If your business is building sets and stages for outdoor events, what do you do when suddenly all events are cancelled because of COVID-19?
If you are the Australian manufacturer Stagekings, you get advice from a mate in Ireland and start building desks instead.
Nick Martin from Stagekings says since the company turned to manufacturing working-from-home desks its full-time staff has grown from pre-COVID-19 numbers. Today it employs 52 people: about 20 in its Kurnell warehouse and others working from home or doing deliveries.
The company’s product line has expanded from desks to stand-up desks, monitor and laptop stands, wine racks and stools. A popular line is small but elegant desks for the newly created market of kids’ home-schooling.
The firm takes 120 to 150 orders a day in Australia, and with inquiries coming from New Zealand, Singapore and the United States, it might soon become an exporter.
It is just one example of what can be a positive from the pandemic: a revival in Australian manufacturing. Changing the way we work, learn and play creates opportunities for domestic manufacturers.
Some firms have expanded for obvious reasons. Sydney’s Resmed manufactures ventilators, among other products. In response to COVID-19 it is looking at “double or triple” output.
Ventilators are in high demand. Australia is relatively well supplied, not only because they are manufactured locally but also because the virus has been reasonably successfully contained so far. However, demand from other countries makes this a good export prospect.
There’s also a huge new market in personal protective equipment including masks and hand sanitiser. Not only are skincare companies ramping up production, but also new and unlikely manufacturers of hand sanitiser have emerged: distillers, the Corowa chocolate factory, the stationery company Karst. Shortages reported on by Crikey in March are less of a worry today.
The COVID-19 Co-ordination Commission has asked former Dow Chemicals chief executive Andrew Liveris to “identify opportunities for growth in manufacturing once Australia moves into the recovery stage”.
We don’t know when recovery will start but we don’t need to wait. Manufacturing opportunities are arising already, catering not only to those working from home, but in fields such as food, transport and energy.
We face two distinct paths with manufacturing policy: one looks backwards to past glories, the other forward.
There is still a push to bring back an Australian vehicle manufacturing industry. When US President Donald Trump ordered General Motors to manufacture ventilators, the Society of Automotive Engineers called for Australia to rebuild its car industry. It is not necessary — other manufacturers can do ventilators.
A car industry is last century’s factories building a product invented the century before. It requires a scale that the Australian domestic market cannot support and a commitment to old technology. There are better niches for manufacturing.
An opportunity will arise from a need to rethink large government projects such as submarines as money becomes tight after the huge COVID-19 spend. Are traditional submarines a good investment when a generation of autonomous underwater vessels is starting up? Can Australian defence be smarter in purchasing Australian technology?
We have defence suppliers that are already world leaders. More can emerge if we think about future preparedness rather than fighting the last war.
That points to a way forward for policy. Old school protectionism will fail. All that Australia’s high levels of protection in the 1950s and ’60s did was help a few companies while making consumers worse off. Winding them back raised Australian living standards (noting there is less evidence for benefits from reducing low tariffs still further).
The same applies to subsidies. They almost always degenerate into windfall payments to a few wealthy and well-connected mates (for an incisive analysis see Game of Mates by Cameron Murray and Paul Frijters).
Grants to particular companies — especially if there is ministerial discretion — will more likely than not be misused or misapplied. Non-discriminatory policy for all manufacturers is better.
Useful roles for government include:
- Partnering with manufacturers in industries dominated by government — such as health and defence — and paying more for quality, security and reliability
- Helping manufacturers to navigate export rules, needed even more in a post-COVID-19 world when different countries will have idiosyncratic controls
- Linking manufacturing with research — for example, through Australian Research Council linkage grants or the National Collaborative Research Infrastructure scheme
- Continuing tax incentives for innovation
- Regulating unfair competition to ensure big corporations are unable to crush innovation from medium-sized companies such as Stagekings.
Professor Roy Green observed in relation to the closure of Holden that the problem was not using public funds to support manufacturing, but using them to prioritise what worked in the past rather than for the future. Its a common failing with manufacturing policy. The Covid-19 crisis offers an alternative pathway.
Because of its unprecedented impact it is of necessity driving alternative thinking in manufacturing. Our choice is whether to foster new entrants and reimagined firms, or throw money at old established firms. If governments chooses the latter, workforce and investors will follow. Innovators will be left behind, leaving us to look back in a decade and mark another opportunity missed. We can only hope the government and its advisers choose the first path.
Great article Stephen, thank you.
Congratulations to Stagekings and the distillers that have reworked their production lines.
I also like the idea of providing grants to companies that do not involve ministerial discretion.
I am hopeful that this virus will make us rethink our reliance on traditional defence force hardware. For the future, it is essential to develop our own capabilities, to be better prepared to respond to different kinds of threats both here and abroad.
Good luck on the military hardware. The whole point of the US Military Industrial Complex is to sell stuff. Their stuff. Here, the US or Saudi Arabia doesn’t matter. Create political trouble, leading to wars and sales. Or just angst and sales.
Local competition is not desirable.
Good upbeat article though. There’s plenty of manufacturing here and lots of it is good. Always room for more.
Lithgow (NSW) once had a small arms industry.
That was a very heartening piece, thank you.
The scope for small scale, light engineering in this country is limited only by imagination and bad habits.
The obvious venue is alt-tech, from energy generation & storage to innovative building to suit our unique climatic & environmental conditions.
Small is the key – let a hundred ideas blossom even if 2/3 fail, another thousand will follow.
Anyone who knows which end of spanner to hold has a future in a self reliant, decentralised Australia.
Good riddance to globalisation and dependence on over extended, just-in-time supply lines of everything from pharmaceuticals to clothing & furniture, often using raw materials we export for a pittance.
I wonder if the Email workforce & experience in Orange is still standing? Once the Orange Small Arms factory, it was a leading manfacturer of white goods until killed, like so much else by “cheap” imports – whether truly cheap depends of lifespan, repairability & availability, none of which is encourage by globalised capital.
New Zealand under the progressive leadership of their Prime Minister has already signalled their intention to bring back manufacturing and its jobs back home where they belong, for too long stupid governments have been sending prosperity to Asia and this prosperity has not only caused financial hardship to our own economy but has enabled some of those nations to arm themselves to the teeth and they are now a serious threat to our own national security, the C.E.O`s of these global corporations are really traitors to their own countries by their actions and are to blame for all the social ills that are now destroying the social fabric of most western nations including our and just for their own greed.
Aotearoa once relied on OZ for cars and heavy manufacturing after Britain ceased to be serious about the Commonwealth.
Include PNG & the Pacific island communities and there would be an ideal industrial base to begin building (among other things) the NextGen vehicles – turbines running on alcohol until we get the hydrogen industry up to full volume.
As to air travel, welcome back airships given the mostly SW prevailing winds – it’d be nice to give the Shaky Isles something other than our topsoil.
With hydrogen as lift & engine so that as the destination is approached, the crucial volume is reduced sufficiently to not require the crude, old method of hauling down by ropes NB – it was NOT hydrogen that caused the Hindenburg catastrophe but the waterproof doping of the outer skin which was subsequently found to be akin to rocket fuel with very low flashpoint, probably ignited by lighting on that dark & stormy night or even static electricity when it touched the mooring mast.
I like the idea of more local manufacturing and its a good opportunity while China is affected.
it requires more Australians to appreciate quality over cheap price , a habit that will be hard to break.
Hopefully we have seen peak globalisation , it hasnt raised the standard of living of the middle or poor Australians .
Great opportunities in new green technology if someone has vision , it wont come from the politicians.
There is a reason low prices are not a boon – apart from the loss of domestic employment.
By definition, something cheaply produced will not have the quality, longevity nor adaptability of something into which more care & thought have been invested.
I’m still using a Hotpoint electric frying almost daily – it was my mother’s in the 1950s.
My Victa mower, of similar vintage, with the Villiers engine (though the modern Briggs-Stratton isn’t too bad) is still running and parts are easily had from the many old models discarded in favour of the cheap’nasty imports.
I could go on – a Singer treadle sewing machine in wooden cabinet belonging to my grandmother is now being used by my grandaughter to make her own clothes – but the point is the same.
Build well, locally and as simply as suitable and the country will be a lot better off.
I agree, however the worse offenders are the Government. Everything from military uniforms, diesel-powered subs, medications, and PPF to name a few. There would bot be many of us who would object to a cost-plus system and make more of our needs locally.
Let’s do it!