Archive for the ‘Automotive’ Category

Ford Australia’s demise calls for review of government assistance

June 11, 2013

My grandfather was a blacksmith in Trafalgar (Vic) and in the 1930s he became the local Ford dealer. His sons later ran the business as it expanded to Warragul and Pakenham. In the 1960s, Prefects and Zephyrs gave way to the mighty Falcon and the less-impressive Cortinas. On Sundays in October we sat transfixed in front of the TV watching the Bathurst 500 as Allan Moffat and Dick Johnson threw their Falcons around the track against the enemy Holden Toranas of Peter Brock and Colin Bond.

I think I need a shrink. I still can’t bring myself to hire a Holden at the airport, and my dog and I cruise around Canberra in my beloved Falcon. My wife and kids tell me to get with it, and to buy something decent.

I suspect that my personal mea culpa is just one of countless being offered following Ford’s recent decision to exit car manufacturing in Australia. It is additionally galling given Ford has received some $1.1 billion in federal assistance over the past decade. And to add further pain, Ford Australia President, Mr. Bob Graziano, then puts out a smokescreen that the cost of manufacturing a car in Australia is double that in Europe and four times that in Asia!

If that’s the case, was the federal government really thinking it could close the gap with subsidies? We’ll never know, but Graziano’s figures have been accepted as gospel and everyone is blithely accepting that the root causes are the high $A, the volume sensitivity of car production, and Ford’s inability to align its models with consumer preferences.

Well, the focus will now surely shift to co-investments (lovely word that) with Toyota and Holden. It is incumbent on the feds that they know how these two companies’ local operations measure up against their competitors in Thailand, South Korea, China etc. Without this information any federal assistance will be more blind faith. In this regard, you might note that there hasn’t been a full-blown Productivity Commission report on the industry since 2002! Shadow Minister Mirabella has stated that there will be a PC review of the car industry. It cannot come soon enough.

Value chains the answer

A value chain is a fancy word for supply chain. David Gregory, a Cockatoo colleague here in Canberra, is an expert in this field, and says that we made a fundamental mistake with industry policy in the 1970s by (i) supporting five car manufacturers in Australia, and (ii) focusing on industries. He argues that the reality is that industries don’t compete, businesses do – and there is often a huge difference between businesses within an industry in terms of their competitive performance.

David goes on to suggest that industry policy should be about fostering collaboration between high performing like-minded businesses within value chains. By such an approach, businesses can identify and deliver consumer value to specifically targeted consumers.

What has all of this got to do with local government? A lot. Local councils are well situated to help foster collaboration along these supply chains. Economic development managers can be helping the industry associations to align the parties – because the feds aren’t in this space any more.

THIS ARTICLE APPEARS IN THE JUNE 2013 EDITION OF LOCAL GOVERNMENT FOCUS

Auto Industry Plan announced in Australia

November 12, 2008

 

PM Kevin Rudd announced on 10 November a $6.2 billion plan to make the Australian automotive industry more economically and environmentally sustainable by 2020.

 

It includes an expanded $1.3 billion Green Car Innovation Fund – where the Australian Government matches industry investment in green cars on a $1 dollar to $3 dollar basis over 10 year period from 2009.

 

The Green Car Plan will provide:

• A better-targeted, greener, Automotive Transformation Scheme (ATS), from 2011 to 2020 ($3.4 billion).

• Changes to the Automotive Competitiveness and Investment Scheme in 2010 ($79.6 million).

• Promotion of structural adjustment through consolidation in the components sector ($116.3 million).

• Support for suppliers’ improved integration in complex national and global supply chains ($20 million).

• Enhanced market access program ($6.3 million).

• A new Automotive Industry Innovation Council.

 

Automotive tariffs will be cut to 5 per cent, giving Australia the third-lowest tariff regime among economies with a well-developed automotive industry. Australia will continue to pursue a free trade agenda because the future of the industry lies in innovation and global integration. PM Rudd said only 15 countries in the world can design, engineer and build a car from scratch, and Australia is determined to maintain that capacity.

 

(Laura Tingle, political editor for the Australian Financial Review, says the Plan is “sloppy, badly constructed, fiscally negligent, irresponsible, protectionist, irrational appeasement of rent seekers, which is now being camouflaged not only as a response to climate change but the global financial crisis.”  Whew – where’s the blood pressure tablets for Laura? We are taking an optimistic view of the Plan, and integrating our companies into global supply chains is the only option – Editor)

 

Australia’s Auto future

September 22, 2008

 

On 15 August 2008,  the Review of Australia’s Automotive Industry was released. Carried out by Steve Bracks (former Victorian Premier) and an expert panel, the review’s recommendations included:

§ A new Global Automotive Transition Scheme to support R&D, design and export.

§ Double to $1 billion the Government’s Green Car Innovation Fund.

§ A restructuring fund to assist the automotive supply chain to improve economies of scale.

§ Reducing the passenger motor vehicle tariff from 10 to 5 percent by 2010.

§ Include road transport in an emissions trading scheme.

§ Encouraging auto exports via FTAs, particularly with the Gulf States, ASEAN and South Africa.

§ Expand access to overseas automotive supply chains through a ‘Team Australia’ approach using eminent automotive ambassadors.

See www.innovation.gov.au/automotivereview

Glass half empty…

September 22, 2008

 

‘Cockatoo’, as a democratic institution, allows members to freely express their views, as long as they’re not defamatory or ridiculous. A Canberra-based member filed this report on Minister Carr’s Press Club address.

 

We the Government and the APS knows betterAt his National Press Club speech on 3 September to address innovation and the inclusion of the arts and humanities into science funding, the Minister repeated that Canberra and its officials know more about innovation, competition and the logic of business and what makes good research than do businesses or the universities.

 

He said the car industry employs 60,000 people and needs to be assisted to make cars people want, despite its self-interest failing to do it. So far, he said, it has not performed. Ditto for the textiles sector which also needs structural support even as he described its high level of innovation and flexibility.  He finds we do not have enough PhD graduates being injected to help smarten up industry especially in the SME sector. Minister Carr sees the need to cajole SMEs into sponsoring doctoral candidates for the future workforce even though most SMEs do not need science PhD graduates to make their business work.

 

Government officials will assess universities’ claims for funding under new national research “mission” statements. Officials, under Minister Carr’s conception of industry development, know more than industry about business and will pay grants for business to live up to Government goals. 

 

Throughout his speech – on nearly all occasions where a sectoral issue was addressed – it was the reverse of usual business dynamics. Government directs, business invests, because Government knows best.

 

The problem which escaped no one is that the Rudd Government has not stated clear industry and innovation goals, reasons for those goals, and related incentive-based and regulatory commitments to achieve them. It has spoken atmospherically, not concretely, and under current language is unlikely to be so.

 

If the car industry is as Minister Carr says “strategically important” does this mean continued taxpayer-funded jobs for a sluggish manufacturers and dollars for corporate losses, or does it mean paying what it takes to have an indigenous vehicle manufacturing capability in case our sea-lanes and imports are cut? If so, a strategic autarky in an uncertain future world is the goal, then let’s hear it for what it is, not just a revisitation of policy ideas now, as one senior official said at the speech, which were coming out of the ALP in 1995.

 

What he means is that the Government is rich and intends to pay those it sees as allies, but cannot yet find the words to do. Perhaps they will emerge from the Review season.

  

Clusters and Zones on radar in Algeria

September 22, 2008

The Algerian Government is considering the creation of a competitiveness cluster in the region of Cap Djinet.

 

The agenda is led by the group Cevital. The National Agency for the Development of investment will soon submit it to the National Council of Investments.

 

The aim is to develop partnerships with foreign companies in steel, aluminium, automotive, chemical/petrochemical and paints. The agenda might involve an Integrated Activities Zone where companies, universities and technological partners could work in synergy.

 

Source: SPL Info

Cluster links to India and USA (BEST PRACTICE)

June 24, 2008

 

A key success factor in investment attraction is the ability of localities to connect their knowledge, competencies and people.

We are thus in talks with agencies in India and the USA to link networks and clusters across borders – to enhance the connectivity of companies and researchers, and strengthen competitive advantages of towns and regions.

The key problem being addressing is the ’hit and miss’ involved in innovation and commercial deals. This is why development agencies and companies spend a lot of time connecting people via meetings, conferences, newsletters, websites, investment missions etc.

For example, millions of IT executives and their staffs compete daily to win business and to position themselves in each others’ markets. They crave knowledge about who is letting contracts, and which local companies they should be getting close to. This is a costly and time-consuming activity, only a small percentage of firms are amenable to joint ventures at any given time, and trust is not generated overnight. Wouldn’t it be easier with an on-the-ground ally?

We are thus identifying networks that are serious and active about collaboration and two-way investment. The aim is to have a multi-country platform to connect the key agencies within particular industries. Initial focus is on aquaculture; auto parts; biofuels; biotech; dairy foods; electronics; environmental management; food manufacturing; healthcare; information technology; marine engineering; telecommunications; textiles.

 

Contact us at apd@orac.net.au for further details.

Anyone for investment tie-ups with Australia?

June 2, 2008

 

The Cockatoo Network, which I manage, is recognised globally for its efforts to build collaboration and alliances. Our main fields are industry development, investment attraction and innovation.

In our experience, the strongest success factor in investment attraction is the ability of localities to connect their knowledge, competencies, resources and people – both internally and externally.

With respect to the external dimension, we are in discussions with development agencies in India and the USA to link networks and clusters across different localities. We believe this will significantly enhance the connectivity of companies and research organisations, as well as the competitive advantages of the towns and regions concerned.

The particular problem we are addressing is the large element of ’hit and miss’ involved in innovation and commercial deals. This is intuitively understood by development agencies and companies, which is why they spend a lot of time connecting people via meetings, conferences, newsletters, websites, investment missions etc.

Take the example of the IT sector, where millions of executives and their staff worldwide compete daily to win business and to position themselves in each others’ markets. They crave knowledge about which agencies are letting contracts, who are the key decision-makers, and which local companies they should be getting close to. This is a costly and time-consuming activity because only a small percentage of firms are amenable to joint ventures or deals at a given time, and trust is not generated overnight. Wouldn’t life be easier if you had an agency on-the-ground to assist?

We are therefore in the process of identifying those networks that are serious and active about collaboration and two-way investment. The aim is to have a multi-country platform that identifies and connects the key agencies within particular industries. Our initial focus is on aquaculture, automotive parts, biofuels, biotech; dairy foods, electronics, environmental management; food manufacturing; healthcare; information technology; marine engineering; telecommunications; textiles.

 We will be travelling to India and the USA – and then progressively to Thailand, Europe and other nations to complete our feasibility study. We are looking for potential collaborators. If you have a common interest, we surely would like to hear from you!

Rod Brown, Cockatoo Network, Canberra phone 61-2-62317261 or apd@orac.net.au

Kim Carr’s innovation agenda

April 13, 2008

Federal Industry Minister, Kim Carr addressed the Annual Industry Leaders’ Dinner in Geelong in late March. It was significant at three levels. Excerpts below.

Commitment to manufacturing “Do I support manufacturing? You bet. – Do I think it’s vital to the Australian economy and Australia society? Absolutely – Do I think governments should create an environment in which manufacturing can flourish? No question. When Kevin Rudd said he wanted Australia to remain “a country that actually makes things”, I cheered.

“…We remain firmly and unapologetically committed to securing the future of manufacturing…the slightly more challenging news is that the government can’t support manufacturing at any cost, or on any terms…the quid pro quo for our support is that manufacturers must be ready to innovate and export…and prepared to invest in local know-how to create their own competitive advantage.”

Status of reviews underway The 4 reviews are National Innovation System (chaired – Dr Terry Cutler); Cooperative Research Centres program (chair – Professor Mary O’Kane (part of the innovation review); Automotive Industry (Steve Bracks); Textiles, Clothing & Footwear Industries (Professor Roy Green).

The Cutler review will help us understand the connections between the different elements of our national innovation system. The automotive and TCF reviews will show what innovation can do for industry. The NIS and CRC reviews will show what industry can do for innovation. We need to connect sectors, institutions and individuals to promote collaboration and knowledge transfer.’ (Cockatoo is about connectivity – we will be making submissions. See innovation.gov.au)

Enterprise Connect program $200 million initiative to give SMEs better access to new ideas, know-how and technologies. To create a network of knowledge-creation and knowledge-transfer sites. Main elements:

§ 5 new manufacturing centres – Sydney, Melbourne, Adelaide, Perth, Burnie, plus existing QMI Solutions base.

§ 5 dedicated innovation centres – Creative Industries; Clean Energy; Remote Enterprise (Alice Springs); Mining Technology (Mackay) Innovative Regions (Geelong). First two have not been decided.

§ $10 million Researchers in Business scheme – for placement of university and public researchers in businesses.

Clusters will grow in importance, says Welsh expert

March 5, 2008

Professor Philip Cooke (University of Wales) has been a keynote speaker at various TCI conferences in recent years, and is an active collaborator with other academics and economic development professionals around the world, including us. Herewith is a summary of one of his recent presentations.

 To talk about clusters properly, one needs to build in ‘localised enterprise support infrastructure’ which helps the organic growth of firms. The advantage of clustering is that it facilitates:
·          inter-generational transfer of knowledge.
·          imitation of successful practices and innovations.
·          inter-personal face to face contact.
·          inter-firm cooperation.
·          tacit circulation of commercial and technical knowledge. 

There are probably 20-30 really strong clusters in the UK – some are old such as ceramics in Stoke on Trent. A good, newer example is around Reading (Oxfordshire) where the Silverstone race circuit has facilitated the growth of a F1 motor sports cluster involving construction, testing, training – nine racing car groups (e.g. Williams and Benetton) have clustered there, with many suppliers nearby. There was poaching of skilled technicians until the authorities called a meeting and asked for cooperation.  

Other examples are in IT and biotech around Cambridge and multi media around Cardiff. Germany also has four biotech clusters, including Munich and Hamburg. Most of these are located close to a source of knowledge.   Cluster agendas conform with the realities of the New Economy:

Old Economy                                                                                       New Economy

 A skill                                                                                                       Lifelong learning

Labour conflicts                                                                                   Teams

Environmental limits                                                                          Growth

Security                                                                                                  Risk taking

Monopolies                                                                                          Competition

Plants                                                                                                    Intelligence

Standardisation                                                                                   Customer choice

Status Quo                                                                                            Agility

Hierarchical                                                                                          Distributed

Wages                                                                                                   Shared ownership

 Certain features of the New Economy are important in the context of innovation systems – venture capital search laboratories, IP-driven development and incubators.  

Clusters will grow in importance in the New Economy, given that it requires the revitalisation of old sectors, knowledge transfer and creativity, collective learning, untraded interdependence (favours), spill-over effects from new business formation, and project-based collaboration. 

Some concluding remarks:

·         
It is hard to build clusters from scratch.
·          supportive infrastructure is very important.
·          clusters enhance new firm formation.
·          there is a role for government if market failure exists.
·          need to understand that firms in clusters have other priorities – a sense of collective order or thinking about clusters is not always there.
·          Agricultural areas can benefit from clusters, but this is not fully appreciated.
·          ‘A cluster is not a cluster without a governance structure’.

Contact: phone 029 20 874945, cookepn@cf.ac.uk

Toyota’s model for success – Kaizen and the Art of Creative Thinking

November 11, 2007


 
The Superfactory newsletter in the US is an excellent repository of information and ideas relating to manufacturing innovation. It currently features an article on Kaizen and the Art of Creative Thinking, the classic from Dr. Shigeo Shingo, the original Lean Manufacturing genius. Superfactory claims that Kaizen and the Art of Creative Thinking provides the single most important tool for initiating a Lean transformation, specifically Dr. Shingo’s own Scientific Thinking Mechanism. Never before published in English, you now have access to Toyota’s secret model of success – you can learn how to dissect the status quo to address the actual problem, generate innovative ideas in group environments, and learn the best way to implement solutions. This book unlocks the secret to managing creative thinking.

One chapter is available for free download.

Well, we visited the excerpt of Dr. Shingo’s work and it makes for extremely interesting reading. A section covers IDEAS GENERATION, which is defined as formulating solutions that move beyond the status quo.  On the other hand, JUDGEMENT tends to be a passive and internally-oriented mental activity opposed to such action stemming from our fear of change. Dr. Shingo walks the reader through examples of how to get the balance right.

To me there are two messages:

·          You must be alert to people whose first instinct is to criticize an idea.
·          You should nurture the free thinkers, but have the right reality checks. 

More Information and to download Chapter 5, From Ideas to Reality

Contact us at apd@orac.net.au for further leads.