Topics: Australian manufacturing capability and supply chains
Oliver Peterson: Would you be prepared to pay a little bit more for the products that are manufactured in Australia? Particularly pharmaceuticals if they were all made and manufactured in Australia? How far are you prepared to go? Because many of you are saying we’ve been caught out here in the coronavirus, we are not as self-sufficient as we need to be. Karen Andrews is the Minister for Industry and she joins me on Perth Live this afternoon. Hello Minister.
Karen Andrews: Good afternoon, how are you?
Oliver Peterson: I’m very well, thank you for your time over this Monday, Easter Monday, holiday period. I hope you’ve had a safe and quiet Easter with you and your family like the rest of us have. Out of the coronavirus, we have already started to see there are some short falls when it comes to Australian manufacturing and certainly there are many, many people in the community now having a look at what we might be able to do a little bit better. Are you starting to collate that sort of data and have a look around and see just how equipped we might be to fire up the machines again and get Australian manufacturing back on the front foot?
Karen Andrews: Yes, absolutely. So, I started looking last year at what the future of manufacturing was likely to look like in Australia and of course, we’ve got a long history with mining and resources, but we haven’t been that good at doing the value add. So, my original thoughts were looking at what we could do with value add. From WA’s point of view, critical minerals, batteries is a real opportunity for us. Now, of course, with coronavirus we’ve had to have another look at that, which we’re starting to do now and look at issues, such as sovereign capability, so what do we need to manufacture for ourselves and which supply chains do we need to make sure that we have in place so that we’re not reliant on other nations, during a crisis.
Oliver Peterson: We’ve already seen some innovative Australian companies flick the switch to be able to make hand sanitiser, some of our clothing manufacturers are starting to make masks and also to make sure we’ve got enough personal protection equipment. Is it that easy to flick the switch or has it been something of a revolution, I suppose, to discover that we didn’t have enough of this here anyway and we are, as you say, reliant on particularly that critical gear that we need on the frontline, that we didn’t have readily available in Australia and we were relying on it from other countries?
Karen Andrews: Well a couple of things were really very interesting and were just sensational to be honest. We didn’t have a lot of manufacturing capacity here for personal protective equipment, which meant that we had to start looking at how we were going to ramp that up. So we did only have one manufacturer that could manufacture surgical masks for example and their output was seven million masks a year. We’ve now been able to work with them to get them up to over 50 million masks a year of capacity, so it’s been a huge increase. But, what has been so good is that so many manufacturers have put their hand up and said: well look, we don’t actually manufacture that particular piece of equipment or that piece of- that uniform for example, but what we can do is we can start to retool, we can look what our other options are. So, you know, whether it’s making gowns, whether it’s making masks or at the more sophisticated end, making ventilators.
Oliver Peterson: Yeah and that’s really good to see Australian ingenuity being able to flick the switch and change what they’re able t to produce. After this passes though and going forward, do you think and there seems to be that sense in the community anyway – here, definitely from our listeners as well, Minister Andrews – in regards to supporting more Australian locally made and manufactured goods, is that something that is top of mind for you now as well, to have a look around and see what capacity we have here in WA, in South Australia, NSW, VIC, the other states and territories and how we might be able to produce many of our own goods and not worry so much about imports, particularly out of China and India?
Karen Andrews: Absolutely, absolutely. Now business as usual cannot be what it was six months ago, our business as usual, after we’ve got through this epidemic, is going to be having a look at our manufacturing business and our business as usual is going to be escalating that, creating more opportunities. And of course, the more that we can build with our manufacturing capacity, the more diversity that we can get into manufacturing, the more opportunities there will be for our young people coming through school.
Oliver Peterson: Pharmaceuticals, I know that is an example that you’ve discussed over the last 24 hours or so, when we revealed that – what – about 90 per cent of pharmaceuticals sold in Australia are actually imported? Can we actually compete, Minister?
Karen Andrews: Look, I think we can. But, we can’t manufacture every single pharmaceutical here in Australia, that would be unrealistic. So, we do have very good stockpiles of medicine, so it’s generally around six months’ stock level that we have here,which we need to maintain clearly without a doubt. What we need to do is have a good look at our pharmaceutical manufacturing and work through what the options are so that we could effectively pivot our pharmaceutical manufacturers to manufacture other medicines. So that is top of mind, top of my list, as we go forward to make sure that in the critical areas, we have the capacity to either manufacture ourselves, or to pivot very quickly to make it in terms of need.
Oliver Peterson: Alright. Critical areas and also supporting Australian made and manufactured though might come as a cost. Because, as we know, paying Australian wages is a little more than say it is in those hubs that we just mentioned, China and India, the wages are a little bit lower, therefore we as customers, are we going to have to be prepared to pay a little bit more?
Karen Andrews: Potentially, but our manufacturers have to be able to demonstrate – and they will, I’m very confident they will – they have to demonstrate that they can manufacture for value, rather than just cost. So we’ll be looking for the quality of the product, we’ll be looking for the sustainability, we’ll be looking for the longevity of product and building that into our capability here so that when we compete, we do it on a value basis, rather than just pure cost. And of course, what we can demonstrate is that we are a safe, secure nation to work in and if we can work through and establish the appropriate and correct supply chains, then we have a very good proposition to offer not just our fellow Australians and our businesses here, but also globally.
Oliver Peterson: So that’s being specific and targeted, looking, as you say, competing on cost and competing on value. Just making sure we don’t manufacture absolutely everything, because it won’t be economical. We have to be sure about what we’re going to manufacture will actually sell and as you say, we can even export?
Karen Andrews: Yes, we can’t be all things to all people and we should not try to do that. We should work through what our niche is, build on our capability which has long been in mining and resources where we are quite frankly, world leading, and also agriculture. And in fact, about 25 per cent of Australia’s manufacturing is food based and many of our closest neighbours see us as clean, green food suppliers. So, we’ll certainly be looking at what we can to ramp that work up.
Oliver Peterson: So a lot of the messaging out of this is really have a look at what we can manufacture and just not be so reliant on imports, while trade is obviously vital, it’s important it will continue. We need to be somewhat self-sufficient, in particular areas?
Karen Andrews: Absolutely, we do.
Oliver Peterson: Minister Karen Andrews, appreciate your time. Thank you very much.
Karen Andrews: It’s a pleasure, take care.
Oliver Peterson: I will. She’s the Minister for Industry, Karen Andrews.