09 May Space manufacturing in Australia
Australia’s capacity to manufacture critical elements of space systems is increasing but from a much lower base than countries with equivalent economies. Key issues for consideration include the focal areas for growth including sovereign capability, the balance of sourcing from domestic markets and international markets, the right size for Australia’s space manufacturing and testing capability, and answering the question of how to sustain this capability in a globally competitive and often distorted market? Other countries use offsets to “protect” national capabilities, but Australia moved away from that policy some time ago. What mechanisms can be brought to bear to ensure Australian manufacturers can compete in international markets? Should a level of Australian content be mandated?
Manufacturing in Australia has been in decline for many years. However, it nose-dived with the collapse of the motor vehicle manufacturing industry in the last decade. In the context of the 2020 Commonwealth Budget a $1.5 billion fund was announced to kickstart manufacturing in Australia focused on six key sectors judged by Government to be areas of advantage or having potential for growth in new and emerging areas. One of these key sectors is space.
There are many challenges facing the overall manufacturing sector in Australia. However, the space and spatial sectors face some specific issues, discussed below.
- Shortages of skilled and experienced staff;
- An age profile that is skewed to the young and the old, with a thin band of people in the 35-55 years age bracket;
- Women are grossly under-represented, although several space and spatial industry leaders are women;
- Indigenous people and other ethnic minorities are also under-represented.
Universities shoulder a disproportionate proportion of the space sector workload. They also struggle to attract students in sufficient numbers into the disciplines associated with remote sensing. The extent to which the universities will be able to continue to shoulder this load is problematic, given the recent collapse in revenues to the sector and the severe belt-tightening occurring across the sector.
Much of Australia’s space and spatial workforce is employed in government funded organisations, notably CSIRO, DST Group, BoM and GA.
Most private companies operating in the space and spatial sectors are SMEs and start-ups. Many of the start-ups are built around a technology that has been developed by the business owner. The small size of these companies, almost by definition, can limit the formality of many processes that governments and larger businesses sometimes insist upon.
These include, but are not limited to:
- governance arrangements,
- adoption of and adherence to specific quality and other standards,
- cyber awareness and cyber security,
- business continuity and disaster recovery plans,
- IP protection policies,
- succession planning,
- business development and marketing strategies and capabilities.
Research and Innovation
When compared to nations of comparable size and wealth, Australia spends relatively little on research and development across the board. Successive governments have taken a view that if a company needs to invest in R&D to capitalise on a market opportunity, it will find the resources to do so. In recent months, R&D tax concessions policy has been overhauled,
but the new model continues to attract more criticism than support from companies.
High wages, a relatively strong dollar and Australia’s distance from markets in which its manufactured goods may be competitive combine to make the export of goods that are made in Australia difficult to sell overseas at competitive prices.
OPPORTUNITY FOR GROWTH
Three opportunities for growth are identified:
- Investment in sovereign capabilities. The Commonwealth Government has kick started the process with the $1.5 billion announced for manufacturing in the October 2020 Budget, however, more detail will be required to determine how the selected industries can be made more sustainable over time.
- Better informed users, leading to increased domestic sales.
- Increased exports – the many challenges already identified, notwithstanding.
1. Companies redouble their efforts to seek grant funding to improve their businesses, making them more competitive in domestic and international markets.
2. That industry associations encourage space and spatial companies to take full advantage of the services offered by the Centre for Defence Industry Capability (CDIC) and other industry grants programs within the Department of Industry, Science, Energy and Resources and in from the States and Territories.
3. That industry associations encourage and assist Australia’s space and spatial companies to adopt a mindset of uncompromising quality, as a hallmark of Australian manufacturing – using Australian involvement in the JSF program as a model.
4. That industry associations devise ways and means to provide their SME and start-up members with affordable business skilling programs, as opposed to technical advice, in business development, marketing, IP protection, business strategy and planning.
5. That industry associations work together to improve and extend the programs that will emerge as a result of the Government’s commitment to spend $1.5 billon on delivery of the Modern Manufacturing Strategy over the next few years.