Manufacturing round table: the morning after

Well, two afternoons after actually. This post is here as a matter of record as it’s largely a repetition of a story posted here on Sunday. Anyway, Crikey asked me to write the notes up and what with their word limit it’s serialised into two parts – the first of which appears below the fold. Publishing it under the heading “Why Manufacturing Matters” is an inventive way for Crikey! to head up a story by someone who thinks that we might be able to help manufacturers by improving the way we run the economy in lots of useful ways, but not that ‘manufacturing matters’.

Manufacturing industry roundtable

John Button and I were keynote speakers at Kevin Rudds Manufacturing Industry Roundtable on Monday. Though it was closed to journalists, Crikey have asked me to edit some notes I posted at Club Troppo to air my clean linen in public before the event.

Heres half of those notes the second half tomorrow!

1. Why manufacturing? Why indeed. Well get no-where without a broad definition of manufacturing which comprehends the paths up the value chain that developed country manufactures should take into design, brand management, software and systems integration.

2. We should focus on things that are worth doing in their own right but which also have strongly positive effects on innovation and for manufacturing – broadly considered.

3. As Lateral Economics argued in its discussion paper for the Victorian Government Regulation and Innovation, our current system of regulation review is mired in the limitations of central planning. We need a system of regulation review that drives change from the bottom up giving firms rights to alternative compliance.

4. We should seek to become a regulatory pacesetter with the primary aim of good government, but with the secondary effect of generating opportunities for our manufacturers.

5. Our report provided an example of setting up penumbral markets alongside Kyoto compliant carbon markets where experimental technologies could be developed. This would lower the cost of carbon abatement and place innovative Australian producers in the box seat to develop new technologies.

6. We could do something similar in other areas like pharmaceuticals.

7. Excessively strong intellectual property protection is becoming a major impediment to innovation in software. Weve been heading in the wrong direction here owing to our kowtowing to the Americans. But we can still address the issue and comply with our FTA obligations.

8. We should also do whatever possible to protect open source software from the fear uncertainty and doubt that software patents are having. We should aim to make Australia a safe haven for the creation and distribution of software, particularly, but not exclusively open source software.

9. The Commonwealth government should insist that State Governments not seek to poach existing business off each other, and going further should prevent them competing with each other with incentives to attract foreign investment except as part of some process co-ordinated with a national approach to investment attraction.

Well that last point went up on Club Troppo, but didnt make it into my time limited presentation.

Of course many other points were raised in a successful and interesting day.

Of the points raised, the greatest interest was shown in a new approach to regulation. And Kevin Rudd impressed me. Genuine interest in policy is surprisingly rare amongst politicians, and lies at the heart of John Howards present woes. By contrast Rudd seemed as interested in good policy as any politician Ive met.

Tomorrow: how we can manage our macro-economy to advantage manufactures.

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cam
cam
14 years ago

Why do you want the states to stop competing for foreign investment and have a national approach?

Nabakov
Nabakov
14 years ago

Nick,

I’m digesting various accounts of the summit now flowing towards me and yours is one of the best yet.

The “expanding the definition of manufacturing and what it indirectly as well as directly delivers for an economey” is a theme that should really become a meme.

And re the whole IP/regulatory issue, it’s worth noting the concept of patents was originally introduced not just to protect commercially viable ideas but to also to make the knowledge more widely available to develop new market opportunities.

And also that developing regulatory expertise for the fast evolving 21st century is an exportable service too.

The Commonwealth government should insist that State Governments not seek to poach existing business off each other, and going further should prevent them competing with each other with incentives to attract foreign investment except as part of some process co-ordinated with a national approach to investment attraction.

Aww, now you want to take fun away from hearty state competition. Maybe we could have a “catch and release” program instead?

Ultimately, it’s about skills and innovation though and they should all smoodged together eg: a bright 16 year old boy or girl should have the opportunity to explore and get inspired by career paths that lead from and between Batman TAFE auto design stuff, the VCA’s CGI courses or Monash’s biomedical programs, pushing the envelope on the Synchrotron or VPAC for graduate work on thinking big about nano/micro technologies and/or messing around with intelligent transport systems or medical/retail stock systems because they had a sudden brainwave about arphids or social IT technolgies while goofing off in World of Warcraft or Second Life (A big, VicGov-backed and very funky chunk of Melbourne’s about to materialise in about a fortnight’s time in Second Life in a way that seems bloody obvious once you’ll see it. But no one did see it until some very bright 20something interns suggested it. And made it work)

It’s gonna be their kinda world. So let’s train, encourage, resource and support the next generations here to be multidisciplinary researchers, engineers, designers, planners, thinkers, artists, directors, marketeers, project managers, data wizards, hustlers and entreprenuers while outsourcing all the low wage humping, lifting and assembling we can. Seems to be working OK for the UK – they share the same command of global culture and its lingua franca and an sharp eye for an innovative angle as us – but while they’re currently more glamourous, we’re cheaper, work harder and give better meeting at the top end of globalisied knowledge-driven industries.

It’s telling that our most recognisable brand name abroad is Qantas, a very overrated services provider while countries with a fifth or less of our population have established globally recognised premium manufacturing brands like Saab, Nokia, Fisher & Paykel, Volvo and Kerry Gold.

Nabakov
Nabakov
14 years ago

But if manufacturing is part of systems integration, a piece in a set of social, economic and technological connections, well theres a fair chance a fair few will come at that.

21st century manufacturing, Travel the world, redesign whole factories, play with with the most advanced technologies around, meet hot design and marketing chicks and interface with ’em!

Brendan Halfweeg
14 years ago

I have no problem with the idea of regional differences in taxation policy, not just targetting manufacturing, but all economic activity. A stronger federal system whereby states, territories and regions are able to compete on the regulatory and taxation fronts is essential to the discovery process of what works. A commonwealth government one size fits all in terms of industry policy is a step backwards. States and territories should be responsible for determining taxation rates locally and competition for lower taxation should be encouraged. Rudd is on the wrong track here, as is Howard. Competitive federalism is the way forward.

To a certain extent, competing on regulations and taxation is all that should happen anyway, any level of government picking winners will lead to significant distortions in resource allocation. There is no ideal level of manufacturing activity for Australia other than the one that individual investors pursue without recourse to state encouragement in the form of tax holidays or other industry or company specific incentives.

David Rubie
David Rubie
14 years ago

Minor nit: Saab and Volvo might be global brands, but they are owned by the big two and now barely scrape facelifts over the top of centrally designed vehicles. Sad but true. They are little more than Holden and Ford Oz in that respect.

David Rubie
David Rubie
14 years ago

Nitting with Nabakov. I find it annoying that Saab and Volvo have been trotted out for the past 30 years as some kind of model for how small countries might succeed in motor vehicle manufacturing. Volvo committed suicide with the 850 and fell into re-badging Mitsubishis. Saab committed a much longer suicide with the 9000. Both companies, I guess, seem like they were big successes in the US but as R&D become hideously expensive, neither could really keep up.

In a weird way, it makes the protected/foreign owned Holden/Ford operations here both stupid (forcing us to buy overpriced cars) and cunning (letting the big boys wear all the R&D costs while being forced to buy Australian engineers).

If we could have an industry policy that encouraged multi-nationals to buy our engineers, while still having cheap cars, maybe we’d have something. World class education would seem to be the golden ticket, but the UK have tied up automotive engineering and design as specialities whilst ditching their hideous mass manufacturing to a large degree. It’s very smart stuff we could feasibly emulate. The real, extra bonus manufacturing is all done in minute crafts associated with motor racing, which simultaneously has encouraged investment in education (it’s very glamorous stuff) while offering decent starter jobs for graduates who end up in the multi-nationals. Maybe we should jump on something nobody else is doing though (helicopters? small runs of bush bashers for top-end cattle herding duties and a Red Bull sponsored racing series?)

As a broader view, the british motor industry had to die (big scale) to survive (small scale) and it’s now thriving as a hub of specialist engineering – in comparison to Sweden (who are now mere branders and re-assemblers) they’ve been a real success. Big scale stuff is 1950s era thinking and best left to economies that have lots of cheap labour, even for premium brands.

Ben Eltham
14 years ago

Nick

I am very much in agreement with your point about software patents now inhibiting IT innovation.

But I think the problem is more widespread than just software. The most stringent tightening of Australia’s intellectual property laws as a result of the FTA were actually in the field of copyright. For instance, we took our cue from Sono Bono and extended copyright to 70 years after the death of the right holder.

Nick I was wondering what your perspective on issues like creative commons are. Do you believe that ever-stronger copyright laws are now beginning to stifle intellectual enquiry and artistic creativity?

Nick
Nick
14 years ago

Interesting comments – but where does serious venture capital sit in this?

What do you think we should be doing to encourage early stage venture capital to come in early and stick around, to help build some of that innovative value in Australian companies?