Thursday, June 8, 2017

Fasten Your Seatbelts

***Fasten Your Seatbelts

A rebelde T-clamp for a mill vice, machined in Sydney.

This is hardly a surprise: manufacturing contributes just 7 percent of Australian gross domestic products. What is scary is this: manufacturing has shrunk 20% since 2015. While as a nation and as individuals we are still amongst the 12 wealthiest nations in the world, the wealth comes from services, not from making physical goods. Even mining contributes just 9% of our GDP.

Unless the trend is reversed, the consequences will be tragic: we are raising a generation of smart kids waiting for their inheritance, yet kids who possess no product-making skills.For a nation to grow healthy, a good balance of manufacturing, servicing, mining and yes, even agricultural activities, is essential. 

What are the reasons for the decline in Australian manufacturing? I am not an expert in this field, so instead of offering my 'rebellious leftist socialist' opinion, let me quote the Australian industry experts:

"The reasons for the long-term decline of manufacturing in Australia are many. Particularly significant is a long-standing policy indifference to the manufacturing sector, bordering on hostility from central economic agencies such as the Treasury, the Reserve Bank and the Productivity Commission. This flows from a colonial cringe, the commitment to a neoliberal 'free market' ideology and continued adherence to the orthodox economic doctrine of 'comparative advantage' - the belief that a nation should produce only those things for which it has a 'natural' or innate advantage over other countries."

Again, this is scary. The snowball is melting and regardless of which side you take, and how you see the future of Australia, you should be concerned. Because without people who know how to actually MAKE things, we would not be able to technically advance. We will not be able to stop the boats, build submarines, or hospitals, or do advanced research, or combat climate change - not even fix broken bones. We must re-learn how to shape metals or we will remain colonized, and soon become a foreign-owned and foreign run nation.

Yesterday, Josh and I spent all day visiting metal merchants and machining shop suppliers. To say that we are disappointed would be an understatement. The snowball is melting fast: after the closure of automotive industry manufacturing plants, it is obvious that demand for precision machining is no longer there. Almost 100% of hand tools, measuring equipment, lathes, mills and accessories are cheap Chinese imports. The product range would hardly satisfy the needs of an advanced machining shop which specializes in the repair of large field machinery. The hobbyists are gone too. Your typical Englishman looking for a strip of brass or a small diameter rod for his clock or steam model engine is dead and buried, and his Myford lathe is either exported to China or rusting fast in his garage. His son is a well-to-do banker or an accountant or a business consultant and he has no interest in his dad's lathe.  Yet just a bunch of old hobbyists would generate enough of a 'butterfly effect' to keep the steel merchants interested in offering small cuts and off-cuts, so dearly important for prototyping.

Sandvik, the world largest special-metal and cutting tool supplier has basically closed its Australian office. While their website still lists a Smithfield-based business as its sales representative, this is just an error, to be fixed with their next website update. And who can blame them?  Why bother doing business with a colony on the other side of the world?

Last night Josh spent a good half an hour talking to a sales representative of a German precision instrument maker, based in Australia and specializing in mills. In the ten years since he started promoting the high-end machine, he has failed to sell even ONE single unit. At one stage, he thought that he finally made a sale but after 4 years dealing with one Australian Government-owned business, the sale contract failed.

Now, we are not talking about a mega million dollars investment: the machine is no more expensive than a high performance sports car. But ten years without a sale is a long time to be patient, even for a German salesman. I can only imagine how many German machines he could have sold if he was based in China, Russia, Brazil - or even Indonesia; in countries where people actually make things.

The butterfly effect - a sale of just one high precision machine to a Government-run plant would mean the whole world of difference. Once the machine arrives, we would have a whole bunch of Australians trained to use it; and a few more who would learn how to maintain it. There would be an immediate requirement for exotic materials and very specialist tools which would attract the attention of Australian tool and material suppliers. Once the machine was set up and production commenced, it would become a talking point and would attract media attention. It would then attract the attention of small private businesses. A few more machines would be imported and businesses would be able to share their know-how, innovate and improve, and offer a high-tech product for both the domestic and export markets.

The road ahead of us is bumpy and unpredictable. We have fastened our seatbelts and so should you.


Happy collecting,

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