Editorial: The dismantling of Australia’s manufacturing capability | ADM April 2014
First of all, welcome to the first edition of ADM with me in the editorial chair, albeit temporarily, as Katherine is away on maternity leave.
For those of you who don’t already know, Katherine successfully introduced the ‘Ziesing Mk.II’ into service in early March and I’m happy to say that both Mum and baby Evan are travelling well. I’m sure you will join me in wishing her and her family the best of wishes as they settle down to life as an expanded family unit.
For my first editorial I’d like to begin by touching on the theme of Katherine’s piece in the March issue of ADM regarding the so-called shipbuilding ‘Valley of Death’, but I’d like to broaden the terms of reference somewhat to include the slow death of Australia’s motor vehicle manufacturing industry and its implications for future projects, such as Land 400.
As many of you know, the ADM 2014 Defence/Industry Congress was held in Canberra at the end of February and among the many topics canvassed, the future of naval shipbuilding and the loss of manufacturing capability in Australia came up many times.
Various aspects of the Congress are covered in greater detail elsewhere in this issue, but right from the outset the Defence Minister, Senator David Johnston and Assistant Minister for Defence Stuart Robert made it clear that they understood the problems.
While it is comforting to know that the problems are understood within the Defence portfolio, the challenge will be in convincing the wider government and the Australian public.
The imperatives of keeping viable manufacturing capability in Australia are arguably lost on a government with the political desire of returning the books to surplus in the near term – as Dr Mark Thomson of ASPI pointed out at the Congress when discussing the current Defence budget, returning the budget to surplus is in fact only a political desire, not an economic imperative.
There has also been a detectable public reluctance to continue subsidising a motor vehicle manufacturing industry that is losing money and this sentiment has no doubt been noted by the government.
But what will happen when these industries finally close their doors? Apart from the emotive aspect of the loss of hundreds of jobs and important skills, what will be the impact on other industries, the Australian economy and the expectations of ongoing high standards of living?
Some in the naval shipbuilding industry will tell you that the Valley of Death moniker doesn’t accurately describe the current state of play, as it suggests there may be a way across. Many will argue that it is already too late, even if projects are brought forward, and the situation should more accurately be described as ‘The Cliff of Oblivion.’
To take BAE Systems as case study, the company is facing the imminent possibility of having to close its Williamstown shipyard and, if it does, what will become of it? Who would want to buy an idle shipyard with no prospect of work in the foreseeable future? The prime waterfront location in a trendy Melbourne suburb with city views across the bay would no doubt attract the interest of property developers, meaning the facility would be lost to Australia for ever.
So who would win? The property developers in the short term for sure; those companies who specialise in industrial site remediation, in the short term; the local population, in the short term. But what about the long-term effects on local and national economies, to say nothing of industrial and defence capability? Remember, once these facilities close and the land is used for some other purpose, it is gone forever.
Perhaps it is time for us all to educate both our politicians and the wider public of the dangers of allowing our industrial capability to atrophy?
During his address to the ADM Congress, Stuart Robert noted that the importance of Land 400, the Land Combat Vehicle System which will acquire a significant number of fighting vehicles, could not be understated and promised that both he and Senator Johnson would lobby very strongly for a Military Off-The Shelf design that would be either manufactured or assembled in Australia.
The minister went on to challenge industry and State Governments to collaborate to come up with creative ways of constructing competitive tenders which he could take to government.
If we are not to repeat the problems currently facing the shipbuilding sector, primes, SMEs and governments alike must work together to come up with innovative solutions which will maintain industrial capability and be of long-term benefit to the country. And we all have the responsibility for explaining to the average Australian why this is important.