Transcript : Building Resiliency and Seizing Opportunities in Advanced Manufacturing
27 May 2020 | Check against delivery
YASMIN ALLEN: Welcome. My name is Yasmin Allen, and it is my great pleasure to welcome you to Advance’s first global townhall in digital format, building resilience and seizing opportunities in advanced manufacturing. Ambassador Sinodinos, honoured guests, colleagues and friends, welcome. I also warmly welcome our New York Consul General, Mr Alister Walton. I pay my respects to Aboriginal and Torres Strait Island Elders, past, present, and future. This is a wonderful turnout and thank you all for joining us. Today, we have more than 1,200 participants registered on the call from around the world with almost 300 Advance members joining us from the U.S. alone and many more from Singapore, Hong Kong, the UK, Japan, Indonesia, France, Germany, New Zealand, and more countries. Advance identifies and celebrates extraordinary Australians living and working around the world. Our guests today epitomise this excellence and success. Advance provides the opportunity for our diaspora to share their knowledge back home for the benefit of all Australians.
It is a huge advantage that we have this talented, energetic, and highly successful diaspora that we can tap into, particularly in times like these. I keep hearing the phrase, don’t waste a crisis. COVID-19 has extracted an enormously high health and economic price. And as some economies are contemplating re-opening, today we turn our minds to the How. I sit on boards across Australia’s major sectors of health, finance, and energy, the ASX, Cochlear, and Santos. All these companies are currently working remotely and facing into the challenges of what to leave behind in the old world as we reemerge. Although this crisis started as a health crisis, it is clearly now an economic crisis of major proportions. COVID-19 has slingshotted us into our future world, one in which digital has become central to every interaction forcing both organisations and individuals further up the adoption curve. Technological advancement is critical to advanced manufacturing and is the basis of flexible transparent and stable supply chains.
Yesterday, Advance.org Patron and our Prime Minister, Scott Morrison, announced major nationwide reform to the skills sector to help drive our economic recovery. As we move from job-seeker to job-maker programs, the Australian Government is prepared to invest in the skills that are aligned to industry needs and importantly, the new economy. I am part of this as chairman of the Digital Skills Organisation set up by the Department of Employment, following last year’s Joyce Review into Australia’s vocational education and training sector. Effectively, a new partnership between industry, government, and education. The imperative is for us to transition our workforces to ensure we have the talent required for Australia to thrive in today’s world. Last week, I listened to a podcast by John Berry, our former United States ambassador to Australia and now president of the American Australia Association. He was in a conversation with the United States Study Centre CEO, Simon Jackman. John talked about his experience in this new hard hit New York. In his words, and with apologies to Charles Dickens, it is the best of times, it is the worst of times. And that is where I would like this conversation to focus for the next hour and a half on what we’ve demonstrably been able to achieve because we’ve had no choice. How do we exit this crisis successfully holding on to business changes that will drive resilient and globally competitive industries? Advance works with Australians around the world to find answers, and that is how we arrived at today’s conversation with these outstanding global leaders.
I will now introduce Australia’s Ambassador to the United States, the Honourable Arthur Sinodinos AO. Mr Ambassador brings to this role his training as an economist, the humility of being a son of Greek immigrants born and raised in the mining town of Newcastle in New South Wales. He combines the expertise of a Treasury bureaucrat, former Chief of Staff to Prime Minister Howard, senator for New South Wales, Cabinet Secretary, and minister for industry, innovation, and science. Mr Ambassador also has experience in the private sector. We feel honoured and privileged to work with him and his outstanding team at the embassy to bring this conversation to you. In a moment, I will hand it over to Mr Ambassador. Following his remarks, we will be joined by Advance CEO, Maria MacNamara, who will introduce you to our panel of global leaders. Mr Anthony Pratt, Executive Chairman of Pratt Industries and Visy Industries, Mr Andrew Liveris AO, former chairman and CEO of The Dow Chemical Company and director of DowDuPont, Ms Robyn Denholm, Chairman of Tesla, and Ms Pamela Melroy, Director of Nova Systems. Each speaker will make brief opening remarks and then Maria will put your questions in a facilitated Q&A to the panel. So please, let us welcome Mr Ambassador.
AMBASSADOR SINODINOS: Thank you very much, Yasmin. Great to be with you. Thank you to you and Maria for putting on this great event which has over a thousand people listening. I’m the least interesting speaker on here. I’ve looked at the panel, I think it’s such a wonderful panel, such great experience across the board and at the very cutting edge of manufacturing and space and so on. So for me, I’m looking forward to learning a lot today. Before I go into the substance of my remarks, I do want to commend Advance and I look forward, as Ambassador, to doing more with Advance in the future. It’s important for us to make the best use of our diaspora because our diaspora are in such influential and innovative positions across the world in all sorts of sectors and industries. So from my perspective, Advance is very important as part of our efforts of tapping into global talent, encouraging expatriates to think about coming home and bringing their expertise and technical know-how with them. So ladies and gentlemen, with that, I just want to get going with my main remarks. I suppose the first point to make is we’re talking about manufacturing. So what is that? It’s the transformation of goods, materials, or substances into new products. Advanced manufacturing is the use of innovative technology to improve products or processes.
Now, there was a period there where traditionally manufacturing in Australia was seen as inward-looking, fragmented, and needing tariff protection in order to be able to survive. And of course, that was not a recipe for encouraging globally competitive, globally recognised brands. And of course, with the globalisation that occurred particularly from the 80s on and with a great set of reforms through the 80s and 90s in Australia, we became a far more outwardly oriented economy. And while manufacturing contracted, the economy, as a whole, grew, grew very strongly, and indeed we had virtually 30 years of unbroken growth.
So why worry about manufacturing? Well, I think manufacturing is important for a number of reasons. We need a smart manufacturing sector that is internationally competitive. Because it’s a source of high wage, high productivity jobs. And this COVID-19 has shown, also, a secure source of supply during global disruptions. Building the sector means focusing on our sources of comparative advantage. And energy, in the past, was a major advantage that we had and the government is seeking to address that now. And because we aspire to be a high wage country, there is a need for innovation and productivity to improve our competitiveness. So that requires harnessing our world-class science and innovation. And by doing that, we take production away from being commoditised and low value into being customised and high value. And therefore, able to generate premiums, particularly in international markets. And research is important because when we do research, it can catalyse new products and processes. And if we’re on the ground floor of new manufacturing, we get a head start. It helps us to create an advantage. And that can mean being a premium producer in world markets. Customising our production can be very important. Now, we punch above our way in science and research. So my message is that that is the source of competitive advantage for Australia. We haven’t always looked at it in those terms. But from what I’ve seen over the years, including in my period as industry minister, is we are world leaders in so many sectors. And in a sense, the only thing that limits us is our own imagination and capacity for thinking big. So what I’d like to see is us increasingly building on that science and research to be innovation leaders rather than followers so that we’re actually sitting at the top of the production and technology frontier. That’s very important, I think.
As part of my role here, I’m talking to the U.S. government and to other governments about how, for example, we influence the standards which are set for various industrial products and processes. Because by doing that, we can help to maximise the capacity of Australian companies that innovate, help set those standards, and influence global standards. And therefore, be more competitive internationally. As I sit back and look at the U.S. at the moment, I know that this won’t come as a complete surprise to you but COVID-19 is acting as a bit of an accelerant of trends that were already there. The trends around questioning globalisation, trends around what to do with China or the engagement with China. Now, globalisation was already under threat from populist backlash prompting protectionist pressures. And COVID-19 has sparked a debate here about global supply chains, on-shoring of production, and identifying strategic sectors or industries. We’ve seen during the COVID-19 crisis here in the States, the Defence Production Act used to prioritise domestic production and consumption of things like personal protective equipment.
And now, there’s a debate going on in government circles about how best to support U.S. industry going forward. Is it through instruments like taxes and generic subsidies or is it through more industry-specific interventions? And that, of course, is a debate that has major implications for us. COVID-19 has also heightened the tensions between the U.S. and China, intensifying calls for decoupling in trade, investment, and research. Now, from our point of view, we’re not in the position where we can produce everything. So for us, international trade remains very important. And we’ve got to be aware of cries of self-sufficiency and national security as a cover for increasing protection. Because in an aggregate sense, lower trade volumes will hamper the global recovery and make us poorer, particularly those in lower income countries. So the rationale for why we should intervene in these circumstances has to be clear. And what we are increasingly seeing is that governments add value by marshalling resources to undertake activities that are either beyond the private sector, because of risk appetite, or the time horizon is so lengthy. A classic case of this is the sort of Blue Sky research, often mission oriented, that when you do things like the Moon Program, and the moon landing, the way the U.S. was able to marshal its resources, both public and private, to bring that about. And what I’m observing as I am here in the States, I’ve become even optimistic about the capacity of the U.S. to keep reinventing itself. I don’t buy this narrative that the U.S. is somehow inevitably declining or losing power.
For those of you who have the time, I think there’s a great book by a guy called Bhu Srinivasan. It’s called ‘A 400-Year History of American Capitalism’, which superbly documents the way in which America, over 400 years, has reinvented itself and the fact that this has often been synergistic, the public and private sectors working together. And as we face up now to the strategic competition with China, in particular, we shouldn’t discount the capacity of the U.S. to be able to meet that threat. But it’s not up to the U.S. alone. China is on track to potentially exceed the R&D of the five of our partners combined over the next few years. That gives you a sense of how big the challenge will be going forward. And the U.S. is reaching out to trusted partners like Australia, and that creates great new opportunities for smart Australian companies. So this is my long-winded way of saying that we’re getting to a point where I think the U.S. is far more receptive to dealing with trusted partners like Australia in terms of taking science and innovation forward in a co-operative fashion and using that to underpin, potentially, refashion supply chains in which we can play a bigger role. And these are opportunities that will build on our comparative advantage and can be facilitated by strategic government involvement.
So defence, industry, and material is probably the best example here. As you may recall, the 2016 Defence White Paper and Integrated Investment Program had a vision of a sovereign and export-oriented defence industrial policy. Building sovereign capability in such advanced areas as the submarine program, our submarines will be the most advanced in the world when they’re built. And also, a focus on stimulating defence exports to capitalise on investment in advanced weapons systems. And now, while we’re deeply engaged in the U.S. system, there’s plenty of scope to go further and I think this is a big opportunity for defence and advanced manufacturing in Australia. We particularly want to become more embedded in the national technology and industrial base as a supplier of advanced capabilities here. The aspiration would be to create, if possible among the five eyes, a defence free trade area. We’re also exploring how our involvement with the major R&D agencies such as the Defence Advanced Research Projects Agency and the other offers. DARPA, there’s DARPA and then there’s ARPA in the energy space. It’s ARPA in the biomedical space. Now, these are major technology spenders which can create great commercial spinoffs. And it’s important for us, of course, to get involved. And I’ve been impressed government-funded venture capital companies like In-Q-Tel which invest in software, infrastructure, material sciences, startups to deliver critical cutting edge technologies to the defence and intelligence communities. As part of this process, we’re setting up a dialogue around frontier technologies, artificial intelligence, quantum computing and the like. We’re in the process of putting together a dialogue on critical minerals so we can, with the American government, look at ways we can improve the production and processing of critical minerals, most of which are, at the moment, dominated by China.
I think that’s going to be very important going forward. And that, in itself, will create processing opportunities within Australia. The trick there is to have a customer. At the moment, the Department of Defence here is a potential customer with Linus Corporation on a major contract that’s being led at the moment. The other area which has become front of mind for us here in the U.S is space industry. There’s a lot of work going on to capitalise on AUD150 million that the Prime Minister announced as part of a Space Industry Development Programme which will embed us in the supply chains that work with NASA and others. Just in closing, my mission here in the U.S., apart from anything else, is to learn as much as I can about how the U.S. does science and innovation. And what are the lessons we can learn? The area I’m particularly interested in is around commercialisation and collaboration. We do it better in Australia than we once did, but we still have room to do better. This is something I’m keen to see whether the differences between the two countries are cultural or whether there are specific things we can do which can incentivise the greater collaboration between industry, researchers, and academia.
Finally, a lot of the work I do here is to attract American investment into Australia. We talked before about Advance and looking for global talent. But foreign direct investment in Australia, is very important to us. And one of the pitches I make to investors here is that we have these clusters which can promote innovation, whether it’s the mid tech precincts that we’ve got in Sydney and Melbourne, whether it’s the Nuclear Science and Technology Organisation’s Innovation Cluster in southern Sydney, which will have the world’s first nuclear science and technology incubator, a graduate Institute, and a business park associated with it. I promote the clusters because by bringing together industry, research, and academics and others, that creates the synergy of co-location, which leads to commercialisation and collaboration. Now, I’ve run around the paddock a bit. So I’m going to conclude my remarks there. But the important point I want to make is there’s great opportunity here in the States, great opportunity for us to work with Australian companies in a lot of these science and tech areas, particularly those where government is a major player here. So advanced manufacturing has a bright future as long as we recognise science and technology is a comparative advantage, a competitive advantage of Australia. Thanks Maria.
MARIA MACNAMARA: Thank you, Mr Ambassador. As is your custom, you’ve given us a valuable framework and some important issues and opportunities to ponder. And I recognise and honour your contribution to the establishment of the Australian Space Agency and your commitment to science, technology, engineering, and maths. I know that you’ve got a very soft spot in your heart for the ANSTO team as well.
Good morning Honoured guests, ladies and gentlemen, my name is Maria McNamara and I have the privilege of being the CEO of Advance.org, an organisation I joined in September last yea- that seeks to connect global Australians with one another and with Australia to accelerate the very things Mr Ambassador just mentioned, collaboration, investment, and innovation and also, of course, to inspire the next generation. I’ve had the opportunity to meet and hear the stories of each of our speakers today and it’s a real honour to be able to introduce each of them to you. After opening remarks by each global leader, I’ll be putting some of the 200 questions we’ve received to them.
I recognise for some of you, particularly based in the U.S., that you have specific visa and travel-related questions for the ambassador and we’ll post responses to these questions on advice from the embassy on our website after this session.
Let’s begin with an introduction of the chairman of Pratt Industries and Visy Industries who moved to the United States in 2001 and over the last 15 years has grown his business 15 fold in sales and earnings with revenues growing from 100 million to over 2 billion US dollars. A company that moved from being 46th largest in the cargo to box production space in the USA to the fifth largest. Ladies and gentlemen, please welcome Anthony Pratt, who will talk to us about how he did it, what he’s learnt and what he thinks lies ahead. Good morning, Anthony.
ANTHONY PRATT: Good morning and thank you Ambassador Sinodinos and Yasmin Allen for organising this event. As the founding patron of Advance, it’s an honour to participate. And thanks to Ken Allen for founding Advance in 2001. This COVID pandemic has transformed the way that we live, bringing forth things that were going to happen in 2030 to now. From online grocery ordering to Zoom calls. For example, last year, I asked Charlie Vaughan, Australian Silicon Valley entrepreneur, “what is the next biggest thing in Silicon Valley?” And he said an acronym, DTC CPG, Direct To Consumer, Consumer Packaged Goods. I believe online direct to consumer subscription-based businesses are a big part of the future.
From Moen.com to NET-A-PORTER will transform supply chains and manufacturing. Then, in April, after the coronavirus hit, online grocery ordering in America went from one billion dollars to five billion dollars per month. The Internet of food turbocharged and is here to stay. There are three parts to the Internet of food. The first part are subscription-based businesses like ButcherBox. The second part are grocery retailers and e-tailers like Amazon, Wal-Mart, Woolworths, and Coles. And the third are food delivery, whether it be Domino’s, and restaurants. These innovative DTC businesses, in turn, create innovation and advanced manufacturing at companies like Pratt Industries and Visy. For example, ButcherBox, which sources meat from abattoirs and ships into American homes. Pratt Industries developed a thermal insulated box that keeps meat frozen for 60 hours. It’s 100% recycled and the insulation is made out of paper, not polystyrene. So it’s environmentally friendly, but it performs as well as polystyrene. By the way, DTC companies often spring from Silicon Valley and Australia and America should continue to reinvent our economic relationship so that, in today’s times, we should connect Silicon Valley, which is the world’s hub of innovation, to young Australian entrepreneurs to engage a whole new generation of Australians with America.
In packaging, my business, Silicon Valley is leading our revolution. No longer does a plane brand box suffice. Our customers who sell consumers online want personalised printing both on the inside and the outside of the box so that when you open the box, it says, for example, “Happy Birthday Ambassador” on the inside lid of the box. And personalised printing means digital printing. So around up a thousand boxes, for example, all with different prints. So consumer preferences, that’s an example where consumer preferences are driving investments in advanced manufacturing. In our case, digital printing. On manufacturing, I believe the big key to Australia’s future is manufacturing. We need to double down on manufacturing. Visy is proud to be 1% of all Australian manufacturing. And in 2017, I was proud to make a $2 billion pledge to invest in Australian manufacturing jobs over the next 10 years. It’s a great time to manufacture. And I don’t mean subsidising non-strategic industries. I’m talking about focusing on what we are best At. For example, food manufacturing. Food production is not only our biggest manufacturing sector today. It’s 30% of all Australian manufacturing employment today. We can turbocharge a food and other manufacturing-led recovery in Australia by focusing on six areas. Firstly, our nation’s water infrastructure. Second, accelerated depreciation for manufacturing investment. Thirdly, energy policy. Fourthly, superannuation lending for investment and jobs. Fifthly, continue the consistency of focus on adding value to commodities. And finally, making the most of our continuing to make the most about free trade agreements.
Firstly, to go to the first point on water infrastructure, to develop advance food manufacturing in Australia, we need to continue the water infrastructure focus. And one example is to bring water from the north of Australia to Northern Victoria. And this would help both food growing and drought. Secondly, on accelerated depreciation for manufacturing investment, did you know that 90% of public company earnings are spent on share buybacks and dividends rather than investment. So I applaud the government for its openness to considering areas like accelerated depreciation for manufacturing investment so that more is spent on machines and less on share buybacks and dividends. And I’m proud to say, by the way, that Patt Industries and Visy have skin in the game. We invest $500 million in machinery every year, which means jobs for Australians. We’ve built waste hydro recycling infrastructure, 100% recycled paper mills and clean energy plants to power those mills. Next, on energy policy, which is vital to food and other manufacturing, I believe in, in All of the Above, energy policy. And that means solar, wind, gas, oil, shale gas, coal, nuclear, as well as other renewables which will lead to huge energy supply in Australia, which will drive energy prices down. Next, superannuation funds can be an important part, an important part of the infrastructure of Australian manufacturing. Australia’s superannuation pool is $3 trillion today. Just twice the size of the Australian economy by the way. And by 2032, Australia’s superannuation pool will be $7 trillion.
Since 2014, if super funds had lent their money to corporate Australia, including the capital-intensive manufacturing, they would have achieved the same returns as they would have in equities. But Australia, unfortunately, has the lowest rate of super fund lending in the OECD. An important driver of our pledge, also in 2017, to invest $2 billion in American Manufacturing, was the availability of 30-year bonds lent by the U.S. super funds. And as a result, we’ve built five out of America’s last six fibre mills, all 100% recycled. On the next issue of pursuing added-value manufacturing, last week, Industry Minister, Karen Andrews, said, “We currently export far too many raw materials that we have the potential to value add through manufacturing, especially railroads, critical minerals, and food manufacturing.” An example of what happens when we compliment our natural competitive advantage of growing food, with food manufacturing.
If you sell wheat, it sells for $100 a tonne. If you turn it into flour, it sells for $500 a tonne. And if you further manufacture it into bread, it sells for $5,000 a tonne, all of which means jobs, jobs, jobs. And this is what drove me to set up seven years ago because food doesn’t get the attention it deserves. And since setting up The Global Food Forum with the Australian newspaper, I’m happy to say that 600 more food factories have been built. As the minister said, while car manufacturing might generate headlines, food and beverage manufacturing has had 11 consecutive quarters of growth. In the last 20 years, many high profile international manufacturers have left Australia. But food manufacturing is delivering around AUD125 billion into the economy and exports of around AUD40 billion. So we should double down on this winner. And on the matter of free trade agreements, in the past, people said that Australia’s population was too small to manufacture. But the free trade agreements have, and good on you Prime Minister for this, given a huge population just up the hill in Asia. And a safe food clean brand is our strength in exporting food to Asia’s three billion people, now coming into the middle class that have got the affluence to buy added-value products. We need to continue to embrace those free trade agreements and not retreat to the old world of regressive tariffs and fortress Australia.
We should focus export on what we do well like food and import things that we will never be competitive on. As Prime Minister Morrison recently said, open trading has been a core part of our prosperity over the centuries. He’s right. And with the Aussie dollar so low, there’s never been a better time to trade. As a resource-rich export nation with small population, we should seize the opportunity of food manufacturing as the cornerstone of a renaissance in Australian manufacturing leading to well-paying manufacturing jobs. Thank you.
MARIA MACNAMARA: Thank you so much, Anthony. It was the boost that we all needed because what you’ve managed to do is make the case, not only for manufacturing, but certainly for food and the global perspective is one that we value. So now, I’m going to take you from the world of food manufacturing and recycled boxes to a slightly different world, The Dow Chemical Company, a multinational chemical corporation headquartered in the United States where our next speaker, Andrew Liveris AO, was CEO and Chairman. Andrew was born in Darwin. He’s the grandson of Greek immigrants and was educated in both Darwin and Brisbane after Cyclone Tracy. He’s a chemical engineer and he graduated with first-class honours from the University of Queensland. He’s also the author of a book “Make It In America” and it won’t surprise you to know that he’s advised two Presidents and now a Prime Minister, as a special adviser to the National COVID Co-ordination Commission on how to revitalise the manufacturing and now advanced manufacturing sector to drive innovation and economic growth. So how is he overseeing the investment in R&D and its commercialisation? What will it take for Australia to unlock this opportunity? Ladies and gentlemen, I welcome Andrew Liveris.
ANDREW LIVERIS: Thank you. Thank you, Maria and thank you Mr Ambassador. Thank you to Advance and Yasmin and to Ken Allen. As Anthony Pratt said, this is a tremendous opportunity to tap the brains of our wonderful diaspora. And I now count myself as almost a returnee sitting here in Sydney since COVID started. It’s not a bad place to be and I’ve been honoured to have a role in the recovery plan. And clearly, the work we’re doing and the work we’re proceeding with under the direction of Nev Power and the commission is right on subject to the things the Ambassador talked about given his rich history and innovation as already articulated. And of course, Anthony Pratt is a role model for all Australians in how to create a global market from a position here in Australia and do what needed to be done.
I want to start my remarks to frame the question that was asked, which is innovation and R&D and my learnings at Dow – because what got me into writing a book while I was a CEO. I was asked the question, how did you have time to write a book when you were CEO. It is an incredible frustration I felt during the first five years of my tenure going to Washington and trying to make a case for “old line” manufacturers like Dow, which therein lies the first problem. What countries like China and Singapore and Germany and, you know, very interesting economies, Japan, realised is that manufacturing was a vital part of an ecosystem. And so I saw Dow as a chemical company for the 21st century, whereas our audiences, especially the lawmakers and legislatures and agencies were looking about at us as old-line yesterday sector not, innovative. And that was a very big frustration to me and Anthony would identify with this because paper is not paper. Paper and paper board is advance packaging for modern-day food transport as he articulated. Well, chemistry is in our lives, 95% of all synthetic products is based on chemistry. And as a technology nerd, still today, and as a chemical engineer who loves chemistry, I felt frustrated by the lack of understanding by our lawmakers on why a manufacturing ecosystem was needed.
I put in the book lots of interesting factoids, facts speak, such as the job multiplier. If you have a production facility in a community that multiplies jobs in the ecosystem, it is a 1 to 5 ratio between jobs inside the factory boundary and jobs outside the factory boundary. It’s a 1 to 8 multiplier on dollars export out of the factory to those created in that ecosystem. So this is actually a catalyst to create a new economy if you structure and do it right. In the book, I talked about how other countries that identify manufacturing as a strategic industry to do exactly that, to employ jobs for the 21st century, not last century. And China’s five-year plans and, you know, their SCI strategic emerging industries, these were very much top-down. Here, we’re going to go focus on these sectors. In a democracy, which, of course, we all want to live in and be part of, that used to happen. Bell Labs, World War II, NASA. As a Mr Ambassador referenced, putting man on the moon moment was NASA. NASA created massive new industries through government coming in and catalysing the beginning of those industries. And from that, the entrepreneurial nature of, you know, these economies like the United States, like Australia could in fact develop and expand prototypes from, literally, the beginnings of that industry. That lack of understanding in present-day manufacturing had taken the US manufacturing sector down to 11% of its economy. Lack of focus, if you like, on the industries of the future based on the industries of the current. In other words, you need the current to create the future.
Why? Because, in the book, I talk about manufacturing as an ecosystem. It’s not just the plant. It goes from R&D through design through production, obviously, distribution and supply chain, and then, of course, clearly scaling and commercialisation. That is a full ecosystem. It’s not just the production plant. And so old-line manufacturing becomes new line manufacturing because you can invest in R&D from the factory floor. This serendipitous discovery in the world, of course, the aha moments with that little caption above the head, Eureka I found it, but most of innovation occurs and most of invention occurs because you understand the products you’re In and how to improve them based on customers giving you vital feedback. What China understood is, I’ve got to actually do that when I opened up my economy by bringing in foreign technology. In 1990, China had four foreign-owned R&D Labs. In 2010, when I wrote the book, the numbers we came up with were 42,000 foreign-owned R&D labs. China opened its doors to foreign technology and the rest is history. They basically put in place a manufacturing ecosystem that didn’t just freeze in place based on the technology we brought in. They actually upgraded it and became number one in key emerging industries like batteries and solar panels and the like.
So the Chinese plan gave them a degree of certainty so they could invest against it. Clearly, top down. Now, how do we do that bottom up? How do we do what Anthony Pratt was talking about with food? How do we actually understand competitive advantage in a globalising world? And frankly, at Dow, what I did and what I noticed is that when I went to Washington, people didn’t understand that I wasn’t competing against other companies. In fact, I was one of only two U.S. chemical companies left. Dow and DuPont and I eventually merged them anyway. So what we were competing against were countries. So at Dow, globally, when I went into China, was competing in state-owned enterprises, in Saudi Arabia, in India, in…you name it, even Germany gave an industry policy as a framework for competitive advantage so I could actually export to the EU and the world.
So how did we trigger that? How do we actually create that? How did we build a manufacturing ecosystem? Well, it was already identified by the Ambassador and the work we’re doing right now as part of the commission. There is research and science at the beginning. And then, at the other end, there’s actually scale and enterprise capability companies that come out of that. In the middle is the valley of death, which is technology demonstration and prototyping. And if you allow your economy, as Australia Has, to get down to 6% of its entire economies manufacturing, 6%, remember I said the U.S. was 11. It’s now sitting at around 20. OK? So President Obama and now President Trump have focused in on saying, “Hey, just a Second. I need to build capability again. I need to compete. I need to upgrade my skills for the 21st Century.” And President Obama put in place eight innovation hubs outside of Silicon Valley, outside of the Massachusetts Boston corridor.
We put these eight centres across the country from Georgia Tech to the University of Illinois Urbana-Champaign to focus in on capabilities and invited public-private partnerships. That model catalysed the renaissance of manufacturing. The other thing that happened, and that was mentioned by Anthony Pratt, was sensible energy policy. So sustained human capital technology advantage to investing in our education and our reskilling, which the Prime Minister did, in fact, address the other day. And I’m very proud to see that. But also, how do we have comparative advantage when the world is our market and energy policy is a big piece of that. So we’ve been working to come up with recommendations to focus on this manufacturing ecosystem here in this country and to not do other things for all people because we can’t, and we shouldn’t, because we’re part of a global market. Not to use 20th-century tools today for a 21st-century economy, but to use 21st-century tools for a 21st-century economy.
And what is that? That is basically saying what are we good at? How do we focus it? What do we double down on? What does the world need that is not happening right now that we can be a part of? And space is a great example of that, rare earths is another great example of that. Why shouldn’t we? And I know Pamela is going to talk about this. Why shouldn’t we be thinking about lithium and batteries here in this country? You know, what is stopping us? And so put the imagination to work and home in and focus in on five or six or seven sectors that we are already good at and then we can double down on and then we can actually speak to comparative advantage, export it to the world. That is the work that we’re doing right now. I’m not going to advise…let you all know what the outcomes are because, obviously, that has to be processed through the Commission and through the Prime Minister and of course, Cabinet and the National Cabinet. But we’re working very hard on that. I want to finish my opening remarks by actually saying not only will we be looking at sectors, but we’ll also have a bow to this notion that energy-intensive trade-exposed Industries should be our domain. OK. Paper Industry and the pulp and paper Industry, that Anthony knows so well, easily upgrades itself if you have R&D investment to advance packaging.
Chemicals, commodity chemicals of the, you know, low price kind can be upgraded, especially chemicals, and our value add step there can be made. Old-line industry, cement. Cement can be advanced building design, modular designs to lower the capex of not only our mining Industry but also our housing industry. That is already occurring. You can take old-line industries and put them Into 21st-century manufacturing by putting together the intersections. What intersections? The sections of the sciences, check. We have great science in this country. Intersection of the modern economy and digital, check. We can put that in place in this country and we do have that. Human skills and upgrading our human skills, a focus in on that, check, we can do that. Sustainability, we should be the world leader in setting the pace for why the planet needs to be protected. This should be coming out of our country. We should be setting the standard on moving to low impact technologies to the planet. Check, we can do that. If you put all those things together and gap those intersections and focus in on the sectors that matter and put Australia to work on that, we will create the new industries that manufacturing deserves in this country and lift that number from 6% to something Higher. And then back to my book, the multipliers will occur. The job creations, high-quality jobs that will come out of this will take the way, the debate of old-line industrial relations of the 20th century to modern workers for the 21st century. And there’ll be higher-paying jobs and for all of our workers, not just an elite group. So I think this sort of focus is what we really need to have in the learnings I brought from the U.S. I’m hoping to customise them to the Australian model and I’m very honoured to be able to do that and have a partner. Thank you.
MARIA MACNAMARA: Thank you so much, Andrew. Your point about Australians wanting better jobs means they need the companies that will produce those jobs and they need the skills to do those jobs. So I’m looking forward to the Q&A later. Let’s change pace and allow me to take you to Palo Alto, California, a place not widely known for car manufacturing, to the very home of Tesla, a global advanced manufacturing company that makes vehicles, electric vehicles, battery energy storage systems, solar panel and solar roof tiles. Today we have the privilege of having the chairman of Tesla, Robyn Denholm with us. It’s no wonder that she was chosen for this important role. Where else would you find, a leader with strong hold on economics, who’s worked for a car company like Toyota. A technology business like Sun Microsystems, a network equipment company, Juniper and of course, Australia’s telecommunications giant, Telstra. A company that has been through the most significant transformation of any organisation in Australia in my lifetime. In her world, growth comes in double digits. People come with multiple qualifications and manufacturing comes with tech. Ladies and gentlemen, Robyn Denholm.
ROBYN DENHOLM: Well, thank you Maria. And hello to everyone. I’m really honoured to have been asked to join this esteemed panel and address you on a topic that’s really near and dear to my heart. I’ve always been involved in businesses that make things. Engineering in technology businesses that have developed new products in the computer, software and storage sector. The networking arena or the transporting energy space. As Australia looks to rebuild its economy, in the aftermath of the bushfires over the last summer and the economic shutdown of COVID-19, Australia should really be looking at industries that will further build on its key advantages as a country. As smart, innovative workforce, good capital market, and the abundance of natural resources, as was mentioned earlier. And a track record of being a good trading partner, we’ve been very successful as a country, with continuous growth, spanning nearly 3 decades. Now businesses have a unique opportunity to plant the seeds for new areas of the economy to fuel Australia’s growth over the next 30 years. There are three areas that I want to talk about this morning. The importance of technology in advanced manufacturing, supply chain ecosystem that Andrew already spoke about, and the talent and technology skillsets that we need which Yasmin referred to in her opening remarks. Advanced manufacturing today is predicated on having automation and technology central to how things are produced. I have a pretty unique insight to this as I was working at Toyota in Australia in the 90s, when Toyota built the world-class Altona facility that produced cars with outstanding quality and pretty good economics. I know that auto manufacturing has advanced tremendously over the years, but I thought it might be helpful to share how the focus on manufacturing is fundamentally different in what Tesla is doing today in the US.
Tesla believes that thinking about a factory in the same way that people think about the product itself creates the potential for a step change in manufacturing that creates enormous benefits for quality, cost, efficiency and employee safety. Tesla calls this the machine that builds the machine. It’s how we’ve scaled production of the Model 3 to what it is today, and is the reason the company is then able to manufacture EVs for the whole world in Silicon Valley, California arguably one of the most expensive locations in the world. Tesla also believes that this is the future of manufacturing, a mix of high level automation, machinery and people to make it successful. Tesla learnt the hard way with the ramp of Model 3 that it has to be the right balance of human, robot manufacturing is necessary. Robots are great at precision repetition, but the tradeoff is that they’re not flexible, whereas people can adapt and solve problems in real time. Tesla’s manufacturing technology team is highly skilled and integrated with Manufacturing, engineering and R&D. They are software developers, not just integrators. They have built their own ERPs, their own production and warehousing systems, their own supply chain systems. The freedom to not have to fit in with a vendor view of how manufacturing should be run has enabled a tremendous amount of innovation. Size and scale also matters, as we discussed earlier. Tesla’s first Gigafactory in Reno in Nevada had to be big to make a global impact on fossil fuel use and drive down the cost of EVs for customers. Four years ago, everyone thought Tesla was crazy for pursuing battery manufacturing at this scale. The factory is over 5 million square feet and has the capacity to grow to 12 million.
Tesla is producing more batteries in the Gigafactory in Reno, Nevada than the rest of the planet combined. We would not be able to make all the vehicles we’re making if it didn’t have the Gigafactory. The company also makes the energy storage products in this facility, Powerwall and Megapack, which enables us to benefit from the R&D, the manufacturing innovation and the scale. The technology in our vehicles and batteries are the result of advanced manufacturing. What Tesla has focused on is not just building a better EV, but actually transforming the driving experience, producing the best vehicles, and with the Model 3, a better TCO versus a combustion engine vehicle. Software is a huge advantage as well. Over the years, software updates, new features and functionality, including safety features and repairs can be added to the car over time. All you need is a Wi-Fi connection. The second area I want to address is really the supply chain ecosystem, especially in the technology Space and both Anthony and Andrew touched on this as well. The recent global economic shutdown as a result of COVID has put supply chains in the forefront of most people’s mind and with good reason. For many companies production rates are hamstrung by the least available part or the least capable supplier. Technology to manage supply chains becomes critical.
Using technology to ensure supply chains have optimal transport miles to reduce the environmental impact and also the cost or to minimise disruptions when unforeseen circumstances occur. At Tesla, unlike many other order manufacturers, we are very vertically integrated. Vertical integration allows for quicker iterations on designs and cost efficiencies rather than making suppliers across the world, we’re making those goods onsite and moving them under one roof. We can also take advantage of the technology innovation to design and produce important components. Another area which has been touched on already is really the energy area. For Australia to be able to have a leading position in the world of advanced manufacturing and technology industries where everything is digitised and automated, globally competitive energy costs need to be a focus, both from a financial and from an environmental perspective. Australia has the resources as a country to lead in the world in the next era of energy generation and I don’t mean fossil fuels. In some areas, Australia is already leading from the front. Parts of Australia are already experiencing some of the highest levels of wind and solar generation in the world, including some of the highest levels of residential solar PV. The largest in-service battery currently in the world is in South Australia, where an Adelaide-based construction company partnering with Tesla’s engineers built and installed it. Two years later, it is being expanded as it has proven itself not just in stabilising the grid but also from an economic point of view. Australia can build a renewable energy industry to power itself and the world.
Australia currently exports many of the raw materials for production in other countries, so why couldn’t Australia turn the tables and turn those raw materials into components or even finished products for environmental energy generation? It’s also fair to say that you can’t have a discussion about technology-based business foundations for any country without talking about talent. To me people are at the heart of any technology-based business, as it is the creative nature of humans brought together as a collective that really creates and transforms industries. I’m a huge fan of Australia’s education system. I would rate it with the best in the world. What I think the country and businesses can do more of is to connect students with industry, inspire and draw more of our human capital talent into technology and manufacturing sectors. Australia will need more university-educated engineers, computer scientists and robotics Majors, but we will also need technical talent from our TAFE systems to build the production lines and other areas in advanced manufacturing. Even more importantly, Australian business and government leaders need to change the conversation at home and in the boardroom on how Australian advanced Manufacturing and the technology sectors can be a cornerstone of our economic growth for Australia and for the decades to come. I’d like us to inspire a generation of builders who are curious and are problem solvers, who thrive on creating a better world. Although there are no plans for Tesla to manufacture in Australia, I hope that the examples that I’ve given you of what Tesla is doing can demonstrate what can be done with advanced manufacturing, and can help in the conversation and the inspiration that the manufacturing sector may need to be the cornerstone of Australia’s future economic success. I believe as Australians, we have a lot to be optimistic about. We’re a resilient bunch. We have historically turned adversities into opportunities. And whilst it wouldn’t have been anyone’s choice to have the unprecedented bushfire season followed by a pandemic, we can use this pause in economic activity to really decide how we rebuild the economy for the next 30 years. Thank you.
MARIA MACNAMARA: Thank you so much, Robyn. I share your passion and enthusiasm for our emerging talent pool. There’s a wonderful company called Ribit run by Liz Jakubowski and very well known to Mr Ambassador that does exactly that. It matches undergraduates with industry to make sure they get industry-specific experience as they are coming through. And we also have the wonderful WithYouWithMe that does the assessment, training and placement for those veterans so that they have a future after their service. I hope one day very soon that we can welcome Tesla as a manufacturer in Australia. And with that, as I was trying to work out a segue between Robyn and Pamela, our next speaker, all I could see was the car in space and what Pam would think if she saw it while she was in space. And I’ll just leave you with that as I introduce her. She’s a very special American and a friend of Australia. Pam Melroy, is an inspiration to problem solvers who like to live on the edge. She’s a retired Air Force test pilot, a former NASA astronaut and space shuttle Commander. After NASA she served as deputy program manager for the Lockheed Martin Orion space exploration initiatives Program and is a director of field operations and acting deputy associate administrator for the commercial space transportation at the FAA. Pam went on to serve as Deputy Director Tactical Technology Office at DARPA. She’s now a Director of Space Technology and Policy at Nova Systems and a Non-Executive Director of Australian high growth company, Myriota, the world leader in low cost and low power satellite connectivity for the Internet of Things based in Adelaide. Her face lights up when Pam talks about Myriota, so I hope she spends a minute sharing their remarkable story. She also knows the power of calibrating risk. Ladies and gentlemen, Pam Melroy.
PAMELA MELROY: Thank you so much for that lovely introduction. Yes, I’m excited about some of the themes that have come out already and I hope to reinforce a few of them. I’m going to take it up way up maybe to the beyond the hundred thousand foot level and talk about the space market for just a moment. In general when we talk about the space market the applications are significant in our world, Communications, position navigation and timing, such as we get from the GPS system and the remote sensing of the environment to include weather. So, it’s important to understand in the global space market that space used to be just nation states operating and what’s happened in the last decade in particular is a rapid growth in space companies taking over, not just direct to TV, which is a reasonably mature industry in communications, but is making inroads in all of those areas. But it’s important to understand that international law and policy is still very focused on nation states taking responsibility for oversight of commercial activities. And, as a result, a lot of the structures around the regulations policy and law are very, very focused around international relationships at a government level. And the government plays an absolutely crucial role as a regulator, but also as a key customer in the commercial space industry.
One of the things that was incredibly dramatic in 2018, thank you, I know you’ve been acknowledged already, Ambassador Sinodinos for your part in starting an Australian Space Agency, it really has had a profound impact. I’ve just received a report from the Australian Space Agency, I’m on their advisory group saying that they’re estimating $2 billion worth growth from $1 billion in the last two years in the space industry in Australia.
It really helps to have a front door and a focus and also for the government to help shape not just what Australia will do in space, but what they won’t do as well. Very, very important. They’ve accomplished in two years and one of the things that I think they do very well is they’re highly consultative with industry, which is so important in a growing sector. So, global partnerships are also critical to insert yourself into the supply chain. Ambassador Sinodinos mentioned the Five Eyes relationship and I completely support the idea of transferring, you know, we share this information that is so sensitive between our countries. We need to go the next step and get beyond some of the highly protective industrial policies in the United States and other countries because space is part of the defence base. And so, the industrial policy is very focused on customers in the country buying local. And so, being able to create a Defence Free Trade Agreement would be fantastic and have a huge impact. So, those country to country partnerships are so important. The Five Eyes relationship is so strong and there’s a real appetite in the United States to strengthen the partnership with Australia. And, of course, I have to mention the fact that the partnership is also very strong on the civil side. NASA is very excited about working with Australia and happy to invite them to join the Moon to Mars program. And Australia has committed $150 million to participate as a global partner in space exploration to the moon and beyond and just have to make the point that we’re seeing that In-Q-Tel was mentioned, they’ve set up shop they’re investing in companies like Myriota.
Myriota has some of the most astounding technology, it’s really world leading I’ve seen plenty of Internet of things. Their internet of things direct from space very low size, weight and power but even more importantly security which is a known weakness of internet of things and I think especially for defence applications is going to be really important. So let’s talk about sovereign capability for a moment. Australia needs space capability because in the future all industries will be space industries and we don’t talk anymore about why internet connectivity is important to our businesses that conversation happened more than 20 years ago but now internet connectivity is critical to all businesses, and in 20 years we’re going to see the same thing with space and no one questions why Australia needs sovereign capability in cyber connectivity. Already precision agriculture fishing marine tracking, border security even timing for financial transactions rely heavily on space. So we actually understand that sovereign capability, trusted capability in microelectronics is really important, it’s important in space too and the defence white paper in my company Novus systems which is an adviser to defence and systems engineering and defence complex defence systems, we’re already seeing that impact on Australian industry to build sovereign capability. Sovereign capability in space starts with access or launch. So, for example, Gilmour Space Technologies is in Queensland is working very hard to develop an advanced small launch capability eventually we’ll probably compete with New Zealand and rocket labs. In addition there are two locations that are pressing forward to be space ports Equatorial Launch and Northern Territory who already has a contract from NASA to launch a sounding rocket and Southern Launch in South Australia as well.
So access to space is not just being able to launch, people actually wanna be able to build and integrate their satellites nearby the launch facilities and that’s why if you go to Florida, for example, you will see all of the major manufacturers have huge integration facilities and construction facilities near the launch pads and that’s where some of the advanced manufacturing is going to come in, it’s very it’s essential to use digital twin technologies additive manufacturing in particular is growing in this area in both launch and manufacturing satellites, it is a huge challenge there’s more work that needs to be done because of the tolerances for aerospace so there is more investment that needs to be made and that’s certainly an area that Australia could excel in. And finally of course the applications of space really important to understand cost and bandwidth needs. So Internet of things is very low bandwidth very small messages but spread where there’s no easy backhaul, space is the only answer for marine, Applications or extremely remote applications as well. I’d like to talk about one particular industry application that is very exciting to me and that is Remote Asset Management. When I came to Australia in 2018 I was astounded by the capability in the mining and oil and gas sectors around remote asset management suites of technologies that allow huge logistics trains to be operated with a minimal number of people in a very safe way. That technology is absolutely needed as you look at the global exploration of space going to the moon, commercial space stations in low earth orbit, going on to Mars all of those technologies are absolutely going to be critical. But what I also saw was that the resources industries could benefit from what aerospace knows about trusted human machine teaming, systems engineering and digital twins, and so earlier this year Nova in conjunction with our partners at Woodside, UWA, Curtain and Fugro and the state of Western Australia started a consortium called the Australian Remote Operations for Space and Earth. It’s a non-profit consortium that is project based aimed at making Australia the trusted partner for remote asset management capabilities both on earth and in space in the future. So space is a wonderful fast growing market and it’s wonderful to see Australia take its place on the global stage. Thank you.
MARIA MACNAMARA: Thank you so much, Pamela. I’m now going to invite all the speakers to come back, and we’ve agreed that we’re going to keep their answers as short as possible, so that we can cover as many questions as we can. OK, fantastic. Great to see you all. Andrew Liveris, we… many argue that Australia should focus on domesticating critical elements of the supply chain, such as energy, water treatment, basic health care supplies and fuel production. What is the fastest way to stimulate Australian domestic manufacturing capability to ensure Australia’s sovereign supply of critical products?
ANDREW LIVERIS AO: Well, there’s no short answer to that, but I’m going to be as short as I possibly can, given the time. I mean, I would say that national issues or the national interest, and we just heard about the space conversation, are the domain of the leaders of the country. And in a democracy, through the processes that we have, things like feeding our people, giving them enough water, you know, shelter, affordable energy, making sure they have the highest, best lifestyle available, which the country of course, is blessed with these natural resources, should be forward looking not backward looking. So just like the conversation on the internet 20, 30 years ago, and here we are today, digitalised, just like the conversation on EV, and what Robyn just went through, we’ve got to have forward-thinking policy frameworks, and of course, with the backdrop of uncertainty, you’ve gotta get it from all stakeholders. As the Business Roundtable of America recently released, and I had something to do with that, we have now stakeholders, not just shareholders. As Anthony Pratt mentioned, private sector isn’t just about the financial return every 90 days in the public listed domain. It’s about responsibility and the licence to operate forward from here. So public-private partnership models to focus in on areas of national importance and criticality, defence of course, is another one, these need to be debated, agreed on, and then implemented. What’s the ratio? How much of your supply chain should be onshore versus offshore? That’s going backward from the math, you should go forward from the need. And the need should be inclusive of all stakeholders. I think… my observation about Australia, is we polarise around the trivial very fast. We’ve gotta do on energy policy, what Anthony Pratt said. It isn’t this or that, it’s all the above! And guess what? We’re a smart enough nation, to handle the complexity of all of the above. We’re number 59 on the economic complexity scale, right now. Second worst in the OECD. Simple was last century’s domain. Complex is our domain, and we’ve gotta put all the stakes on the table to focus in on the sectors that matter, that are economically advantaged, and of course, important to the sovereign. Thank you. Robyn Denholm, how can we build an agile manufacturing industry, where software is prioritised, and funding opportunities extend behind plant and equipment to include software and services? That was a question from Elliot Duff in Brisbane.
ROBYN DENHOLM: I think it’s a great question. And to me, what we really need to do is, there is no distinction anymore between hardware and software. I mean, obviously, there’s a physical instantiation of hardware, but more and more, in both the manufacturing process, but also in products themselves, the hardware elements morph into software, and software elements morph into hardware. And so I think what we’ve gotta do is to take those old ways of looking at things, and really look at what are the products and services required, and how do we actually best deliver them? And use the technology that’s available. I think some of the distinction that’s behind that question, may be rooted in, you know, tax depreciation levels that are different between hardware and software. And to me, those don’t matter as we move forward. What really matters is applying the technology to the manufacturing area itself, to get the most efficient and effective, and best quality, as well as safety of employees in the forefront. Thank you. Anthony Pratt, what advice do you have for small Australian manufacturers looking to scale their businesses globally? Peter McKinnon from Newcastle, New South Wales, is asking as the owner of an ergonomic solution for the global market, and Deborah Saunders from Wildlife Drones in Canberra, was also asking from the perspective of her early stage startup, manufacturing their own products.
ANTHONY PRATT: Well, thank you very much. My advice to small manufacturers that wanna diversify overseas, I’d say the most important thing, if you’ re putting a business somewhere overseas, is to stick to what you’re good at, and stick to your core business. If there are three variables in when you go overseas, people, place, product. So only two… only one out of those three can be out of place. So if you’ve got a new place, and obviously, you should go in with your own person, and you should go in with your own product, whatever that product is. And I think, sort of related to that, is that you should try and think of a sustainable competitive advantage within your product, which is going to do well in that new country. So for us it was 100% recyclable when we went to America. There was no one else there was 100% recycled at scale. I think the second thing that’s important in going overseas if you’re a small Australian company, catering company, is to go, have at least one Australian as sort of your representative there preferably someone that’s financially literate who you can trust, it’s very honest, because, you know, a lot of the people that you’ll be working with in your country are, you know, you don’t really know who they are that come to you with a reputation. So, having someone that you trust living in that new country as sort of as your representative there is very important. And I think thirdly, persistence. I mean, it takes seven years at least to make money in a new country, in a new business. And I think therefore you’ve got to take a long term view and, more importantly, you’ve gotta have an American mentality. More importantly, you’ve got to have the money to sustain seven or more years of losses before you make money. And that’s particularly relevant if you’re taking a business to America where, you know, America’s a great country to be in, it’s got the greatest balance of low sovereign risk, yet still growth. The tough part of America is that it’s so much competition and margins are very skinny. So, it’s very important to have a long term view and be able to sustain the losses that you’ll have for the first seven or more years. And finally, I think the full rules of business are always relevant, look after your best people, look after your best customers. Revenue must exceed expenses and collect your debts.
MARIA MACNAMARA: Fantastic. Fantastic advice. Pam Melroy, how do we maintain a focus on R&D for future productivity when there is so many competing interests due to the COVID-19 crisis?
PAMELA MELROY: Right. In a situation like this I’ve seen… Well, at DARPA we had two different approaches and they were more a matter of scale. So, you often see, especially in government R&D, what we refer to as thousand flower blooming, which is you sprinkle a small amount of money over all kinds of businesses, all kinds of ideas. And the problem with that is there’s a lot of interesting things that come out of it ,but no no real progress is made. For large efforts what you need to do is actually pick, focus and then make a few big bets and concentrate, especially with a focus on utilisation and commercialisation. So, really understanding what is the problem you are trying to solve and that’s how you generate jobs. So, as long as the integrated approach is looking at whatever that… Picking a few very important, we’ve heard some really interesting suggestions here. Certainly there is space but there’s also energy and a few other areas and it becomes a national initiative and that’s how you make it through all of the things because it’s not just near-term jobs, which it is, but it’s also long term outcome. So, focusing on a few really, really important areas is the right approach.
MARIA MACNAMARA: Thank you so much. Ambassador, the secret sauce behind growth of Australia’s wine industry and the resulting tourism restaurant hospitality sector growth was the explosion in globally recognised industry education and certification courses. These skills ensured that patrons, and many of whom were tourists, received a quality of service that matches the quality of the product. You know, last year we saw the exports in wine rise to $2.86 billion. In this COVID constrained world where the government, industry and individuals have limited funds to invest in training, how do we support the growth of new industries with the relevant education and training Resources?
AMBASSADOR SINODINOS: Great question, Maria. In the Australian context we’ve just had the Prime Minister talk about reform of skilling, working with the state governments in order to try and make skills education more relevant to industry needs, trying to look ahead and determine industry trends. I think when it comes to industry trends it’s not just about what industry immediately needs, but looking out further afield as we work out what technology another change will dictate will happen. Tools like Fathom, Michael Prentice and his people who are looking at industry composition going out and what that means in terms of skills is going to be important because I think government are the ones that can look further ahead than anybody else and try and determine that. And I think if you take that sort of approach you can work out from there, well, what do we need to do to make sure our skills are relevant and are responding to change. It also means having a flexible system, it means not being bound by some of the traditional ways that we’ve done apprenticeships, for example. And Yasmin and her people are working on all of this now. It does also mean being prepared to increase funding where there is a case, but doing that, and the Prime Minister’s indicated the case will be to show that the system is changing to make it match fit or fit for purpose. So, I think there’s a lot of scope to adapt. It means courses also are becoming more modular perhaps and people not having to do long periods of study in order to gain a particular qualification or occupational certificate or licence or whatever. I think we just have to…it’s a bit like Pam’s point. You’ve got to work back from where you want to go and then make sure the system changes to reflect that. And this is the 21st century. We’ve just got to think more laterally about how we do all this and Australia is in a great position where we have great levels of governance. We have the national cabinet which is working quite well. We have a unique opportunity to get a lot of this right. And harnessing the talent of the sort of people who are around the table is Important. Harnessing the ideas that come through from the people who put questions in. The fact there are 1,000 people on this shows you the passion and commitment of our fellow Australians to getting the job done. And I’m just very keen to make sure we harness that and making sure the government is listening to what people are saying.
MARIA MACNAMARA: Thank you so much Ambassador. Now we’re running five minutes overtime on our programming schedule but I think it’s so valuable to have this combination of talent on this call that I’m going to see if we can just push it out a little bit more because I’ve got one important question that I want to ask each of you and it comes to us from Graham Fitzgerald in Newcastle, New South Wales and it is what has been the most unexpected lesson from the current destruction caused by the response to COVID-19. And if you could each take that question and give me a brief answer. Let’s begin with Andrew Liveris.
ANDREW LIVERIS AO: So, first, it has an advantage I guess and a disadvantage. Honestly, I think it’s probably the one that 99% of humanity has just figured out that online works, digital works. But I really miss community and so I think those who think we’re going to go all the way might wanna recalibrate. And the elasticity of human beings and our short term memory spans will return. OK so we better take the lessons this moment, put them somewhere and dig them out in three or four years. So we don’t repeat what we’ve just gone through and lack of global institutional coordination is one of the big lessons we’ve got to look after ourselves.
MARIA MACNAMARA: Thank you Pam Melroy.
PAMELA MELROY: Yes it’s a great point. Nothing substitutes for that. That human connection. One of the things that is very interesting to me though is I was pretty heartbroken when I left Australia a little bit early from a trip that I had planned in March as I saw things getting more difficult and actually worried about getting back to the US and being with my family. What’s amazing to me is how much work is still getting done and I feel like I wasn’t driven to work with people like this. I flew to Australia so that I could have these meetings. Nothing will substitute for a visit and I can’t wait until I get back. But I think even I’ll be even more productive even when I’m in Australia because I’ll use my time to have these effective meetings especially with people I know well and worked closely with. So to me I think that’s fantastic. But it also reminds us of our incredible reliance on communications.
MARIA MACNAMARA: Thank you. Anthony Pratt.
ANTHONY PRATT: Yes I agree. I think the things that were going to take until 2030 to occur have been brought forward to now. Particularly the Internet. and I think Zoom, the explosion of Zoom and things like it are going to…are something that are really positive and are going to really leverage a lot of people’s productivity.
MARIA MACNAMARA: Thank you Robyn Denholm.
ROBYN DENHOLM: They’re all great answers so I’m going to build on them. I’m going to take a slightly different approach. I think the two things that have struck me is the family unit and the connectivity between family members having to spend 24 by seven with them. I think that actually has been a great outcome from the shutdown perspective globally and just seeing innovative ways that people have been able to continue to do their work and also blended family at the same time I hope that continues beyond. And the other thing is how quickly the environment bounced back in many places around the world. I mean I’m sure you’ve all seen stories of people being able to see the stars in Mumbai for the first time in 30 years and even here in Sydney the air quality has been brilliant after the bushfire season over the summer. So to me the enormous resiliency of the environment and how quickly it can turn around so that the trick for me going forward is how do we do that by keeping the environment the way it is now but also ramping up economic activity globally. So it’s been fascinating to watch.
MARIA MACNAMARA: Thank you. And the final word Mr. Ambassador
AMBASSADOR SINODINOS: Thanks, Maria. Well, we’ve got a choice. We can just hope that things return to some version of normal and we default to a lot of our normal settings, or we can make a decision that we’re going to use this opportunity that we didn’t seek, but it’s happened. This black swan event has happened. We can use this to change the way we do Things. And the sort of conversations we’re having here are precisely about that. Because what we’ve seen during the pandemic is that a lot of things that we didn’t think were possible or doable, when push came to shove, some of the biggest decisions didn’t take very long to be taken. Because they had to be taken. That mentality, that working through, getting through the barriers we’ve talked about for a long time but somehow never quite got around to doing something about, we have a chance to do something about it. So, our destiny is not written in the stars. We can make our destiny. Robert Kennedy said, “Some people ask why, and I ask why not.” And he was right. Thank you.
MARIA MACNAMARA: That’s fantastic. So, today we’ve heard about the things that it takes to make a success. We’ve heard about IP commercialisation. We’ve heard about the transformation of established enterprises with the Pratt example. We’ve heard about the investment in our global R&D hubs. We’ve heard about the importance of talent and the importance of building ecosystems. Now, all of those factors are common in every successful innovation nation whether it’s Israel, Ireland, Estonia and of course, in the United States. We’ve covered so much ground today. And I’ll leave you with this reflection:
“Sometimes…often actually, in business, you do know where you’re going and when you do, you can be efficient, put in place a plan and execute it. In contrast, wandering in business is not efficient, but it’s also not random. It’s guided by a hunch, got into a gut, intuition, curiosity and powered by a deep conviction that the prize for customers is big enough, that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counterbalance to its efficiency and you need to employ both. The outside discovery, the non-linear ones are highly likely to require wandering”. Jeff Bezos Letter to Shareholders in 2018.
Ladies and gentlemen, I want to thank you for your time. I want to thank the presenters for their time and I’ll hand over to our chairman, Yasmin Allen to close proceedings.
YASMIN ALLEN: Thank you Maria. So, I’m very excited and stimulated by the conversation today. I’m delighted that we could assemble such an eminent panel of experts. And as I said at the outset, we don’t want to waste this time. And I don’t think we will. Our speakers today have set us ambitious goals for the transformation and growth of Australian manufacturing. Robyn Denholm demonstrated the opportunities at the nexus of manufacturing and cutting edge innovation. You’ve inspired us to back our talent, grow our vet skills and integrate traditionally separate industries. Thank you, Robyn. Pamela Melroy, thank you for your comments today around IoT, precision agriculture and other beneficiaries of the space industry.
Also for your insights into how we might access a foothold in this emerging space market. We have many startup founders in our audience today, who appreciate the opportunity to hear from Advanced.org founding patron, Anthony Pratt, who has successfully developed and Commercialised innovations for global markets. Thank you, Anthony for your practical advice and insight, and also for your continued belief in our organisation’s work. Many of the questions we received in the lead-up to today, related to actions our government could take to assist with the economic recovery. So, thank you, Andrew Liveris for your perspective. I particularly like your comment, “Using 21st century tools for our 20th century economy.” And your insight into the manufacturing ecosystem. Today’s event, would not have been possible without the tremendous support of Ambassador Sinodinos and his team at the Australian Embassy in Washington. Thank you, Mr Ambassador for your wise comments and to your team for working with Advanced.org to gather this outstanding panel of experts.
Thank you to our major supporters DFAT and the Department of Industry. Also the American Australian Association and so the Advanced Manufacturing Growth Centre and Australia’s innovation fund, Main Sequence Ventures. And our attendees, thank you for your insightful questions that really did shape today’s discussion. We plan to continue these conversations, bringing global Australians together to use our collective wisdom to solve Australia’s opportunities and to seek…sorry, solve Australia’s problems and to seek opportunities. Please do consider joining Advance as a member, and I’ll invite you to put the 24th of July into your diaries for our Advance Global Summit, where we will once again bring the best and brightest of Australia’s diaspora Home.
Our greatest resource is our talent. If you connect Australians globally, great things happen. And that is Advance.
Thank you and goodbye.