Australian TCF Technology Network
4th Annual Conference
22 July 2008
Crown Towers
Southbank, Victoria
[check against delivery]
Everyone in this room knows what challenges this industry faces.
Everyone here has felt the impact of globalisation.
Everyone has felt the impact of competition from China and other low-cost producers.
And no one here is immune from at least some of the problems confronting Australian manufacturing as a whole – a high dollar, rising energy costs, water scarcity, high interest rates, skills shortages, climate change and more.
We all understand the challenges, but what do we do about them?
What we don’t do is cut TCF loose. What we don’t do is hang manufacturing out to dry.
We need these industries. They are critical to Australian employment, exports and innovation. They are the lifeblood of communities across the country.
So, what we do is stay ahead of the curve.
If developing countries have an edge in low-value, low-tech, low-capital-intensity, labour-hungry segments of manufacturing, it’s time for us to move into high-value, high-productivity, capital- and research-intensive segments instead.
Technical textiles are a great example.
If climate change is forcing the world to rethink its reliance on petrochemicals, it’s time for us to build on our strengths in wool and other natural fibres – not least by using biotechnology to bring those fibres into the twenty-first century.
An innovative industry
We have a fantastic TCF foundation in this country.
The industry employs over 48,000 people, it adds $2.8 billion to the economy each year, and it exports $1.6 billion worth of goods annually – about half of them manufactured goods.
As good as these figures are, they don’t tell the whole story.
They don’t fully reflect the contribution of researchers, designers, and others involved in activities upstream and downstream of traditional TCF manufacturing.
This is already an industry that takes innovation very seriously.
Firms registered for the TCF SIP Scheme currently spend around $120 million a year on R&D.
Expenditure on R&D, innovative product design and innovative process improvement has increased every year since 2000.
Not surprisingly, the amount TCF firms spend on securing the intellectual property rights to their inventions and discoveries has doubled over the same period.
Some of our most impressive innovations have been the fruit of collaborations between public researchers and private firms.
CSIRO’s Textile and Fibre Technology facility at Belmont has had a hand in many of these – which is why the government is determined to keep it open.
The facility’s success stories include:
• Sirolock doffer wire, which is being commercialised by Bekaert Australia
• ColourClear, developed in partnership with Rohm and Haas, which whitens wool and wool blends
• and a dark speck contamination detector, developed in partnership with Textor Technologies, which will be used to make products for the Asian healthcare market.
The same creativity can be seen across the board.
For example, Professor Xungai Wang and his team at Deakin University are working on:
• conductive textiles that respond to electrical signals
• photochromic textiles that change colour when exposed to UV light and change back in the absence of UV
• and hydrophobic textiles that remain clean and dry by mimicking the surface of a lotus leaf.
Meanwhile RMIT, the CRC for Advanced Composite Structures and the Specialty Group have developed a UV-curable, resin-impregnated fibreglass which is being exported for use in bullet-proof vests.
Not to be outdone, Australian Defence Apparel has developed a Modular Combat Body Armour System with Dupont and the UK’s Aegis Engineering.
It will protect Australian Defence Force troops against rifle fire, stabbing and fragments from explosive devices.
Industry leaders like ADA chief Brian Rush have understood for years the potential for cross-overs between technical and conventional textiles.
ADA’s innovations have earned it export sales throughout Asia.
There are plenty more examples I could mention, including the ongoing work being done by the TCF Technology Network itself.
As I said a moment ago, this is a very sound foundation.
It’s a foundation strong enough to support a new TCF industry – a different kind of industry – an industry driven by the continuous creation and application of new knowledge.
The German model
But as every renovator knows, there is still along way to go after the foundation is laid.
Australia’s competitive advantage lies in the sophisticated R&D emanating from CSIRO, universities such as Deakin and RMIT, TCF companies, and institutions such as the International Fibre Centre.
How to make the most of that advantage?
Those of you who know me will also know that I take a keen industry in Germany – a high-wage, technologically-advanced economy that has retained an extremely strong manufacturing base.
At the beginning of March I met with German industry leaders and members of the Bundestag’s Committee on Economics and Technology in Berlin.
Not for the first time, I was impressed by the Germans’ commitment to continuously improving and renewing their industries, and their willingness to make the investments necessary to achieve that.
They believe training and skills are paramount.
They have been especially careful to cultivate the high-level skills required for success at the upper end of the value chain.
They train not only their workers, but also their suppliers, to ensure consistent quality and reliability of supply.
This investment in technical training – accompanied by sizeable investments in new plant and technologies – has had several transformative effects.
First, it has enabled the Germans to move upmarket.
They have carved out a niche in high-end apparel, with their output increasingly characterised by smaller batch sizes, more complex technical design, superior fabrics and trim, and a greater emphasis on quality, fit and brand.
Second, large sections of the textile industry have successfully made the switch from fabrics for general apparel to technical textiles, including textiles for sportswear and underwear.
Technical textiles now constitute 40 per cent of the country’s total production, which makes Germany the world’s leading producer.
Third, it has boosted productivity.
The number of TCF jobs and firms has contracted in Germany as it has in all advanced economies, but because output per hour worked has improved so much, industry turnover has remained relatively stable.
The German industry has given itself a new lease on life by making a strategic retreat from the high-volume, low-cost, no-name market, and instead focusing on technical textiles and high-quality niche clothing.
Australia is moving down the same road, but we need to pick up the pace.
China isn’t standing still. It is already moving up the value chain. India won’t be far behind.
We still have the edge on both countries – in design, research, education and management – but we really need to start exploiting that edge if we want to win the race to the top.
Review
That was one of the messages to come out of The Future is Fibres.
Some of you will remember my praise for the discussion paper when it came out last year, and this year’s follow-up strategy document is even more inspiring.
Professor Roy Green calls it the bible, so I suppose it could have some bearing on his review of the TCF industries.
It’s not my job to second-guess what Roy might be thinking – we will have his recommendations by the end of next month.
Those recommendations will cover:
• innovation and competitiveness
• government programs and regulation
• education and skills
• climate change and environment
• and the social and regional dimension.
Roy tells me that some of the strongest messages coming out of his consultations were about connectivity, government procurement, training and skills development, and the cost of doing business in Australia.
Roy is also working closely with Dr Terry Cutler and his colleagues, who are reviewing the national innovation system.
The innovation review panel will deliver a green paper to the government next week – just in time to give Roy some food for thought as he finalises the TCF report, which is due a month later.
Our reviews of the innovation system, the car industry, TCF and the Cooperative Research Centre Program are all happening at the same time because we want to synthesise what we learn from them and develop an integrated response.
We want to break down the barriers separating the research community from the business community, scientists from entrepreneurs, the laboratory from the factory floor.
These are all elements in a single ecosystem.
That’s why we have brought innovation, industry, science and research together in a single portfolio.
This is about increasing our innovation capacity, improving connections, concentrating our efforts and resources, and harnessing creativity wherever we find it.
What we are doing already
The policies and programs we adopt to advance these goals will be informed by what we learn from the reviews.
But we didn’t come into office with a blank slate.
There were things we promised to do on innovation, and those promises are being kept.
One of them is the $240 million Clean Business Australia Fund. It will support three initiatives.
• Re-tooling for Climate Change Program will help small and medium sized manufacturers reduce their carbon footprint.
• Climate Ready will support the commercialisation of greenhouse-friendly technologies.
• And the Green Building Fund will help owners retrofit commercial buildings to increase energy-efficiency.
All three initiatives should be up and running by spring.
We also promised to create a $251 million Enterprise Connect network of manufacturing and innovation centres.
The centres will provide tailored business improvement services to SMEs and act as portals to the wider innovation system, giving firms access to new ideas and technologies, as well as to information and infrastructure they can use to grow their own innovation capacity.
Enterprise Connect will also fund the placement of public sector researchers in private firms with ideas that could benefit from expert input.
The machinery is being put in place now, services are being offered already, and we expect the network to be fully operational by the end of the year.
Our initiatives on skills, science and research side are almost too numerous to mention – the government has injected nearly $18 billion into its education revolution since the election.
In my own portfolio, we are doubling the number of Australian Postgraduate Awards, creating the Future Fellowships scheme for mid-career researchers, and developing a new research quality assurance scheme called Excellence in Research for Australia.
We also promised to support frontier science, including biotechnology.
The government’s Industrial Biotechnology Strategy aims to promote the application of biotechnology across Australian industry – including the TCF industries.
Biotechnology can be used in manufacturing and industrial waste management to deliver new products and processes, increase competitiveness, boost revenue and reduce environmental impacts.
As part of the strategy, three industrial biotechnology workshops have been organised to follow the AusBiotech 2008 conference in late October.
The Melbourne workshop will be held on 30 October, and will cover biotechnologies for the textile and leather sectors.
The future
Professor Green has already given the government and the community a much better understanding of how the contemporary TCF industries work, and how they are changing.
We have a fashion and design sector with affinities to the creative arts.
We have an engineered textiles sector which is closer to materials science.
We have a supply chain management sector which is all about effective business administration.
Each of these overlapping sectors is redefining what it means to work in TCF.
Their presence and their capabilities have a big influence on whether people decide to manufacture in this country.
The question is, how do we turn those capabilities to maximum advantage?
How do we forge the networks needed for effective commercialisation?
And I don’t just mean technical textile networks
We need networks that embrace the whole TCF innovation system – design, fashion, research, education and more.
We need clusters of innovative companies and institutions.
We need concentrations of excellence.
That’s the way to promote genuine cross-fertilisation and open up new opportunities in local and global markets and supply chains.
How do we propagate these networks while at the same time building innovation capacity at the enterprise level?
That’s a central question for public policy, and a central question for the TCF review.
We haven’t seen a lot of headlines coming out of this review so far.
Roy has got on with his work quietly and thoughtfully – just as many in the TCF industries get on with theirs.
Maybe TCF has been too quiet for its own good.
This is a high-tech industry, a creative industry, an industry with a great story to tell.
It’s time Australia and the world heard a lot more about it.