High-skilled Australian manufacturing workers in medical technology and aerospace are 38 to 40 per cent cheaper to employ than their US counterparts, the head of the Advanced Manufacturing Growth Centre says.
Chief executive of the AMGC Jens Goennemann says the finding explode as "a myth" the idea that Australian manufacturers can't compete with overseas rivals.
That may be true in low value-added processing and assembly, Mr Goennemann says. But in high value-added areas such as medical technology and aerospace, skilled Australian workers can hold their own.
"Against common belief, when it comes to high-skilled labour, we actually have a cost advantage," he said. For example, Ford had assembled its last Australian car but continued to design vehicles here.
Some of Australia's most successful businesses are in medical technology and aerospace manufacturing. They include blood products company CSL, hearing implant maker Cochlear, aviation supplier Marand and local units of Boeing and BAe Systems.
The skills of their workers – research and development, product design, logistics and after-sales service – account for most value added, while production takes a smaller share.
The AMGC – part of the Turnbull government's innovation policy – is like a draft camp for aspiring high-tech manufacturers to meet top multinationals and learn how to muscle out the competition in global supply chains.
Its 15 foundation members include L&A; Welding, a small western Sydney metal fabricating company that lost nearly half its business when most of Australia's oil refineries shut down.
Revenues fell from $10-12 million in 2012 to about $6-8 million today – mostly in the liquefied natural gas industry – but the company didn't take the blow lying down.
Rather, L&A; Welding worked with the University of Western Sydney and Massachusetts-based industrial software group PTC to digitise its welding processes so that customers could predict – and avert – failures.
Based on feedback from PTC, general manager David Fox said the technology was a potential export, something L&A; hadn't done before. He wanted to put PTC in touch with UWS to drive the project.
"We see that, if we can develop this, we can sell it globally, and maybe distribute it on [PTC's] platform," Mr Fox told The Australian Financial Review.
It's the opposite of the idea that we should support manufacturing for its own sake, and exactly the kind of approach the AMGC wants companies to adopt.
Chris Jenkins, chief executive of defence contractor Thales Australia, one of three multinational foundation AMGC members, said even small companies had to be able to compete globally today.
"All products need to be assessed on the basis of, 'are they able to compete in the world market?'" Mr Jenkins said. "Do they have a quality performance differentiator that will bring them global market share and not just local market share?"
Thales has exported more than $12.5 billion of submarine sonars, air traffic control systems and Bushmaster light-armoured vehicles from Australia over the past 10-15 years.
Getting small companies around the table with multinationals such as Thales created "fertile ground" for them to take the next step and get a foothold in a major project, Mr Goennemann said.
The AMGC is one five growth centres that aim to help build economic pillars beyond natural resources and financial services.
Policymakers had insisted since the 1980s that manufacturing must stand on its own two feet but failed to follow through.
Mr Goennemann said the new approach was aimed at areas of demonstrated strength rather than taking a scatter gun approach.
"If we don't focus on what we are good at and go out and meet the global competition, the global competition will come to us," he said.
AMGC foundation members also include multinationals Dow Chemical, Siemens and research agencies and universities CSIRO, Welding Technology Institute of Australia and University and NSW.
Small and medium firms i the founder group include ASX-listed carbon fibre tech group Quickstep, 3D printing groups SPEE3D, specialist gases group HI Fraser, Sun Pharma, Rinstrum, PJ Bowers ad Freelog Consulting.
