agile and empowered workers, proficiently recruited, managed 
and deployed with flexibility by their managers. 

The literature also emphasises the importance of these teams of skilled and well-managed 
workers operating in organisations that continuously refresh their knowledge and learn. The 
Enterprise Innovation paper described the features of these ‘learning organisations’ as ones 
that attract and use people with diverse skills and competencies, delegate problem-
solving, sanction informed risk-taking, encourage discretionary effort, experiment with new 
business offerings and customer services, and are generally more open, responsive and 
nimble in their operations and relationships. 

38 Boning et al, 2007. 
39 Giannangeli and Gomez-Salvador, 2008. 



There are a myriad of suggested pathways for individual manufacturers and their 
representatives to act to create such high-performing workplaces. Workforce development 
programs in other countries offer ideas for Australian manufacturers to consider. For 
example, Ireland’s National Workplace Strategy – Workplaces of the Future, Finland’s 
Workplace Development Program, New Zealand’s Workplace Productivity Program, 
Canada’s Workplace Skills Initiative, and the UK Innovation Department’s ‘Train to Gain’ 
program. These programs focus on practical initiatives to improve management and 
leadership skills, provide access to informal learning networks, and encourage workplace 
best practice projects. Current recommendations by Skills Australia to link workforce skills 
programs with business innovation programs across Australian Government departments 
seek to achieve the same ends. 

Action to upskill and manage the manufacturing workforce is key. Manufacturing firms need 
to be in a position to anticipate and respond to fast-changing new business opportunities 
and models. Readily-available, skilled and agile people that are motivated and empowered 
to design and implement new approaches to business are indispensable to Australia’s 
manufacturing future. 

Multiply knowledge connections 

This paper has made the case that these days knowledge is power for the competitiveness 
and sustainability of Australian manufacturing. Further, in the modern era, manufacturing is 
not a solitary pursuit. Being well-connected and highly proficient at collaboration is a key 
ingredient for absorbing knowledge and transforming it into new competitive capabilities 
for manufacturing enterprises. 

While stocks of knowledge are important, flows of knowledge are critical to competitive 
success. Knowledge only flows when manufacturers are highly connected and as innovation 
analysts, John Hagel and John Seely Brown contend, when they occupy “privileged 
positions in rich networks of relationships”. 

Australian business has a relatively poor track record at collaboration compared to OECD 
countries, according to recent data on the innovation activities of Australian firms from the 
Australian Bureau of Statistics and the Commonwealth Department of Innovation, Industry, 
Science and Research. 

“Clumps, not clusters” was how Leon Gettler commented in his column in The Age on 12 
January 2010 on the absence of significant manufacturing clusters in Australia. He 
characterised this as “pioneers exploring opportunities in an empty space”. 

Therefore, it is critical that manufacturers be assisted to forge new webs of connections, 
partnerships and collaborations. While access by enterprises to information has never been 
easier, faster or cheaper because of ubiquitous information and communications 
technologies, access to usable knowledge still relies on engagement with people and the 
depth of their relationships and connections. 

Deliberate and disciplined efforts are required to encourage the collaborative, trust-based 
relationships needed for knowledge-sharing and capability-building. It is through such 
collaborations that enterprises are put in touch with the know-how, resources, technologies, 
skills and opportunities that are a prerequisite for the growth of their businesses. Action is 
needed to embed businesses in a rich and diverse innovation ‘eco-system’ from which 
competitive success is seeded, shaped and continually refreshed. 


Help wanted 

The three calls to action for manufacturers to experiment with business innovations, invest 
in people and skills, and multiply knowledge connections should also guide the priorities 
for their representatives and for government policy and programs. 

Initial ideas for manufacturing advocates and public policy makers to foster this platform for 
action include: 

• 
Creating learning opportunities for manufacturing leaders to understand more about 
business model innovation and managerial innovation and how to experiment with new 
approaches to make step changes in their ability to innovate and grow as globally 
competitive Australian manufacturers. 
• 
Establishing active communities of practice, both geographically and virtually, for 
manufacturing firms to share knowledge, problems, best practices, and to collaborate in 
cross-organisation and cross-disciplinary business problem-solving exercises. The UK 
program, PeerAssist, provides one role model. 
• 
Activating a new Workplaces of the Future skills agenda based on increasing and 
embedding the capabilities needed for innovation-led productivity growth in Australia. 
This should bring together all the social partners with a track record of insights and ideas 
on this subject – trade unions, educationalists, industry bodies, government officials and 
advisers, researchers and community interest groups. 
• 
Redesigning public and private sector business support programs for manufacturers to 
focus on innovation, not just on business improvement. That is, these programs should 
increase the ability of manufacturers to continually generate new sources of distinctive 
and enduring competitive advantage, rather than facilitating necessary but ultimately 
‘status quo’ efficiencies and routine improvements. 
• 
Advocating and reinventing manufacturing industry policy as an integral part of Australia’s 
mainstream productivity agenda. 

47 
Manufacturing futures April 2011 

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