Yes, Australia can manufacture, and it’s up to our engineers
The country should dedicate at least two years to better establish itself in manufacturing while harnessing the power of its engineers, says manufacturing expert Luke Preston.
The world’s most valuable car company has announced the end of production for its Model S and Model X vehicles at Fremont. I’m talking about Tesla and its preparations to begin making Optimus humanoid robots at Fremont in Northern California.
This article is about how and why manufacturers in Australia can compete, and I’ll get to that. But first, why is a place so horrifyingly expensive to manufacture as Silicon Valley, California, so central to Tesla’s current “bet-the-company” plans?
High-value, knowledge-intensive manufacturing – the kind Australia can do well – does not depend on the cheapest labour. It depends on brilliant engineers: something Silicon Valley has in spades.
As an Engineers Australia submission to the 2023 Parliamentary Inquiry into Developing Advanced Manufacturing in Australia put it, our profession is “often the foundational aspect of advanced manufacturing”, with much of the value in this “generated by the skills and knowledge of [engineers]”.
This goes right throughout the value chain, from pre-production activities such as research and development to post-production activities such as technical sales and circular economy considerations.
“Australia needs to aggressively use the next two years or so to better establish ourselves in manufacturing, underpinned by the power of our engineers.”
Luke Preston
Australian engineers are often wonderful systems thinkers, able to consider the whole suspension system rather than just a lugnut, so to speak.
I was fortunate to join Ford straight after finishing uni. I saw this holistic thinking up close, and it was fostered in a way by a shortage of resources at the company’s Australian outposts.
With good systems thinking you can go after the manufacturing system, which is a large, complex beast, and make it more efficient. This ups competitiveness as the percentage of the unit costs for labour trends towards zero.
The relevance of cost of labour, particularly of an entry-level, unskilled kind, is already becoming less relevant as manufacturing systems become more efficient, linking AI and automation.
This will only continue. I’d argue that Australia needs to aggressively use the next two years to better establish ourselves in manufacturing, underpinned by the power of our engineers and making use of all the tools the current AI revolution has to offer.
And yes, when I talk about manufacturing, I am talking about the production element of the value curve as well as its pre- and post-production endpoints. Production is something that Australia has given up on over time.
Access to your production line is invaluable and anyone who has success in manufacturing has learned that, often the hard way.
I was at Tesla for five years, including when Elon Musk broke down the walls between engineering and manufacturing engineering and said, “You’re all one now”. If he didn’t see the engineer who designed a certain part also spending time on the manufacturing line, they would be fired.
Another point from my time there was that by the time I headed back home, one in five Tesla engineers were Aussies. Australia’s loss of car making throughout the 2010s was Tesla’s great gain. There are Australian engineers involved right now, tooling up at Fremont for the million-Optimus-robots-a-year capacity goal.
In my current job at the Australian Composites Manufacturing Cooperative Research Centre, I have the privilege of seeing many technically adept companies within this country, many of them internationally relevant and each flourishing as the result of a strong engineering team.
Again, can Australia compete globally in manufacturing? And why would anyone choose to make as well as design and service products here?
Because Australia has some of the best engineers in the world, and the way you make your manufacturing system more efficient is to have your engineers optimising your production line and other parts of the business. You make a good product, then you make it cheaper and cheaper to make through automation and other means.
There are companies that prove it can be and is done here, such as internet networking equipment business Finisar, cold spray additive manufacturing specialists SPEE3D and next-generation X-ray machine company Micro-X.
Each of these has a high percentage of engineers in their workforce – and enterprising engineers among their founders – as well as strong commercial competence and a rich understanding of their customers’ problems.
Yes, Australia needs many more companies like the ones listed above, but it also needs to overcome the perception of high-wage costs being antithetical to manufacturing success.
And engineers are able to look at that problem at a system level, and know that that paradigm is false.
This article originally appeared on the website of create, Engineers Australia's members' title, on May 28. You can see the original version here.
