South East Melbourne Manufacturers Alliance Inc.
Future of Manufacturing in South East Melbourne Stage 1 Implementation:
Foundation and Capability Building
Report to Southern Melbourne Regional
Development Australia Committee
March 2013
Background
This report describes the outcomes of the first stage of a four stage project which aims to support the future of manufacturing in Melbourne’s South East. The original study was undertaken by the Southern Melbourne Regional Development Australia (RDA) Committee, in partnership with South East Business Networks (SEBN) and South East Melbourne Manufacturers’ Alliance (SEMMA) in 2011. The partners commissioned Bremer & Co to undertake a study and report on the future of manufacturing in south east Melbourne. The report explored the issues facing manufacturing in the south east region, investigated global influences and trends and consulted extensively with local businesses. It set out the challenges facing the sector in the region and proposed a medium to long term strategy to strengthen local industry. This was based on the themes of collaboration, connection and a collective vision. The report’s strategy suggested several themes under which a variety of actions could be taken to strengthen the region’s manufacturing sector. A core principle that runs through the themes is that better connections between regional firms and global best practice will drive innovation and improve competitiveness. The report recommended adopting a model of engagement to bring more firms into contact with global best practice through supply chains, commercial linkages and other means. The report emphasised the necessity for strong leadership from the local business sector in order to achieve the desired outcomes. Actively fostering local leadership and facilitating links between firms is a fundamental strategic objective of this project. Implementation of the strategy will involve actions by a range of parties and will require sustained effort over the medium to long term. It is envisaged the strategy will be implemented in stages, each one building on the outcomes of the earlier stages, but with their own objectives. Stage 1 Implementation (Foundation and Capability Building) has been undertaken by SEMMA in partnership with the City of Greater Dandenong (CGD). The CGD’s Business Networking Department, SEBN, has had primary involvement as a participant. ‐ 2 ‐ | P a g e Implementation Stage 1 (Foundation and Capability Building) Stage 1 had a number of objectives, key of which was to bring business stakeholders into alignment around a vision and to discuss strategic responses to the themes recommended by the report. The themes were: 1.
Create and promote a shared vision of viable manufacturing of the future 2.
Expand the global outlook 3.
Encourage a culture of anticipating change 4.
Build on the strength of existing regional bodies 5.
Build leadership and management skills. Methodology The methodology centred on developing strategies and actions for the themes and involved activities as follows: Stage 1 Summary of Key Activities Stage 1: Foundation and capability building 1. Establish a steering group to oversee the project; 2. Develop the vision and investigate regional branding; 3. Promote the Future of Manufacturing strategy to key stakeholders including leading manufacturing firms and key regional organisations; 4. Introduce demonstration initiative(s); 5. Develop roadmap framework; 6. Engage government support and identify sources of government funding. 1. Establish a Steering Group A steering group was established comprising representatives from SEMMA, CGD (SEBN), and the Southern Melbourne RDA. A consultant, Chris Ogilvy, was contracted by SEMMA to manage the project and to speak to individual business leaders, as required. 2. Develop the Vision and Investigate Regional Branding It was decided to use the 5 themes from the original study as a discussion tool to develop the vision and to begin the process of creating a regional ‘brand’ if deemed necessary by the business participants. Four workshops were conducted, and individual meetings held with business leaders. These businesses had been involved in the original study and had indicated interest in participating in implementation. Senior people from 28 local manufacturing companies participated in the workshops (list of participating firms at Appendix 1). ‐ 3 ‐ | P a g e 1. The first two workshops outlined the findings of the 2011 study. These workshops presented the outcomes of the study to participants, stimulated discussion on strategies related to the themes and ‘unpacked’ actions which participants believed underpinned each of the five themes derived from the study. 2. The second two workshops delved deeper, and businesses began to take ownership of the ideas, strategies and actions. The vision statement was crystallised, individual strategies articulated and supporting actions suggested for each theme. 3. Meetings were also held face‐to‐face with five major business leaders in the region to discuss the themes and strategies that were emerging. They agreed to the overall direction the workshops were taking, undertook to support the project and to establish the appropriateness of branding the south east region as a manufacturing hub. Outcomes: 1. Development of a collective vision ‘A vibrant and globally connected manufacturing sector’  Open to change  Supplying leading edge products/services  Providing employment. The unabridged version of this statement is as follows: “A modern and globally connected manufacturing sector ‐ resilient to change, servicing existing emerging markets in the Asian century and providing high value employment”. The vision reflects the themes from the Future of Manufacturing Study and summarises the principles discussed by manufacturing participants. It will form the framework for the work to undertaken to support the industry over the next 10 to 15 years:  Being open to change and collaboration  Opening up new opportunities to supply leading edge products/services  Providing employment in a diversified industry base  Participating in global supply chains  Creating the flexibility to produce a wide range of high value products, compared with competitors. 2. Agreement on Principles to Underpin Framework The businesses that participated in the workshops were in agreement with the strategic framework that Stage 1 of this project is preparing. There was consensus on the following principles which are woven into the detail of the five themes and strategies in the outcomes section: ‐ 4 ‐ | P a g e 
The project’s thrust needs to come from the industry itself and a number of the senior, leading businesses undertook to support this objective.  SE Melbourne is the heartland of manufacturing and branding is appropriate, and in fact, necessary if the region’s manufacturing profile is to be maintained.  Businesses should be exposed to different ideas, good practice, better technology, successful peers and global supply chains. It ought to be ‘exposure with purpose’, in other words, tailored to the requirements of specific businesses and tailored to the knowledge base of the participants.  ‘Openness’ is a critical element for a long term strategy which will evolve into a collaborative model. The current customer/supplier mindset will need to change as will the mostly ‘inward’ looking business culture.  Overseas experience is an essential benchmark to guide activity and success. A manufacturing hub in Germany is a good example of ‘cluster engineering’ where the government has used incentives to attract similar companies to a particular geographic area. Conceptually, this model provides an opportunity/option for manufacturing in the south east of Melbourne. It could include a ‘centre of excellence’ that would provide a range of services to local companies.  The Port of Hastings is a means for industry in the south east to have greater global connection, and business ought to advocate for this to government.  Connections between research bodies and business are important; however they need be re‐shaped to benefit business not the institution. 4. Promote The Future Of Manufacturing Strategy to Key Stakeholders The steering group agreed that in the short time available, promotion would not be possible to all the stakeholders as had originally proposed. It was also agreed that for certain stakeholders, such as local government and tertiary institutions, it would be more appropriate to present a completed road map/framework rather than a list of themes and strategies for discussion. It was decided that a number of stakeholders would be approached in Stage 1 and others in Stage 2 of the implementation due to the depth of the tasks that needed to be undertaken in Stage 1. Stage 1 Key stakeholders were identified as: i) Select business leaders iii) Federal Government ii) State Government (DBI) Stage 2 stakeholders were identified as: iv) Local Government vii) SEMIP v) CSIRO viii) VCAMM. vi) Monash University ‐ 5 ‐ | P a g e Outcomes: As part of Stage 1 promotion the following activities were undertaken:  Select business leaders were identified for the 4 workshops and face‐to‐face meetings held as described above;  Presentations to businesses were made at SEMMA AGM and SEBN functions;  State Government was informed through meetings with DBI and a presentation to the Victorian RDA Advisory Committee;  Federal Government was informed through the presentation made at the above advisory committee, to AusIndustry and internal memos circulated within DRALGAS;  Federal and State MPs were informed though personal meetings undertaken by SEMMA and RDA (SEMMA and the RDA have met with Federal MPs Mark Dreyfus and Simon Crean to discuss manufacturing, the project and funding. They have also meet with State Minister Denis Napthine);  Industry and local government stakeholders were informed through newsletters published by CGD and RDA. 5. Introduce Demonstration Initiative(s) This activity was not formally undertaken as the steering committee believes it will have greater strategic value as part of Stage 2 Implementation. Nevertheless, SEMMA and SEBN are facilitating a number of trial innovation groups which have the capacity to evolve into Stage 2 activities. 6. Develop Roadmap Framework The framework has been shaped from the strategies relating to the themes and has close alignment to the Prime Minister’s Manufacturing Task Force Report roadmap. A summary of the framework based on the roadmap and populated with the strategies from the business workshops is presented in the Figure below. This outlines the primary strategies that will form the Roadmap 2025 strategy for Melbourne’s south east. (soory about ypose thsie ‐ 6 ‐ | P a g e Themes and Strategies A critical element will be creating regional buy‐in for Stage 2 and promotion of the Vision. Implementation has, to date, concentrated on the development of the strategies underpinning the five themes and its acceptance by participating local manufacturers, key stakeholders in the Victorian and Federal governments. A Global Outlook Strategy  Facilitate collaboration between firms and regional bodies to position local manufacturers in global markets  Expose businesses to global innovative business models and supply chains  Promote understanding of global markets and trends to enable a more globally connected manufacturing sector. How it relates to supporting manufacturing  Adds value to business activity and profitability  Recognises need to access global supply chains  Provides SME’s with collaboration opportunities  Creates regional identity  Creates greater global connections Activities  Connect manufacturers and research institutions to keep up with international trends and markets  Highlight local sources of global innovation, information, products and supply chains  Select firms for joint projects between domestic market based businesses and firms within supply chains  Identify participants for local/global business cohort network (SME cohort and local Global businesses)  Establish trial visits and project(s) within local/global cohort network to demonstrate opportunities  SEMMA to actively promote ‘Strategy 2025’ within the region  Develop case studies and business presentations from Regional ‘success stories” A Culture of Anticipatory Change Strategy  Embed awareness that collaboration is something to be learnt and practiced ‐ 7 ‐ | P a g e 
Enable cross fertilise between businesses (looking vertically and horizontally across the supply chain)  Generate co‐operation to assist and enable Innovation  Provide exposure to new technologies, materials and markets How it relates to supporting manufacturing  Exposes businesses to a dynamic global environment  Creates a regional perspective and interface  Creates a culture of competition, collaboration and change Activities  Link to Government policy – Local, State and Federal  Leverage capability within the supply chain (formation of clusters)  Identify businesses that have leadership potential, offer a global perspective, are competitive and lead the change.  Research emerging markets to get a sense of what practices might work in the future  Link and leverage Government programmes and initiatives to drive change within the Region  Identify Company ‘role models’ that demonstrate the cultural transition required  Recruit businesses that offer a competitive and global perspective (Case studies)  Awareness – facilitate cross fertilisation networks between regional businesses Strengthening Regional Bodies Strategy Build regional leadership of manufacturing through SEMMA by linking and collaborating with other bodies that work with manufacturers or fill gaps where no other bodies exist How it relates to supporting manufacturing  Businesses giving support to SEMMA and building its strength and profile provides the credibility to lead. Activities  Establish a manufacturing consortium that allows a wider scope and engagement of participants.  Increase collaborative relationships – regional bodies to assist manufacturing SEBN, SEMIP, CSIRO, DBI, Enterprise Connect, etc.  Expand SEMMA’s catchment to provide support to a wider geographical network. (East and South)  Collaborate with other metropolitan areas ‐ 8 ‐ | P a g e 
Commence the foundation recruitment to establish a Melbourne SE Regional Manufacturing Council comprising SEBN, SEMIP, CSIRO, DBI, EC, Monash Uni, others will be nominated during Jan‐June 2013. Building Leadership and management Strategy  Engender leadership at regional level  Create cultural values and skill within firms to run globally competitive businesses  Engender leadership in terms of markets and business trends How it relates to supporting manufacturing  Creates an environment for regional businesses to survive and thrive Activities  Identify and capitalise on the experience of key businesses and business leaders to represent manufacturing within the region  Exposure to best practice (Insights Excellence, Innovations Insight Group )  Create high performance consortiums  Identify businesses that should/choose to participate  Enable employee exchange along the various supply chains  Source overseas secondments and training for employees  Mentor young and developing managers  Accelerate skill set exposure, fast track learning from the ground up – shop floor and managers  Establish prototype for High Performance Consortiums ‐ built around leadership and management for ‘next generation’ managers  Recruit businesses to participate in long term programmes and capitalise on local leaders to share their experiences. ‐ 9 ‐ | P a g e Appendix I ‐ list of participating firms in the four Workshops Northern Bodyworks Norden Fyna Foods Trimas Catten Industries Surdex Steel CGD Wolters Steel Mesh Hilton Manufacturing Andrew Donald Design Successful Endeavours AW Bell TRJ Engineering Gelpack Jayco Uneek Bending Advanced Polymer Technologies Brittania Metals Corex Nissan Castings Hygain Susan Day Cakes Aluminium Industries Appendix 2 – Leaders from regional manufactures to speak on behalf of Regional Manufacturers and champion the strategies developed through the process. Todd Hartley – Hilton Manufacturers Andrew Meek – AW Bell Martin Schlegel – Advanced Polymer Technologies Martin Solomon – Britannia Metals Simon Whitley ‐ Corex ‐ 10 ‐ | P a g e