COVID-19’s impact on Australian manufacturing

Australian Manufacturing - Response to COVID-19

When you stop to look around at everything that surrounds you - the clothes on your body, the computer in front of you, the food in your pantry, the car in the garage, the cleaning products in your laundry - it's hard to believe that not too long ago, none of this existed in Australia.

Nevertheless, this is where it all began. From the early years of Australia's first settlement where skilled labour was limited and industrial and commercial enterprises non-existent; through to today, where we find ourselves in an interesting era of great innovations and change post-COVID, Australia has a long and proud manufacturing history that has developed, changed and evolved massively over time.

Of course the most recent pivot comes as a result of the coronavirus. For an industry that has been in decline (at its peak in 1950s, Australian manufacturing accounted for almost 30% GDP, while in 2019, Australian manufacturing accounted for just 6% GDP), the event of COVID-19 might just revive it. As hundreds of thousands of Australians began losing their jobs, the manufacturing industry continued to operate, employing approximately 10% of the Australian population (a statistic worth celebrating as national unemployment rates peaked at 7.5%).

With the launch of the Morrison Government's Modern Manufacturing Strategy, where it was announced that $1.4 billion in new funding will be invested over the next four years into the Australian manufacturing industry, we've found ourselves at the corner of a new turn, where we'll see Australian manufacturing become more competitive, resilient and able to scale-up. Not to mention it will help to lead the domestic economic recovery by generating jobs, business income for related sectors and exports.

However, ensuring a safe transformation of Australian Manufacturing in order to rebuild our economy comes with many challenges in a post-COVID world. Smart industrial businesses need to protect their operations through and against the pandemic and other potential dangers.

Nirovision recently sat down with IT&C Director of Visium, Michael Brown to discuss how the pandemic has affected the Australian Manufacturing Industry, and what actions smart businesses are taking in order to increase the protection of staff and business as a whole.

The Role of Manufacturing in the Australian Economy

With levels of output and employment that far exceeds mining and agriculture combined, manufacturing plays a major role in the Australian economy. At present the industry contributes to 6% of Australia's GDP and supports 862,200 jobs. It also continues to be a dominant source of innovation in its contributions to Research and Development and contributes to our growing number of exports.

More recently, the industry also played a critical role in supporting the COVID-19 health response, with Australian manufacturers quickly pivoting to produce and deliver Personal Protective Equipment (PPE) and essential medical equipment as global supply chains were impacted and shortages befell the globe.

Despite this, Australia manufacturing has decline. However, it's not all doom and gloom; with Government support, manufacturing in Australia is set to lead the economic recovery by building an innovative and high-value industry. The clear vision for modern Australian manufacturing will support productivity growth, which will lead to more competitive business and higher wages, while promoting the business confidence the nation needs in order to hire new employees to invest into our recovery.

Challenges to the Manufacturing Industry

It's no secret that the manufacturing industry was hard hit at the advent of COVID-19. As we've learnt throughout the year, the virus is particularly transmissible indoors and in close confines. Not to mention the addition of cold, damp, stainless steel surfaces found within these facilities; "a virus dream environment", as Michael Brown refers to it.

Given the nature of the business within the industry, it was impossible to send all workers home, so a solution to operating safely in a close confined environment had to be found and adhered to quickly.

From the offset, this necessitated the use of Personal Protective Equipment (PPE) and adjusting staff work hours, to minimise close contact. As these changes were all required at short notice and with a fast turnaround, the biggest industry challenge initially was management. However, now that these protocols have been in place for some time, the focus has shifted to enforcing these new procedures; making sure that all staff are wearing PPE correctly and observing distancing rules and shift segregation.

CHALLENGE 1 - Preparing for a second wave of COVID-19

Recent research commissioned by Nirovision found that 98% of manufacturing companies had a COVID safe plan. However, the challenge thereby faced moving forward and maintaining integrity, particularly as case numbers remain low. This also needs to be reinforced as we enter summer, where the wearing of PPE can become less comfortable. This is due diligence of management teams; encouraging the workforce to adhere to protocols while enforcing where necessary.

73% of manufacturing respondents said that they believe everything will return to normal in less than a year. Fortunately, tough initial COVID-related restrictions has meant that Australia is now able to control any small outbreaks of the virus. However, global transmission rates indicate that it is a seasonal illness, and it's unlikely that it will be obsolete within the next 12 months.

If a larger-scale outbreak was to occur in Australia again, we're in a much better position for handling restrictions and should be able to continue to operate normally, however, this requires a level of readiness, particularly by way of contact tracing and risk management.

CHALLENGE 2 - The threat of COVID-19 to manufacturing

"There have been facilities that have been affected by COVID-19 in different ways. One facility had an on-premise outbreak, which meant immediate closure. While, other facilities put considerable efforts into implementing safety procedures and risk management."

Michael Brown, IT&C Director, Visium Networks

In the early days of pandemic, we saw for the first time ever, supermarket shelves bare of products; with particular items including toilet paper, food staples and medicinal items almost non-existent. In Australia, we saw firsthand how disrupted production in China as a result of the virus had a serious knock-on effect.

Not only did this make us (and many other countries), realise just how much we rely on China for product and packaging components, but more so, the need to manufacture more goods onshore and for businesses within the industry to introduce further workplace and workforce safety and security measures, so to avoid such widespread shortages in the future.

Introducing Contact Tracing - Are Manufacturing Businesses Ready?

While differing by state (NSW Premier Gladys Berejiklian has warned of compulsory QR codes, while VIC State Governments have passed the responsibility of contact tracing on to businesses), businesses around Australia are being strongly encouraged to keep records that support contact tracing.

While the majority of the demand is pointed towards hospitality venues, facilities that have persons in attendance for more than 15 minutes (inclusive of staff), are being encouraged to keep records.

Given that there is a large array of technologies available, businesses shouldn’t have any troubles self managing their contact tracing. However, Mr Brown, strongly urges businesses to run mock checks to ensure that data is logging correctly and users are entering false information.

Key Best Practices for Contact Tracing

CHALLENGE 3 - Supply Chain

Following the immediate effects of the pandemic, for the first time in modern manufacturing history, demand, supply and workforce availability were all affected at the same time globally. While impacts varied by industry and country, dramatic changes were seen in the supply chain; some businesses saw drastic reductions in demand, while others were struggling to meet increased demands.

With Chinese Manufacturing being one of the first hard-hit industries, Australian supply chains became disrupted as access to supplies that are essential for domestic manufacturing became limited. Even items as simple as flour became challenged, as Australian flour manufacturing companies were not able to produce the packaging required to transport and sell the product.

As a result of this, Australian domestic manufacturing had to pivot quickly to meet local demands, which forced a large percentage of manufacturing to come back onshore.

"First and foremost, businesses need to ensure that they are adhering to their State Government guidelines. Following that, enforcing that employees follow the 'checking in' and 'checking out' procedures. Several cases over the past couple of months have demonstrated that it only takes one person to slip between the cracks, causing states and economies to suffer."

Michael Brown, IT&C Director, Visium Networks

2021 Australian Manufacturing Industry Trends

TREND 1 - Rethinking Safety and Security in the COVID age

In the year that showed just how quickly and easily a workplace could shut down, it comes with little surprise that the protection of manufacturing workplaces and its people is absolutely paramount to continued production of goods.

New workplace safety initiatives such as temperature checking and recording, touchless check-in and contact tracing will become highly relied upon in ensuring the safety of manufacturing facilities and its people.

While execution of workplace safety and contact tracing is yet to be made compulsory forward-planning and ensuring that details are compliant minimises the risk posed to workplaces, should the facility become exposed to the virus.

"For 2021 and beyond, it's expected that the biggest industry trend will be digitisation of the industry and introducing touchless technology. Electronic visitor management has been growing strongly in market penetration over the past couple of years, however COVID-19 has undoubtedly accelerated that trend... safety initiatives such as temperature checking and recording, touchless check-in and contact tracing will become highly relied upon..."

Michael Brown, IT&C Director, Visium Networks

TREND 2 - Protecting the Supply Chain

Prior to COVID, Australia depended on imports to a high degree, and while Australia can’t manufacture everything it wants, it is capable of manufacturing everything it needs. With support from Government, we will start to see a higher number of products being manufactured onshore, which is great for keeping jobs, but also the entire supply chain as well.

Sydney-based Stormseal (a polythyelene film that is laid on storm-damaged roofs) Managing Director, Matthew Lennox was recently approached by an Asian company for production, where the manufacturing of his goods would be cheaper. However , in a report to the ABC, Mr Lennox stated that he rejected the offer, as being able to make the product close to his customers meant that he could deliver the film more quickly and support the local economy. His decision to keep the manufacturing of Stormseal on shore has immediate positive flow-on effects in that the polymer, fire retardant and UV inhibitors that go into the film (the supply chain) are all Australian manufactured goods too.

"... while Australia can't manufacture everything it wants, it is capable of manufacturing everything it needs."

Michael Brown, IT&C Director, Visium Networks

TREND 3 - Increase in Digital Investments and Services

Post-COVID, the biggest challenge that the industry faces is the need to undergo a rapid digital transformation to support sustainable enterprise resource planning (ERP). There’s now focus on remote capabilities, including operations, product innovation, supply chain, customer management and the overall business in general. This need will drive significant investment in process automation softwares, centralised asset monitoring and diagnostics and cloud-based tools.

While the idea of utilising robotic process automation (RPA) and artificial intelligence (AI) a few years ago was met with much resistance, the post COVID environment we’re now in has shown that these technologies will positively change the manufacturing landscape. Introducing these technologies will allow employees to upskill and facilities to continue their business as usual in remote environments, with minimal people being physically required in factory locations.

Additionally, an increase to investment in technologies that support optimum safety and security measures including touch-free temperature and facial recognition tools will need to be introduced.

"There's now focus on remote capabilities, including operations, production innovation, supply chain, customer management and overall business in general."

Michael Brown, IT&C Director, Visium Networks

TREND 4 - Workplace Duty of Care and Staff Privacy

While the collection of data in the workplace isn’t a new practice – businesses have always had to keep records of who is in their building. in order to meet compliance requirements and governance obligations, not to mention it protects staff, inventory, information and assets – the recent push for tighter workplace protection regulations post-COVID has meant that the collection of data has increased. As a result of this, there is the potential that staff could become concerned about their privacy.

As workplace safety initiatives start becoming enforced, it falls within the duty of care of the workplace to ensure that staff understand why these protocols are being implemented and what information is being collected.

The Australian Privacy Act and Principles lay out clearly defined rules and obligations which all companies must comply with when collecting, using and storing personal information.

"... falls within the duty of the workplace to ensure that staff understand why these protocols are being implemented and what information is being collected."

Michael Brown, IT&C Director, Visium Networks

Conclusion - What We Can Expect in 2021

In a recent interview with ABC, Industry Minister Karen Andrews stated that the Government and Industry had learned lessons from the COVID-19 pandemic.

"Our manufacturers have risen to challenge to deliver during COVID-19 and now, we're unlocking their potential to deliver for our future. In addition to Modern Manufacturing Strategy, the Australian government is also committing $52.8 million to the Manufacturing Modernization Fund Program. Between now and 21 January 2021, businesses have the opportunity to apply for grants between $100,000 to $1 million to invest into new technologies which will increase productivity, create new jobs and drive economic growth. By playing to our strengths, strategically investing and boosting the role of science and technology in industry, we can open up new markets and take more of our quality products to the world."

Karen Andrews

Key Takeaways

  • Following the advent of COVID-19 and its related supply chain shortages, Australian manufacturing businesses pivoted to start producing more products onshore.
  • With Government support, the Australian manufacturing industry is on course to revive and lead the way in boosting economic recovery.
  • Workplace and workforce safety and security protocols have changed, as new procedures are introduced in order to protect.
  • Supply chain management within Australia will change as we start producing more items onshore and importing less.
  • The manufacturing industry is set to undergo a digital transformation, which will encourage remote work, resulting in less people physically needed in factory locations.