How policy and procurement can support COVID recovery in manufacturing
As the Non-Executive Director for the Queensland Manufacturing Institute (QMI), I was invited to participate in a Parliamentary Inquiry for the Queensland Government which looked into Queensland’s response to the COVID19 pandemic. The following is the public transcript from my presentation.
Thank you for allowing us the opportunity to participate in this enquiry. QMI’s response involves several key recommendations which we will outline over the next few minutes. We have been heavily involved in the Queensland Government’s Response to the COVID19 pandemic. Together with AiGroup, we worked alongside the Department of State Development in the COVID Supply Task Force to support the transition of our local manufacturing community to supply much needed medical equipment and supplies. The speed and agility that the Department demonstrated during the crisis response was impressive. Queensland was well ahead of other states in understanding the PPE needs for our health system, and the gaps between those needs and our manufacturing capability.
Through QMI’s Industry Capability Network, Queensland rapidly posted manufacturing and supply opportunities to our database of over 22,000 Queensland businesses. Nineteen work packages were listed on ICN, and there was over 17,000 pageviews. The speed at which we were able to respond, is testament to the government’s team involved in the response and their collaboration with industry. It is a direct result of the work already completed under the Advanced Manufacturing Roadmap and the Manufacturing Hub Model. We believe however, that there is opportunity to leverage the positive work that has already been done and amplify what it is already existing. We can enhance our manufacturing capability through the optimisation of our local procurement policies.
As we look forward, the level of risk and uncertainly for the next decade is high. It is going to be challenging to select the right path and strategic direction. From a manufacturing perspective, we already have a framework for success, with the roadmap and the priority areas, we just need to ensure our procurement policy acts as a capability driver.
For manufacturing, we need to have the underlying capability that allows us to pivot. Manufacturing capability comes with steady business – continuity and security of orders. For our local manufacturers (96% who are SMEs), orders are oxygen. Long term visibility of order pipeline enables manufacturers to develop the underlying capability. It allows them to invest in new equipment and invest in upskilling and training their staff.
Government has an opportunity to use its everyday purchasing across a broad base to build momentum throughout our manufacturing industry whilst enhancing the capability of manufacturing. This capability is what enables our industry to pivot when needed for issues like we are facing now with COVID19.
We welcome the Government’s 25% target for SME procurement, it demonstrates that government procurement can change and adapt to the needs of the broader community. We encourage the government to look deeper into this supply chain and extend this target to locally manufactured goods. In addition, we need to ensure that we have a mechanism to measure success and monitor impact.
Manufacturing capability brings highly skilled, stable, lifelong, meaningful employment. Through supportive policy providing continuity in orders for our manufacturers, it reduces the cost of goods. In turn, this enables our manufacturers to compete on a global scale. We commend the work of Trade Investment Queensland during the COVID response, TIQ is an avid supporter of our manufacturing industry, and are crucial to ensure that we maintain a strong focus on export competitiveness, which is critical to our success. They have a demonstrated track record of being able to coordinate across depts to get things done and have been pivotal in supporting global digital connection for our local manufacturers during COVID. This work is increasingly important as we are isolated from our global customer base. All of this activity directly benefits taxpayers and creates significant value to the Queensland economy. Government investment in procurement creates broad economic value.
Policy change is the driver of behavioural change. Our opportunity is to influence the purchasing and procurement programs so that businesses get used to looking locally – we need to embed this behavioural change. Government can be at the forefront, and lead by example with this change. We need to learn to recognise value for money for the economy over the life of the product, as opposed to initial upfront cost. This is where the true value of Australian manufacturing lies. We will become competitive and we will build our capability through strong manufacturing procurement policy. Our goal is to accelerate the on shoring and reshoring of critical manufacturing processes. This is how we build our sovereign capability and reduce the risk to Queenslanders.
In summary:
Start with good Policy that sets vision and agenda for manufacturing capability
Lead by example - the 25 % SME procurement target is an excellent foundation - this needs to be extended to include local manufacturing.
Build on and leverage the existing framework and infrastructure. Continue to invest in the Hub model and enable them to facilitate the execution of shovel ready projects. Focus on connection and collaboration between the manufacturing hubs, industry and research. Support the Queensland World Economic Forum Advanced Manufacturing Hub to bring global competitiveness to Queensland.
Support TIQ to continue to provide exceptional support for manufacturing exporters. Amplify the resources and the work that TIQ does to create opportunities to include reshoring. Leverage their excellent track record of supporting Queensland innovation and manufacturing in global markets.
Let’s set the agenda by strong policy, start leading by example, and not lose our global focus.
Thank you.
Spoken by Shay Chalmers, August 2020
