Is manufacturing in Australia and New Zealand dead or alive?
Our reliance on local manufacturing and supply chain management depends greatly on which side of the ditch you reside. If a day at the beach involves a pair of thongs and an esky full of your favourite stubbies, then sure, you could be forgiven for thinking it's dead. But if jandals and a chilly bin full of cold ones are more your 'culture', then you may feel a little more confident in a career in the manufacturing industry.
In reality, the two nations are far more aligned than you may think, and the opportunities are equally lucrative for manufacturers who can seize these three opportunities in 2023 and beyond.
More than half of Australian manufacturers intend to re-shore their operations in Australia by 2023
Consumer demand for same-day delivery is driving manufacturers to rethink their supply chain management
Local manufacturers will need to invest more heavily into modern technology if they are to outlast their offshore competitors
Technology will open the door to a far greater problem — skill shortages
1. Globalisation just isn't what it was cracked up to be
More than half (55%) of Australian manufacturers intend to re-shore their operations in Australia by 2023. This follows years of market volatility caused by the pandemic and rising international relations with neighbouring countries. But with employment in the sector sitting at just 6.4% of Australia's working population (well down from 25% in the 1960s) manufacturers have certainly got their work cut out if they want to inspire a new generation of local employees in the sector.
New Zealand's manufacturers, on the other hand, employ approximately 9% of their working population, with the sector accounting for nearly double (11%) the national GDP as compared with Australia's (6%).
We have certainly reaped the rewards of globalisation over the years, but there's a correction coming and especially if you're a believer in the growing 'made-local-for-locals' sentiment. But that alone won't be enough to reinvigorate the industry, so it's up to the manufacturers themselves to get ahead of their market.
Manufacturing and supply chain experts are starting to recognise the need for products being made closer to the consumer and we're starting to see the shift already with distribution giants Catch and Amazon. The bulk of their supply chains have returned on-shore, housing hundreds of their products in some of the biggest warehouses in the southern hemisphere.
Why? Consumers are demanding it more than ever:
80% of consumers surveyed want same-day shipping
61% want their packages even faster (within 1-3 hours)
61% of consumers are willing to pay more for same-day delivery
49% of shoppers say that same-day delivery makes them more likely to shop online
25% of shoppers will abandon a cart online if same-day shipping isn't available
With 93% of Australians preferring to buy products made in Australia and 89% believing more manufacturing should be undertaken on home soil, it's only a matter of time before manufacturers leverage the global disruptions in favour of consumer demand.
Nearly two-thirds of mid-market manufacturers on both sides of the Tasman saw their year-on-year revenue increase in 2021. This wasn't because of globalisation, in fact, it was the result of pent-up local consumer demands who didn't just want their products, they wanted them yesterday!
2. Technology holds the key but who's walking through the door?
The idea behind offshoring some or, in many cases, all our supply chains was to save money on labour. But throw into the equation Robotic Process Automation (RPA), Artificial Intelligence (AI), Machine Learning (ML) and Augmented Reality (AR) and the cost efficiencies of offshoring your supply chain are becoming obsolete. Who would have thought, the costs of hiring a robot here is near-equal to hiring one overseas.
25% of companies surveyed say the pandemic has accelerated their plans to deploy automation
75% are planning to invest in automation in the next 12 months. Whether through choice or necessity
73% of those surveyed believe automation to be business-critical moving forward
So how does that look for manufacturers and distributors who are leveraging Microsoft Dynamics 365?
The same technology is being used in the manufacturing and maintenance of elevators by Thyssenkrupp. Their industry-first cloud-based predictive maintenance system can accurately predict in real-time when an elevator is going to fail and notify an engineer for repair. This means there's far less risk of people being trapped inside and it’s more efficient when it comes to managing maintenance resources too, as they can be scheduled ahead of time.
Jabil, a manufacturing solutions company, has leveraged Microsoft Azure's Machine Learning technology for its 'Factory of the Future' initiative which adopts cross-functional workstreams and automation across the entire facility. The primary goal of the initiative was to create a system that can automatically identify and correct faults in the manufacturing process as they arise.
The results–first and foremost–humans are removed from the mundane and repetitive nature of controlling quality as they tirelessly scan through image after image of the same parts. Instead, their robots can now eliminate 72% of pass-through components which no longer need manual human intervention and can capture 92.18% of true defects.
As standard now, businesses are benefiting from a unified view of stock, warehouse, manufacturing, service, and logistics with Dynamics 365 Supply Chain Management. But with a greater reliance on advanced technology comes a greater demand for the skills required in maintaining that technology in order to stay competitive.
3. The job/skills shortage is real
Is it as simple case of robots replacing humans? Not exactly. Instead, what's typically happening is that robots are freeing up humans to do the jobs that robots can't. In fact, 54% of businesses believe automation has had a positive impact on warehouse and manufacturing employees, including less repetitive and strenuous manual labour. So, the transition is offering workers the chance to up-skill and avoid physical picking activity while gaining more flexibility in their days.
Right or wrong, robots are replacing some jobs. But mostly the mundane, labour-intensive ones that aren't all that good for our health and wellbeing. Nonetheless, it's exacerbated the job insecurity sentiments felt by employees who in general, may rather resign rather than re-skill.
The 'great resignation' is exactly that, employees voluntarily leaving their jobs. And that percentage has been on a steady increase from .5% to 2.5% in the last decade. So, while the jury's still out on what's continuing to drive the job shortage — there's an opportunity for the sector to promote the growing demand for a different set of jobs. Jobs that can't be replaced by machines (anytime soon).
Let's look at Toyota for example. Their engineering teams are using Dynamics 365 Layout and Dynamics Remote Assist on Microsoft HoloLens to create digital twins of their equipment on the manufacturing floor for safety and process verification and maintenance.They're also creating innovative AR training practices through the use of holographic equipment instead of physical equipment in space.
They too have invested in a significant expansion of their local distribution and warehousing. Toyota Australia has built one of the country's most advanced automotive distribution centres, a multi-million-dollar robotic process automation facility in Western Sydney, which houses more than 100,000 automotive parts for both local and export markets. Meanwhile, Toyota New Zealand's expansion warehouse has gone from 24,000m² to 35,000m² which allows them to supply their network of dealers with more than 95% of daily orders directly off the shelf for overnight shipping.
Before questioning your own future career in local manufacturing and distribution, first consider the opportunities to up-skill yourself and the employees within your industry before seeking a career change altogether. As an example, robots will need maintenance, so there's currently a shortage of robot maintenance jobs, believe it or not!
The types of jobs being created are often better paying, especially because they're in such high demand. So, local manufacturers will need to make a call on hiring additional resources as a short-term solution, up-skilling their existing workforce as a long-term solution or working with a partner such as Fusion5 as a hybrid solution.
While there are a number of factors indicating the return of manufacturing and distribution for ANZ, there's still a lot that businesses can be doing to get ahead of their competition, and stay there. Start with your technology, it's the foundation for the future of your business and is now within reach.
Free up your time from being hands-on with core operations and get back to spending time making those important business decisions. With one streamlined business solution, you'll be well equipped to level up and achieve operational excellence.