Adding value a must for economy beyond pandemic

Debate is growing over what a post-coronavirus economic recovery will look like. Although many are pinning their hopes on those industries that have fuelled Australia’s economy in the past – agriculture, mining and services – there is a mounting realisation that COVID-19 is giving Australia a unique opportunity to recalibrate this outmoded economic paradigm.

There is no shortage of evidence why this needs to happen. Research from Harvard University’s Growth Lab reveals Australia’s economy has become less complex over the past decade, driven by a failure to diversify exports. “Australia is less complex than expected for its income level. As a result, its economy is projected to grow slowly.”

The University of Sydney’s academic director of core research facilities, Professor Simon Ringer, is another respected voice realising the need for change. “COVID-19 has revealed more about Australia’s exposure to complex global supply chains, emphasising the mismatch between our upstream domestic production and our demand for downstream manufactured products.”

If Australia does seek to redefine its economic modus operandi, manufacturing will be at the epicentre of this change. Although the story of Australian manufacturing has traditionally been one of slow decline – from employing 16.5 per cent of the workforce 30 years ago to just 6.4 per cent today – it could hold the key to driving Australia’s post-COVID economic recovery, particularly as countries re-evaluate supply chains.

As it currently stands, Australia ranks last in manufacturing self-sufficiency among OECD nations, according to The Australia Institute’s Centre for Future Work. But renewal of the sector could generate as much as $50 billion in additional GDP and more than 400,000 jobs.

“We need a strong manufacturing sector, for the wellbeing of our economy, and the security of our society,” respected author and economist Jim Stanford writes.

Jeff Lang, founder and managing director of Melbourne-based, ASX-listed Titomic, says more long-term, strategic thinking is required.

“When I travel overseas, everybody says, ‘Yeah, you guys sell iron ore and have a lot of kangaroos’, but that’s about it. We’re really good at selling our resources, but not good at building value chains around them.”

For example, Australia is home to one of the world’s largest reserves of titanium mineral sands. However, these are often dug up and shipped overseas to be used to whiten paints and cosmetics. Lang says by developing these into titanium powder – often used in 3D metal printing – Australia could add billions of dollars to GDP.

There are some signs of movement, with initiatives such as the Federal Government’s $100 million Advanced Manufacturing Fund offering a spark of hope. But Lang says there is much more to be done.

“We have the best resources in the world in Australia, whether that be our wind, solar or other renewables, our new capability to produce hydrogen, even some of our oil, gas and coal. What we haven’t been able to do is link all those elements with our resource sector in minerals.

“You mix those together, and Australia has the potential to be the global leader in those value chains, combining future green technology and building value chains that lead to local production. We’ve been taking the easy option for too long, selling our resources off for minimal fees.”

Lang also criticises Canberra for ignoring small to medium enterprises (SMEs).

“It’s the elephant in the room – 98 per cent of all business in Australia is small business,’’ he says. ‘‘They’re not talking to the people on the foundation level, who know how to do the implementation. It’s easier for ministers and advisers to always align with large multinational industries. It’s almost too hard a task that nobody wants to touch.”

Lang has built his career at the intersection of scientific innovation and commercialisation, and has seen a major shift in recent years in how universities collaborate with industry. But the often long research lead times involved have meant Titomic has taken matters into its own hands, officially registering as a research provider.

“We can now take projects and turn them around in periods of time – six to 12 weeks – when normally a university or industry body might take up to three years with a PhD overseeing the research.”

Titomic’s most recent technological breakthrough is Titomic Kinetic Fusion ® (TKF), co-developed with the CSIRO. Traditionally, maintaining structural integrity in metal has required melting it. TKF works by blending different materials together through the acceleration of metal particles to supersonic speeds. The resulting kinetic energy creates mechanical fusion of the metal powder, reducing the product’s carbon footprint by 60 per cent. The technology also allows economical manufacture of titanium parts – something which was largely cost-prohibitive until now.

Combined with automation and other efficiencies, Titomic touts benefits that include reduced lead times from months to days, higherperforming parts, reduced waste, and self-reliant supply chains.

“We’re really in a new area of technology here,” Lang says. “We can make a specific part with multiple different materials in the one part, specific to zones requiring particular mechanical properties.”

The technology is particularly useful for improving wear resistance in some parts, virtually doubling the life span of parts and significantly decreasing maintenance costs. It is already gaining international interest, with Titomic partnering with Airbus on material and process development, and with US-based global product development and technology company Triton to enter the $60 billion US defence market.

There is much more opportunity to be found in advanced manufacturing, Lang notes, provided Australia starts seriously considering a national implementation strategy.

“One thing Australia has that nobody else has: we have the best natural resources in the world,’’ he declares. ‘‘If we’re smart about how we do this, we can build capability around those assets. Australia has an opportunity to come out of COVID-19 in front of any other country.”