Australia A High Cost Manufacturing Environment

Past 10 Years Growth of cost of 150% Comparable to cost growth in Germany, Sweden, Norway etc Who has ever purchased a German product merely because it is cheaper?

CUSTOMERSCOMPETITION BANKS Government Is Australia still operating in a low cost mindset? LOCUS OF CONTROL

Framework for Change Economic LensNeo ClassicalInnovation, Evidentiary & Behavioural Normal basis of competitionLowest costHighest value for $ FocusEfficiencyEffectiveness & Efficiency Time HorizonShortLong Innovation FocusTactical solutionsStrategic Innovation Innovation BehaviourArbitraryValue creation & Value Appropriation Govt Policy ToolsSupply sideDemand side MindsetOwnerCustodian Profit usePocketReinvest

Compete on Value for Money High cost countries, other than Australia, are 4.5% better every year in productivity – e.g. Scandinavian countries RULE: Productivity occurs when you generate higher economic profit than the revenue from your primary offering

Mindsets for the Future Train your staff – invest for the future Build loyalty – low turn over – low cost Trust within the firm – not conflict Global market mindset – all opportunities must have global potential Must know HOW customers will get value from money spent on supply Surprises only from outside domain e.g. public research Invest in the intangibles (e.g. Sweden x2 over Australia) Sweden’s SME margin (net tax) 18% in 2011

Government Tools 1.Regulation – e.g. water saving and building design led to innovation 2.Cluster Tools – Where base capabilities are the same ones – encourage collaboration 3.Procurement – purchase for lifecycle rather than cost 4.Solutions fund rather than R&D Subsidies Sweden has 80% translation of solutions from other Industries; Australia on average 12% Transferring capabilities to new solutions – BMW now providing urban energy solutions based on efficiency solutions in car design