Archive for September, 2011

South Australia’s multimedia cluster

September 9, 2011

SA once ran Australia’s best cluster program. The main architects were Mick O’Neill (until recently Deputy CEO, SA Dept. of Trade & Economic Development) and ex-Irishman Hugh Forde. In this exclusive series, Mick provides Cockatoo readers with the lowdown on the origins and performance of another cluster. In recent editions we have featured water, defence, spatial information – refer our blog.

 Multimedia was one of the two original pilots, selected largely due to the interest from both state and federal governments at the time. In particular there was a federal program to establish a Cooperative Multimedia Centre in most capital cities.

 The cluster project was designed to complement the establishment of the CMC, engaging the industry and developing strategic projects (skills, awareness, research, networking etc.). The CMC subsequently provided a home for the initiatives so in this case there was no need or logic to establish a new entity.

The cluster projects had a finite life and the CMC continued much longer albeit also closing down some years later. Arguably the initiatives contributed to the growth of the sector in their own right but there is no sense of a multimedia sector/cluster today although there is a proliferation of web developers and a digital content ‘sector’ providing animation and post-production to the international film industry, game development, Iphone and Ipad apps, industrial simulation etc. Many of these activities can be traced back to the multimedia initiatives and some of today’s success stories  were involved and will say the cluster activities contributed along the way – if only to enable networking, generate confidence, validation etc.

 Once again we need to be careful about using the term failed cluster but there is undoubtedly a lesson about responding to government priorities rather than looking at the economic fundamentals of the sector.

 Regards, Mick O’Neill 0416 079 089

A shadow of an industry policy

September 9, 2011

Well the dries are out in force, selling the manufacturing sector down the river. John Button, the peerless industry minister of the Hawke/Keating days, would be turning in his grave.

Ross Gittins (Economics Editor, SMH) is a typical example – he postulates that we don’t have a transitory commodity boom like we’ve experienced many times before. This time, he says, we “have a historic shift in the structure of the global economy as the Industrial Revolution finally reaches the developing countries…the day will never come when we’re able to reopen our steel mills and canning factories…’

My big worry is that Gittins’ views are beginning to shadow federal industry policy! Having spent 25 years working in the industry department trying to give our manufacturing industry a future, and a stint at the OECD analysing other nations’ industry policies, I owe it to myself to get cranky. Now let’s be brutally frank.

Six messages

1. Industry policy is defined as a ‘nation’s official strategic effort to influence sectoral development.’ We have nothing like this. Even the title of the industry department – the Department of Innovation, Industry, Science and Research explains how manufacturing has slipped in importance!

2.Australia’s industry policy has very little sectoral emphasis – except for the alarming spread of reactive adjustment packages in respect of company closures in paper products, automotive, engineering, steel, processed food etc. in places likeAdelaide, northernTasmania,Wollongong, Lower South East (SA) etc.

3. Our industry policy is not strategic – it’s mostly about providing diagnostics to improve the performance of companies (Enterprise Connect) or funding innovation via the R&D tax credit and the Commercialization Australia program. These are good programs, but they are crying out for complementary strategic effort. There is no investment attraction program, no strategic purchasing agenda, no design program, no decent product labeling, no attempt to build global manufacturing alliances and no policies to add value to our mineral exports.

4. There is no longer a kick-arse attitude inCanberra. We once had a strong Industry Department, with four manufacturing divisions, who took delight in nailing Treasury. And we had a Department of Trade with real movers and shakers. Now DIISR has a small manufacturing area, and the trade function is swamped by the elites within DFAT. As a sign of the times, Trade Minister Emerson shows alarm at the prospect of adjustment assistance upsetting the World Trade Organisation, when we’ve always been the world’s cleanskins in obeying international trade law!

5. Manufacturing industry is not a sop to the engineering fraternity or to create jobs for the semi-skilled. It has the strongest multiplier effects of all the sectors. It provides the glue for long-term wealth creation.

6. It is incredibly difficult for any manufacturer to compete with imports when the $A is so high. We have to help them develop sophisticated ways of dealing with our competition. If they can’t compete on price, they must compete on quality and timeliness. To this end, we must surely get into industrial design in a big way. The manufacturing sector is crying out for some programs to encourage a mindset of innovative design

In fairness to Gillard, Carr, Crean and Co., the Opposition has no clear idea of what to do either. It seems to me that our political leaders are clueless due to the lack of sensible advice from their advisers.

The role for local players?

First, economic development managers and local MPs should be talking to local manufacturers to relay their needs to federal and state governments.

Secondly, I believe an alliance of manufacturing regions should lobby the federal government and the Opposition. Councils, especially those in regional areas with few alternative industries, have a vested interest in this. You are going to bear the brunt of the social problems. Apart from the big retrenchments, virtually every trade-exposed manufacturer is shedding labour or thinking about it.

The one bright spot is the defence manufacturers. At least we haven’t yet embraced Chinese munitions and equipment!

(This article appears in the September 2011 edition of LG Focus)