10 ways to drive NSW manufacturing jobs
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10 ways to drive
NSW manufacturing jobs
May 2013
Forward
Australia’s manufacturing future by Roy Green
Does manufacturing have a future in Australia? Certainly it is and marketing. And it has become more
hard to imagine a time when it was under so much pressure, crucial than ever to our prosperity for at
not just from the high dollar but also from the speed and scale least three reasons:
of technological change and innovation. As a result, we have • first, manufacturing drives innovation and technological
seen mounting job losses and firm closures, with some regions change, which are key factors in our productivity performance
particularly hard hit. and allow us to achieve competitive advantage in global mar-
Of course, there are commentators who claim that we should not kets and supply chains
be concerned about these trends as they simply reflect ‘structural
• second, it creates high skill, high wage jobs, not just within the
change’ in the economy. However, this ignores the cyclical ele-
manufacturing sector itself but across the economy, particu-
ment of Australia’s commodity boom. Just as our terms of trade
larly in services which add value to manufacturing products
increased to historically high levels along with commodity prices,
and processes, and
so they are now falling. Consequently, Australia will require new
sources of growth to rebalance the economy and ensure future • third, it contributes to our external trade balance, enabling us
jobs and prosperity. to consume more imports without increasing our borrowing
from abroad, which would otherwise make us vulnerable to
This excellent report from the AMWU is based on the recognition
international financial markets.
that manufacturing continues to be a major driver of growth and
competitiveness around the world, not only in low cost emerg- Clearly, manufacturing is changing the world and is itself chang-
ing economies but also in high cost economies such as those ing as a source of transformational products and services. The
of northern Europe, which weathered the global financial crisis AMWU report argues that Australia’s commodity boom is an op-
much better than most. Manufacturing can and should be a future portunity to build this transformational capacity, especially in new
source of growth in Australia, which is not to suggest that it will be and emerging industries, with a view to creating long-term growth
the same as the past. and jobs for the next generation.
Significantly, manufacturing is becoming more globalised, more Professor Roy Green is Dean of the Business School, University of
knowledge-intensive and more interdependent with the integration Technology Sydney, and a member of
of value-adding services, such as design, engineering, computing the Manufacturing Leaders Group.
No time to waste by Tim Ayres
AMWU members in workshops and factories across NSW see first there’s a lot we can do to keep growing
hand the pressures manufacturing is under. They also see the manufacturing.
opportunities that could be grasped to drive the industry forward, This report outlines the 10 ideas we
with the right policy settings and commitment. think give NSW the best start. Barry
NSW can be a hub for thriving industries generating great skilled O’Farrell and his government need to
jobs - especially in our outer-suburban and regional areas - now act now and seriously deal with the crisis in NSW manufacturing.
and into the future. If we fail to take the steps to make this happen There’s no time to waste.
we’ll continue to shed jobs and industry capacity. Tim Ayres is NSW Secretary of the Australian Manufacturing
Even in a period of enormous pressure on Australian manufacturing, Workers Union.
Trains, tracks, signals, stations …
local content for the North West Rail Link
Seventy thousand tonnes of steel, 400,000 cubic metres of concrete, Yet the O’Farrell government’s record in the rolling stock indus-
15 train sets, materials for eight new train stations, 23 km of double try is to send contracts interstate and overseas.
track: the components of the North West Rail Link are a recipe for This means that the opportunities for skilled jobs, apprenticeships
turbo-charging critical manufacturing sectors in NSW. and local investment are being lost.
But the NSW Government has no local content plan for this or The North West and South West Rail line projects have the potential
other major transport infrastructure projects. to support thousands of existing jobs and create thousands more.
The North West Rail Link will use more steel than the Sydney Har- This vital boost to local manufacturing and the long term economic
bour Bridge, but there is no commitment to using Australian steel. benefit of jobs, skills, investment and industry capacity are being
From rail signals to train carriages and station furniture, NSW squandered.
manufacturers are well placed to produce many of the compo- The NSW Government must make a commitment to support the
nents needed to deliver the project, but the O’Farrell Government rolling stock industry and the jobs, skills, innovation and investment
says local content levels are simply a matter for tenderers. that it brings to the NSW economy and regional communities.
The North West Rail Link, like other major infrastructure projects, Research shows that each additional per cent of local content on
represents a major investment of public money. It can and should the North West Rail Link – particularly in steel and rolling stock
deliver jobs, apprenticeships, industry growth and economic ben- manufacturing – can deliver hundreds of jobs*.
efit back to the people of NSW.
If we do it right, the North West Rail Link can deliver far more than
NSW rail manufacturers could build the single-deck trains the NSW just quicker travel time to the city. It can deliver long-term eco-
Government has specified will run on the NWRL, but consultation nomic benefits from investing in skills, jobs and vital industries.
with local industry would have to begin now. Planning, design and
The NSW Government should consult with local industry over its
investment are necessary to create the manufacturing capacity.
plans for all future NSW passenger rail fleet needs, including
It is predictable that if ordering the train sets is left until the last increased demand for rail trans-
minute, local suppliers won’t be able to deliver the port and replacement of aged
project in the short time frame required. and dated fleet.
Our members have been building trains for more than a century.
They have proven that they have the skills to
deliver the best quality in the world.
1
Target of 75% local content on the North West Rail Link,
with contracts to specify local industry participation
plans, mandated high levels of content and guaranteed
apprenticeship opportunities.
*North West rail link projects: Likely employment impacts, David Richardson, 2012
Harnessing the cleantech revolution
While NSW dithers over how it will regulate wind farms, a $6 tril-
lion global industry has sprung up in producing the clean energy
technologies that will drive industry into a lower-carbon future.
Transforming to a lower-carbon economy is inevitable. The kind of
industries and jobs that economy supports is still in question.
The Federal Government has committed $14.8 billion in various
forms of assistance under the Clean Energy Future package for
firms who invest in technology to lower energy use and for manu-
facturers to supply cleantech goods and components.
This funding has the potential to seed a thriving cleantech industry
in NSW.
The NSW Government should develop a strategy to ensure that
NSW companies win the race to engage with opportunities in the
global clean energy and low emissions technology industries.
NSW should aim to win 40 per cent of the investment on offer from
the Commonwealth Government.
With our natural energy resources of wind and sunshine, NSW
should be a world leader not just in clean energy production but
clean technology production.
2
NSW Government to develop a cleantech strategy, aiming to secure
40% of Clean Energy Future funds for NSW businesses to lower
their emissions and develop new carbon-reduction technologies.
Breaking the perspex ceiling:
more skilled trades for women
Women are an important part of the employment mix in manufacturing, but they are lower paid,
hold fewer skills qualifications and don’t have the same opportunities to progress to supervisory
or senior roles as their male co-workers.
In manufacturing as with other blue-collar industries, there has been very little attention paid to
identifying and dismantling the barriers to women’s advancement and satisfaction at work.
Our vision for a thriving manufacturing sector that offers secure, skilled jobs and genuine career
opportunities making top quality products for Australia and the world includes lifting the repre-
sentation skills and status of women in the sector.
Women deserve access to the best skilled jobs manufacturing can offer. They can also play an
important role in meeting the on-going need for skilled labour.
Skills qualifications are the key for opportunities to move into higher-skill, better-paid jobs.
Women currently working in manufacturing report few training opportunities and consequent
opportunities for promotion or higher pay.
In an era of projected shortages a failure by manufacturing and engineering employers to engage
with potential women employees, apprentices and trainees means that half the potential labour
force is excluded, limiting industry capability.
3 Apprenticeship targets on major infrastructure projects
to include skills training targets for women.
Mining to support local industry
From coalmining in the Hunter Valley to metals at Gunnedah and gold
at Orange, the state’s resources industry is experiencing its biggest
boom in history.
Fuelled by overseas demand for minerals and gas the sector has
experienced overwhelming expansion in jobs and infrastructure.
But the boom has created headaches for the manufacturing sector –
the higher Aussie dollar has made it harder for exporters, while the
resources sector has drained the supply of skilled workers, creating
acute skills shortages.
These problems could be addressed if big mining projects utilised local
content. But it’s not uncommon to see companies importing fabricated
steel products and even mining machinery.
Multinational resources companies regularly lock out local engineer-
ing and fabrication firms while overseas components are dumped into
our market to squeeze out Australian suppliers.
The NSW Government should establish a Mining Industry Advocate
within the office of the Department of Industry and Investment to audit
all new mining industry capital investment projects for local content
and provision of training, identify local industry capability and develop
strategies to assist local engineering workshops to engage with the
opportunities and report to Parliament annually on progress.
4
Establish a NSW Government Mining Industry Advocate
to promote local industry engagement with the mining
sector.
Build navy ships here, defend skilled jobs
New South Wales has a proud shipbuilding history and the current
maritime industry is capable of producing world-class passenger,
cargo and defence vessels.
Thousands of highly-skilled workers are employed at major shipbuild-
ing facilities in Newcastle, Garden Island and Balmain.
In Newcastle alone, local shipbuilder Forgacs employs more than 500
skilled tradespeople and 50 more apprentices.
Mining magnate Clive Palmer recently thumbed his nose at Austra-
lian shipbuilding, opting to build his latest plaything – a replica of
the Titanic – along with a number of ships for Queensland Nickel in
China.
The industry needs certainty to keep investing in equipment, jobs and
training.
The Federal Government plans to build 48 more naval vessels, includ-
ing 12 submarines, and to replace the Aurora Australis icebreaker.
We need to make sure they are all built in Australia – with the NSW
Government fighting for our state’s share.
5
All Australian naval vessels to be built
in Australia, with NSW aiming to win a
minimum of 40% of the contracts.
Quality, locally processed food
The closure of Sydney’s Rosella plant, manufacturer of iconic We need action to curtail the market dominance of supermarkets,
tomato sauce among other products earlier this year, was a reminder who aggressively undermine our favourite brands with cut-price
of the enormous pressure Australian food manufacturing is under. private label brands which are much more likely to be made from
The Windsor Farms cannery at Cowra stopped production shortly imported products.
afterwards. We need a vision for a vibrant food manufacturing industry in Australia
NSW has shed thousands of food processing jobs over the past decade. to take advantage of opportunities at home and in the booming Asian
market, led by government and supported by smart policy responses.
Factors are complicated, including cheaper imported food products, the
high Australian dollar and the behaviour of the two major supermarkets These should include clearer country-of-origin labelling laws so
who use their market share – as much as 80 per cent of the grocery Australians can make informed choices about buying Australian;
market, up from 50 per cent in the 1990s – to squeeze maximum profits co-investment in innovation and research and development to
from every link in the food distribution chain. This downward pressure on improve productivity and industry capability; and applying the same
prices is bad for workers, farmers and businesses throughout the supply quality and testing standards to imported food as to food grown and
chain and ultimately delivers lower quality and choice to consumers. processed in Australia.
6
NSW parliamentary inquiry into NSW food processing capability,
threats to existing suppliers and imported content in our
supermarkets.
Invest in skills
The loss of specialist skills is part of the vicious cycle of in- TAFE is NSW’s major provider of skills training via apprentice-
dustry privatisation. Privately-owned companies have not been ships. As funding and teachers are cut, and reforms to the
training apprentices at a rate that covers natural attrition. vocational training system put TAFE in competition with private
Unfortunately, this is an all-too-common occurrence in manu- providers, we are at real risk of undermining the capability of key
facturing as companies take on fewer apprentices and skilled NSW industries.
workers move into the higher-paying mining industry. Experience shows that competitive vocational skills training sys-
In this context, cuts to skills training in the NSW TAFE system tems that pit providers against each other offer narrower, lower
are a real concern. quality and less transportable skills training.
7
The NSW Government should restore TAFE funding, maintain a
quality, comprehensive, public vocational training system and
use all means possible to compel employers to invest in training.
Build a second airport, build Western Sydney jobs
Greater Western Sydney has a gross regional product of close to $100 Western Sydney is the key to building a successful future for
billion. The region’s $14 billion manufacturing industry supports a manufacturing, but the region can’t grow without proper
major logistics and transport industry while a booming small busi- transport infrastructure, freight rail, efficient roads and an
ness sector is responsible for almost half its employment. accessible airport that delivers improved opportunities for
But growth is still patchy in this dynamic region, with unemploy- business investment.
ment rates in some parts of Western Sydney almost double the A Western Sydney Airport is critical for the future of the region –
national average. providing jobs, infrastructure and opportunity for local firms and
The O’Farrell Government has plans for increased population, but communities. The failure of government at all levels to get on with
scant plans for jobs and infrastructure for Western Sydney. the job has let Western Sydney communities down.
8
We need a serious discussion about a Western Sydney airport,
starting with a proper and conclusive community consultation
and environmental and economic analysis of Badgerys Creek.
Don’t drive bus building out of NSW
Local manufacturers thrive when there’s clarity about the role Late last year, the NSW Government placed an order for 80
they play in the future needs of our transport industries in build- double-decker buses with a Queensland company, excluding NSW
ing buses, trains and ferries for New South Wales. manufacturers from the tendering process.
But bus manufacturers in particular have been dealt a crippling Where other state governments back their lo-
blow from the O’Farrell Government’s lack of commitment to cal bus building companies in recognition
procuring public transport locally. of the jobs and economic benefit
Last year the procurement issue was played out at one of Austra- the industry delivers, NSW is
lia’s premier bus builders Volgren. Macquarie St had previously on the brink of losing its
consulted with local industry about its plans for new Sydney buses, entire bus-building
leading Volgren to open its state-of-the-art Newcastle factory at a capability.
cost of $18 million.
But after the O’Farrell Government failed to place any orders, or
consult over future fleet needs, Volgren wound down its
NSW operations and cut 85 skilled jobs.
NSW’s only remaining bus manufacturer –
Western Sydney’s Custom Coaches – is also
facing an uncertain future with no forward
orders from the NSW Government, the
biggest player in the industry.
9
NSW manufacturers to always be given the opportunity to tender
for bus fleet purchases, with a price preference in recognition of
the jobs and economic benefit delivered by the industry.
Use government buying power to boost jobs
The NSW Government spends billions each year procuring goods, The O’Farrell Government has disbanded the previous govern-
from contracts for stationery to major infrastructure projects. ment’s Local Jobs First procurement framework, which gave a
This spending should boost and not undermine NSW jobs and price preference for local content on all tenders above $700k
industry capability. To consider price alone on major contracts with an additional preference for regional businesses.
is a false economy for taxpayers, particularly when it results in It has replaced Jobs First with the Small and Medium Enter-
imported products replacing locally manufactured. prise Policy Framework, a procurement policy which is limited
While government has an obligation to obtain value for money, and fundamentally flawed by its understanding of procurement
it should also examine the full costs and benefits before award- policy principally as a means to achieve cheaper prices rather
ing a contract that includes imported content. Particular atten- than as a broader tool of industry policy. The new scheme has
tion should be paid to job creation, payroll tax implications, the no local content requirement or price preference for local con-
economic impact of those jobs to manufacturing regions and the tent and only requires industry participation plans for tenders
multiplier effect of those jobs throughout the NSW economy. above $10 million.
While imported product may seem an economical option up front, This is a poor outcome for NSW manufacturing businesses
local investment and procurement programs bring wide-ranging facing an uncertain global environment with an extended high
economic benefits to local industry and the community as well as Australian dollar.
to government budgets.
10
Reintroduce a policy in line with Jobs First that gives a
price advantage to NSW businesses as a baseline for all
NSW Government procurement.
Australian Manufacturing Workers’ Union NSW Branch. Authorised by Tim Ayres, NSW Secretary, AMWU. Address: ........133 Parramatta Rd, Granville, NSW 2142 Phone: ..............................................................9897 4200 Fax: ..................................................................9897 2219 Email: ................................................ info@amwu.asn.au
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