Tag Archive for: fourth industrial revolution

Industry 4.0 driving sovereign capability in northern Australia

Innovation in northern Australia is thriving. It’s not clear why, but there’s no doubt that northern Australians are seizing the opportunity to pursue innovative projects that generate economic benefits, contribute to national resilience and respond to defence needs.

A new ASPI report, Breaking down the barriers to Industry 4.0 in the north, launched today, shines a light on the challenges and opportunities, and highlights what’s needed to better harness those opportunities.

Industry 4.0 spans the adoption of improved automation, machine-to-machine and human-to-machine communication, artificial intelligence, continued technological improvements and digitalisation across all sectors, including manufacturing and government services. It enables point-of-distribution or point-of-use production and small-scale production runs tailored to meet customers’ needs.

This is a fundamental shift from the engineering era of mass production of standardised systems in lowest cost locations combined with global distribution from centres of large-scale production.

Through the lens of real experiences and success stories, the report illustrates innovation that’s already occurring in the north, often with the support of future-thinking state and territory governments.

But these innovations aren’t overnight successes. Instead, the report highlights that innovation is underpinned by trial and error, failure and persistence, long lead times and an unwavering commitment to a better future.

There’s a culture of innovation in the north that’s driven by necessity and arises from the tyranny of long supply chains and a small industry base. Entrepreneurs and innovators in the north recognise the strong links between innovation and security. They appreciate that an economically prosperous and resilient north makes for a secure Australia.

Of course, the north isn’t alone in its pursuit of sustainability-focused innovation in Australia, but it’s a stand-out. The difference in the north is that innovators are often driven by the desire to pursue environmental, social, sovereignty and security outcomes as a bundle.

Many benefits can arise from Industry 4.0, including less wasteful use of natural resources and enhanced economic performance. However, the report stresses that there are barriers, such as the fear of letting go of the thinking of the past, the need to focus more clearly on sovereignty and resilience, and a cultural unwillingness to fail.

The report acknowledges that the barriers to innovation aren’t new; however, Industry 4.0 raises them to a new level of obstruction.

Areas in which change is needed include equity investment and anchor clients. Without one, you can’t get the other. The risk mindsets of departments and governments, coupled with shareholder capitalism, drive a disproportionate focus on prospects of failure over success and, in the corporate world, on the next quarter’s profit and share price.

Start-ups and small to medium-sized enterprises are confronted with a maze of inconsistent processes and no clear pathway, resulting in a lack of engagement with subject-matter experts. Box-ticking approaches result in innovation being overlooked.

More is also needed to drive national capability, rethink the viability of large-scale manufacturing and production lines, and align government thinking and practice with the environmental, social and governance mindset of business and the growing expectations of investors, consumers and the community. Innovating will always require a degree of perseverance and a measure of good luck. Still, governments do have the ability to shorten the odds for success.

The report showcases a number of northern innovators. For example, SPEE3D, a 3D printing company, is reconceptualising last century’s manufacturing and production lines through metal cold-spray technology. HyperOne is a Queensland company that’s pursuing a 20,000-plus-kilometre, $1.5 billion hyperscale national fibre network that will support tens of thousands of jobs nationally in a variety of high-tech industries. And Darwin-based Life h2o has developed a suite of military-grade water-purification equipment that could also provide a clean, safe water supply for civilian uses.

Australia is ranked fifth in the OECD for innovation in business and is in the top 10 countries globally for the availability of skilled labour. The report notes that while fifth for innovation is a great achievement, we need to strive for more, and tenth in the skilled-labour stakes is nowhere near good enough.

For Australia to fully embrace Industry 4.0, there’s a need to accept targeted displacement rather than settle for the slowness of continuous improvement or the randomness of transition. Some industries will fade away and new ones will spring up in their place. But new industries must be supported by long-term commitment and investment. Decoupling Industry 4.0 investment from short-term, politically driven ‘announceables’ is essential.

Northern innovators have a commitment to Australia, its future and the kind of world that they want to create for future generations. They conceptualise, create and deliver by leveraging Industry 4.0 thinking and technology.

Technology doesn’t drive change, but how northern innovators are using it does. This is sovereign capability in action.

Embracing the opportunities of Industry 4.0 in northern Australia

High school economics taught us that scaling up improves efficiency and reduces costs. There’s intense focus right now in the Northern Territory on tapping into large-scale solar and renewable hydrogen, large-scale gas exports and large-scale agribusiness. But the roadmap to achieving large-scale success is based on outdated thinking.

Achieving projects on a large scale or an even optimal scale is more important than ever, and is dependent upon embracing digitisation, integrating data and adopting artificial intelligence including machine learning.

While there are industry strategies aplenty, at best they continue to emphasise ‘Industry 3.0’ solutions. For example, the Queensland cattle sector says that industry scaling is dependent on transport infrastructure and services. Likewise, the NT has argued that ‘quality roads are essential for both economic and community equity outcomes’ and that NT-wide ‘collaboration to gain scale will improve efficiency [and] reduce costs’.

Those observations are helpful, but they lack the vision and the impact to drive large-scale change.

The fourth industrial revolution—Industry 4.0—will transform production and manufacturing not just by offsetting labour costs and distances to market but also by providing access to value-add markets and modernising supply chains. Industry 4.0 will enable integration and better management of horizontal and vertical value chains through, for example, integrated data management and analytics.

Economic prosperity is dependent on understanding the potential of Industry 4.0 today. Governments and businesses need to go beyond adopting ‘Industry 4.0 technologies and ways of working specific to the needs of their business’ and move towards adopting Industry 4.0 enablers. These include embracing rising data volumes, computational power and connectivity; adopting emerging analytics to inform business intelligence; creating new forms of human–machine interaction; and improving the transfer of digital instructions to the physical world.

The current trend, however, is to focus on micro-level challenges. For example, workforce challenges such as access to trained staff, the ageing workforce, digital literacy, and attraction and retention strategies are often highlighted as barriers to scaling. These are all important issues but miss the point. The future of work and the future workforce are also considered, but generally in the context of something that will happen later. In large part, the future workforce is employed by organisations today. There isn’t a new workforce waiting in the wings that will arrive next year, in five years or even in ten years’ time complete with a new set of digital skills and capabilities. There won’t be a wholesale turnover of the workforce because not everyone has the financial means to stop working or is of ‘retirement’ age.

The NT’s mining sector is one of its largest industries and employers. However, no new major mines have been established since 2005 despite strong global demand. Finance, scale and access to markets have been identified crucial hurdles to success. While refining and processing minerals and metals for export moves Australia up the value chain and is likely achieved through increased automation, more can be done to take full advantage of Industry 4.0 opportunities.

Likewise, strategic location and land mass are the prevailing reasons used to focus the national security and defence sector in the north. Those are all important aspects, but merely ‘focusing’ on the sector won’t bring the projected 7.3% increase in the NT’s share of the sector’s economic activity by 2030.

Agribusiness is also projected to develop at scale and contribute to the NT achieving its target of a $40 billion economy by 2030. Sector growth will be achieved through ‘coordinated effort using a combination of Sustainable Development Precincts and the Master planning approach as well as value adding opportunities’. However, measures to facilitate reimagining a different operating model are also required.

The NT is says it’s ensuring its economic reconstruction is on track by maintaining critical levels of engagement and partnership with industry. That’s all good stuff but still not enough.

And scaling doesn’t necessarily mean building more traditional infrastructure. My recent Strategist article focused on the need for Australia to pick up the pace on innovation. I used the example of SPEE3D, which has developed a world-leading 3D printer that can rapidly manufacture components in a variety of different metals and alloys. Last year, the NT government invested $2.75 million for SPEE3D to establish its research and development headquarters in Darwin. The company’s big success is in reimagining metal parts manufacture and developing a technology that made it easier and much faster.

When I read the myriad strategies articulating what the future may bring for a jurisdiction, a sector or a local community in the north, I’m struck by how much focus there is on today. Even when a vision is articulated, the way to achieve it tends to be couched in terms of addressing challenges of yesterday rather than pursuing ambitious transformation that focuses on changing or sorting those things that will propel us forward.

Industries, manufacturing and agribusiness in the north need to reimagine their operating models and pursue new ways of doing business based on the opportunities that Industry 4.0 offers. More of the same, or even incremental improvement through adoption of technology, is no longer enough and won’t drive scaling.