Engineering a Manufacturing Future

Luminact Insights by Andrew Thwaites – 22 July 2022

Introduction

Australia is a vast country cut off from the rest of the world, which is why manufacturing has been a big part of our history. Manufacturing was so vibrant it once formed one-quarter of Australian Gross Domestic Product (Rickard 2022). Still, over the years, it has declined. Manufacturing was so crucial to the economy that the Australian Government introduced the ‘Australian Made’ logo in 1986 so consumers could identify and choose products manufactured in Australia. The label has also evolved to mean ‘Australian grown’, ‘Product of Australia’, ‘Australian Seafood’ and ‘Australian’ (Australia Made 2022). Being an island nation, Australia is uniquely independent, so it made sense that Australians have been creating, building, engineering, and manufacturing goods over the years. 

The Australian passenger automotive industry played a pivotal part in Australia’s manufacturing history. Between 1925 and 2017, it consisted of eleven organisations: Ford Australia, Rootes Australia, British Leyland, Chrysler Australia; Australian Motor Industries; Volkswagen Australia, Holden Toyota Australia; Renault Australia; Nissan Australia; and Mitsubishi Motors Australia.  This has declined but some automotive companies still exist in Australia, such as Ford Australia, which has a development hub for conducting research, development and evaluation. Ford Australia produced a locally designed vehicle but manufactured in a low-cost country to utilise their global supply chain. 

Australia was once 1 of the 13 manufacturing countries in the world. In 2011, even while shrinking, the Australian manufacturing industry sustained over 59,000 employees directly from the manufacturers and an estimated 354,000 indirectly in support (Devereux 2011). The Australian automotive sector produced a whole ecosystem for education and training.  This ranged from universities, technical and further education to training organisations. These organisations supported professional engineers, designers, accountants, tradespeople, and essential line workers within the automotive sector. 

Whilst Australian automotive car volumes were much lower than in other countries, the number of parts produced by the suppliers drastically exceeded those of other Australian industries. These larger volumes provided justification for suppliers to invest in new machinery to improve production efficiency. Such investments provided suppliers with capabilities to generate value in other industries.  This is an example of advancements in the manufacturing industry provided by the automotive sector. 

Diver Consolidated Industries (DCI), a supplier to Ford and Holden, produced a car door hinge assembly for the domestic and the Chinese market. They also exported items for Canada and African nations. DCI used thermal and acoustic damping products to manufacture fire truck heat curtains and window heatshields for houses in bushfire-prone areas. Their manufacturing also included finished products such as TV screens brackets and Triton workbenches. Aside from Ford and Holden, DCI also supplied other Original Equipment Manufacturers (OEM), such as Iveco Trucks. The automotive industry enabled DCI to enter the automotive aftermarket sector, to produce high-quality production runs and to develop a patented manufacturing process.  

Times were hard for automotive suppliers during the Global Financial Crisis (GFC) (2007 and 2009). Volumes dropped and the manufacturing workforce was cut to working four days a week. The workforce also shrank, and many workers lost their jobs. Then the automotive production in Australia ended with Ford being first to announce the end of manufacturing in 2016, followed by Holden and Toyota in 2017. 

Before 2012, the number of automotive suppliers diminished as the industry started shrinking and OEMs (Original Equipment Manufacturers) and supplier were seeking low-cost countries such as China and Thailand for suppliers. This was not all due to the GFC, since Australia did not experience an economic downturn as severe as other countries. However, assembly lines were being relocated and workforces being downsized going back to 2006. Why did this happen?  

There were numerous causes for the demise of the Australian passenger automotive manufacturing industry. At the start of the Australian automotive industry, car import tariffs were over 200% (Quince & Kesteven 2020). In 2011 imported car tariffs averaged 3.5%, reduced from 30% in the 1990s. Tariffs for the other manufacturing countries were all higher:  

• EU and UK at 10%; 
• China at 25%; 
• India at 60%; 
• Malaysia at 30%; 
• South Korea at 8%; 
• Russia at 30%-48%; 2
• US 2.5-25%; 
• Thailand was the most protected at 80%; 
• and Brazil at 35% plus an import Tax from 25-55% (Devereux 2011). 

With reduced tariffs in 2011, this resulted in 85% of new car sales being from imports; which was good for consumers, but it adversely affected the domestic automotive industry. Australians had over 60 automotive brands to choose from in the 1 million new car sales market; making Australia the most open car market of the 13 manufacturing countries. Japan had 33 brands for 5.8 million sales; the US with 32 brands for 17.3 million sales and Europe with 70 brands but over 15 million sales compared to 1 million (Devereux 2011). 

It was not surprising that the Australian automotive industry was doomed to fail with one of the smallest sales markets, the lowest import tariffs and one of the largest selection of vehicles available to consumers. The concern was not only for the three last Australian automotive manufacturers but what would happen to the entire manufacturing sector. Would it continue to exist? If so, which companies would survive? 

Manufacturers started shutting down before 2017, as production rates had declined well before the final cars were produced. Production facilities larger than the MCG playing field had idle equipment gathering dust. Engineering machinery were being sold at a price lower than the scrap raw material value. Vendors leaving the industry would even provide the manufacturing equipment free of charge. 

After the fall of the Australian passenger automotive manufacturing industry many suppliers followed, but some survived. Workforces with transferable skills moved into other industries such as defence. Companies like DCI diversified and are still operating today. The manufacturing industry did not disappear after the automotive manufacturing industry collapsed. We will examine some of these companies and discuss their successes and enablers for Australian manufacturing. 

REDARC Electronics

REDARC was established in 1974 and was purchased by its current owners in 1997. They initially supported the automotive industry by engineering the design and manufacturing of vehicle ignition systems and voltage converters. Since then, REDARC expanded its capability into the heavy trucking, industrial, agricultural, emergency services, mining, communications, and defence sectors (REDARC 2022). 

REDARC now produces a range of over 240 (AAMC, 2014) innovative and niche products, including voltage converters. Their other products include solar panels, inverters, power supplies, battery chargers, management systems, lighting controls and heavy vehicle safety systems. 

REDARC did this by targeting niche markets like the caravan industry. One of their products in this market is the TOW-PRO trailer braking system that provides the user with an easy-to-use solution that offers complete control for different braking conditions and scenarios. The TOW-PRO outperformed other solutions available in the marketplace. 

REDARC’s growth to a sales revenue of $30 million (AAMC, 2014) was a result of planning goals to double its revenue every five years by instilling principles of innovation, quality, teamwork, and integrity. As a result, the organisation grew from 8 people to over 275 staff and entered the global market (AAMC, 2014). 

Innovation within the company was supported by Research and Development (R&D) of 15% annual sales revenue with approximately 25% of the workforce contributing to R&D activities (AAMC 2014). This enabled REDARC to be a market leader with new products and setting industry benchmarks with top performers such as the TOW-PRO. 

REDARC also invested in their manufacturing technology, including their printed circuit board (PCB) manufacturing line with complete traceability of every component on every board and with captured statistical data for continuous improvement analysis (REDARC 2022). 

Another key driver of their success is REDARC’s attitude towards their staff. The company fosters an environment for staff buy-in and commitment to improve productivity and product quality. They ensure that staff are a good fit with the company culture after being nominated, endorsed, and determined to be competent for the position (REDARC 2022). 

Sutton Tools 

Sutton Tools is an independently run family business with a rich history that spans over 100 years. They service many industries but are most well-known for their high-quality Australian-made drill bits. Sutton Tools was founded in 1917 and has grown over the years with the acquisition of several companies, including Patience and Nicholson (P&N) and Carb-I-Tool, with overseas operations in Europe and New Zealand (Sutton Tools 2022). 

Sutton Tools have undertaken joint ventures R&D activities with partners that include Swinburne University, ANCA (tool manufacturer), Commonwealth Scientific, Industrial Research Organisation (CSIRO), Advanced Manufacturing Growth Centre (AMGC) and the Defence Materials Technology Centre (DMTC). 

Partnerships with Swinburne have taken place since the 1990s, resulting in the development of Surface Technology Coating that has been implemented into the Sutton Tool manufacturing process, enabling them to stay at the forefront of the industry. 

Sutton Tools recently started a joint venture with Swinburne University and established the Smart Manufacturing Centre with the two parties collaborating on advanced manufacturing for five years. While Sutton Tools gains access to Swinburne equipment, they support the development of emerging engineers via the Swinburne Work Integrated Learning Program (Swinburne 2021). 

Sutton Tools have implemented engineering R&D outcomes into their production process. They form part of the grinding process, implement powder metallurgy, and utilise materials such as High-Speed Steel (HSS) and cobalt alloys with advanced coatings such as Physical Vapor Deposition (PVD). These engineering solutions can produce up to 40% increased efficiency with higher quality. Remarkable achievements include engineering processes to improve finishing tolerances from 10-12 microns down to 3-4 microns and automated processes that can run for over 24 hours, making Sutton Tool an industry leader in quality. 

As Sutton Tools compete in the global market, it must remain efficient and effective. This is done by continuously utilising newly developed technology to maintain its competitiveness in the high-quality and high-price product market rather than high volume low quality.  

Their partnerships with established tool manufacturers ANCA and SMS, have enabled machine processing to streamline and to combine multiple processes into a single operation or to achieve high-quality products. This produces a two-fold outcome with access to the latest technology and better support. 

Sutton Tool also invests in its relationships, engaging with engineers and other manufacturing networks, supporting projects to help develop future engineers and promote such career paths. They also lecture at universities to give students updates on current engineering practices. 

Premcar

Premcar was established by the UK company Tickford Vehicle Engineering (TVE), which started supporting Ford Australia in 1992. Managed initially out of the UK, the engineering was undertaken between the UK and Australia from 1992 to 1996 until it became an independent Australian engineering company in 1996. It later became Prodrive in 2001 but was renamed Premcar after the purchase of Prodrive Automotive Technology business by current owners in 2012 (Premcar 2022).  

Premcar was behind many of Ford Australia’s engineered high-performance models, which included the XR6, XR6 Turbo, XR8, F6 and GT. These vehicles were not produced on the Ford factory line. Instead, factory-built cars undertook the enhancements at a separate factory facility. Premcar engineers redesigned many aspects of the vehicle, including internal and exterior upgrades. 

Premcar engineering expertise was also utilised by other automotive manufacturers, including Toyota and Mazda. Premcar’s engineering collaboration with Mazda Australia produced the mighty Mazda MX5 SP. 

Premcar Engineering was the first to introduce carbon fibre into a production car within Ford globally. Premcar’s engineers needed to resolve heat transfer on the intake by utilising shapes not suited to other manufacturing techniques validated for global use within Ford. 

In 2015, before the automotive closure, Premcar started its diversification using the engineering workforce to support an aviation company develop a helicopter. Diversification continued as they entered the defence sector, supporting Thales in engineering the Bendigo-built defence vehicle, the Hawkei. 

Going back to their roots in automotive engineering, Premcar collaborating with Nissan to manufacture the Nissan Navara N-Trek Warrior and the Nissan Navara Pro4X Warrior. Like Ford’s performance approach, Premcar receives a factory-built vehicle and engineers’ enhancements in Premcar’s own production line in Epping. While it is far from the production line of Ford, Toyota, and Holden, they have created a niche within the Australian manufacturing industry that supports the automotive industry. 

Premcar retains market share in the niche automotive engineering sector by expanding into electric vehicles and upskilling their engineers. 

Conclusion

In conclusion, from the three case studies, we see similarities that enable these companies to thrive and succeed in manufacturing Australian Made products. REDARC and Sutton invest heavily in new engineered manufacturing technology. 

All three adopt the latest technology, with Sutton Tools working closely with industry partners and equipment manufacturers. As a result, these companies produce high-quality products and set benchmarks in their industries. Collaboration with industry partners have allowed them to utilise the partners’ strengths and expertise to produce quality products.  

REDARC demonstrated the importance of hiring the right people. All three companies are advocates of manufacturing and actively promote domestic manufacturing in media to generate interest from engineers and students. 

The successes of these companies are attributed to them finding niche markets and continuously developing capabilities to retain industry leadership. All three now have ties to the defence industry, which seeks to increase Australian content. They also take innovative engineered products into the global market, backed by their premium quality and expertise. 

These companies have demonstrated that manufacturing in Australia is still viable and Australian companies can establish a presence in the global market. The approaches taken by these companies is to offer premium products into a niche market. Talented engineers, R&D investments, industry collaboration and utilising new technologies are all essential in supporting Australian made products. Government policies are also vital in protecting our manufacturing industry. Anthony Kittel, REDARC co-owner, is a strong advocate of government support: “If manufacturing is to continue in this country, government policies have to be supportive of it,” and “If they aren’t, then manufacturing won’t have a future.” 

Will we learn from the learn from the closure of the automotive industry? Mike Devereux (FCAI President, Chairman and Managing Director GM at the time) was not heard, echoing a US President in 2011, 6 years prior to Australian passenger automotive closing down in 2017: 

“In his State of the Union Address in January President Obama echoed David Cameron’s call to rebalance the economy and to invest in manufacturing: “Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine. It may make you feel like you are flying high at first, but it will not take long before you feel the impact.” Australia does want to be a knowledge economy and a diverse economy, and it wants to be more than a farm, a mine, or a hotel then we need to invest in our capability to design, engineer and build. If we don’t, the real opportunity cost is something we can’t even imagine today.” 

The next time you are making a choice ask yourself, is it Australian Made? 

About the Author

Andrew Thwaites graduated from Swinburne University of Technology with a Bachelor of Mechanical Engineering. He started practising engineering in the automotive industry at Autoliv who were known for engineering of the design and manufacturer of airbag and seatbelt systems. In 2008 Andrew joined Diver Consolidate Industries, another Australian automotive supplier specialising in metal pressings, metal fabrication, assembly, and thermal heatshield shields. Andrew left the automotive industry in 2012, joining Elbit System of Australia in the defence industry, where he became a Chartered Professional Engineer with Engineers Australia. Today Andrew remains in the defence industry, employed by Luminact, supporting the Australian Defence Force.  

References

1. Australian Advanced Manufacturing Council (10 November 2014). REDARC Electronics, AAMC, First viewed on 2 Jul 2022 from: https://www.aamc.org.au/portfolio-items/redarc-electronics/  

2. Australia Made (© 2022) History of Australian Made, Australia Made, First viewed on 2 July 2022, https://australianmade.com.au/why-buy-australian-made/history-of-australian-made/#:~:text=In%201986%20the%20Australian%20Government,for%20the%20next%2010%20years. 

3. Devereux, M (7 December 2011) National Press Club Address – Make it in Australia: why car manufacturing matters, Federal Chamber of Automotive Industries, First viewed on 16 July 2022: https://www.carsales.com.au/editorial/details/holdens-devereux-addresses-national-press-club-27977/ 

4. Mulach, J (15 September 2021) Premcar turns 25: MOTOR chats with Bernie Quinn, WhichCar, First viewed on 5 July 2022: https://www.whichcar.com.au/features/bernie-quinn-premcar 

5. Premcar (2022?) Company Website, Premcar, First viewed on 5 July 2022: http://www.premcar.com/index-2.html 

6. Quince, A & Kesteven, S, (8 Jun 2020) Coronavirus has thrown a spotlight on Australia’s manufacturing industry. This is the story of its rise and fall. ABC, viewed on 2 July 2022) https://www.abc.net.au/news/2020-06-08/australian-manufacturing-rise-and-fall-lessons-post-coronavirus/12295518 

7. REDARC (© 2022) Our Story. REDARC, First viewed on 2 July 2022 from: https://www.redarc.com.au/our-story 

8. Reserve Bank of Australia (© 2022) The Global Financial Crisis, RBA First viewed on 2 July 2022 (https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html#:~:text=Australia%20and%20the%20GFC&text=Australia%20did%20not%20experience%20a,a%20period%20of%20heightened%20uncertainty 

9. Rickard, J (©2022) Manufacturing of Australia, Britannica, First viewed 2 July 2022: https://www.britannica.com/place/Australia/Manufacturing 

10. Sibillin, A (11 May 2011) REDARC Electronics, BRW, First viewed on 2 July 2022: https://web.archive.org/web/20141216232929/http://www.brw.com.au/p/sections/fast_club/redarc_electronics_alLzT54E7zGs8MSkZbmp8O 

11. Sutton Tools, (©2022), About Sutton Tools, Sutton Tools, First viewed 2 July 2022: https://suttontools.com/about/about-sutton-tools/ 

12. https://www.swinburne.edu.au/news/2021/04/swinburne-and-sutton-tools-to-launch-joint-smart-manufacturing-centre/ 

13. Swinburne University of Technology, (April 2021) Swinburne and Sutton Tools to launch joint Smart Manufacturing Centre, Swinburne, First viewed on 2 July 2022: https://www.swinburne.edu.au/news/2021/04/swinburne-and-sutton-tools-to-launch-joint-smart-manufacturing-centre/