Australia leader or laggard in the race to secure our future industries

For some time I’ve talked about three major global themes that are shaping future industries. These major themes, if taken account of, represent a huge opportunity for Australia. But at the same time if we don’t understand them in the context of their global relevance, then we are at risk of severely damaging our future competitiveness in a world of trade that sees fewer geographic constraints.

• Industry 4.0 and its application in manufacturing and process industries;
• Fully integrated intelligent infrastructure (integrated real-time optimisation and incident management across all infrastructure domains); and
• Energy transformation (addressing the trilema of reliability, affordability and sustainability).

All of these themes are underpinned by the explosion in data acquisition and digital intelligence.

These themes will dominate the lives of our children and grandchildren. They shouldn’t be seen as independent visions of the future but rather as increasingly interdependent. A coordinated long-term approach is needed to ensure that we leverage to the fullest extent the billions of dollars earmarked in these areas.

For those of you reading this who don’t know me, I’m a 30-plus year veteran of Europe’s largest engineering and technology company, Siemens – which also happens to have been operating in Australia since 1872. I’ve never shied away from saying that I need Australia to have a strong economy and industry so that Siemens can also thrive here.

At CEDA’s State of the Nation event on Wednesday 31 May in Canberra I am hosting a panel discussion with some pre-eminent leaders to discuss the topic Australia: leader or laggard in the race to secure our future industries. On the panel will be Data61 CEO and Cyber Security Growth Centre Co-Chair, Adrian Turner; Mining Equipment Technology Services Ignited Chair and Gekko Systems Chair and Managing Director, Elizabeth Lewis-Gray; and Federal Department of Defence Chief Defence Scientist and Head, Dr Alex Zelinsky.

I’m looking forward to hearing their opinions on this topic. I don’t think it’s possible for Australia to be experts in every area but I’m sure we have pockets of excellence and I’m also sure that there has never been a better opportunity to embrace technological changes such as digitalisation.

On the topic of the Australian Government’s Industry Growth Centres Initiative, these have been set up by the Department of Industry Innovation and Science to help take an industry-led approach to driving innovation, productivity and competitiveness by focusing on areas of comparative strength and strategic priority. Personally, I think we can be leaders if we pick our battlefields wisely but cannot be all things to all industries. We need to define the future orientation of the areas of existing comparable advantage and put in place the key prerequisites.

The Cyber Security Growth Network is one of six Industry Growth Centres and certainly an area of interest as all companies and people face growing threats of cyber security. Only in the last couple of weeks we were made very aware of cyber security with the ransomware virus that led the news headlines here and abroad. But in an increasingly connected world cyber security becomes even more important.

According to the Cyber Security Sector Competitiveness Plan released in April this year “Australia is well placed to become a global cyber security powerhouse”. In fact the report says that favourable market conditions and concerted efforts could lead to tremendous growth. Over the next decade, that potential could be as much as a new $6 billion industry by 2026 – tripling in size from today. I’m looking forward to getting a better understanding from Adrian of the things that are holding us back such as skills and collaboration and what we can do about them. Cyber Security is also one of the working groups of the Prime Minister’s Industry 4.0 Taskforce, which I chair and so I know that it is one of only a few core areas identified by Germany to support their journey towards Industry 4.0.

On the defence side of things, I’ve known Alex Zelinsky for some time and was really pleased when Siemens signed an MoU with DST Group in 2015 and delivered a prototype model of a high temperature superconducting motor from Germany to Australia. As an organisation we invest around $6.5 billion into R&D programs each year. However, I remember at the time one of the key things I talked about to bring our research to life is to have partners who have real applications.

The Next Generation Technologies Fund is a cornerstone of the Turnbull Government’s $1.6 billion investment in defence industry innovation to build a technologically-advanced Australian Defence Force of the future. With the range of multi-billion dollar projects announced and the commitment to spend two per cent of GDP on defence, I see this as a once in a lifetime chance for Australia to be a real leader – especially in the areas of technology that could be transferable to other industries. I’m looking forward to hearing Alex’s point of view on this topic.

One of the other growth centres is Mining Equipment, Technology and Services (METS). In a speech last year where I was introducing Prime Minister Turnbull at a CEDA event in Melbourne, I described how, for a century, the wool industry gave Australia one of the highest living standards in the world. Then the recent resources boom was the biggest since the gold rush of the mid-1800s. We’ve all seen and lived through a transformation of Australian society over the past decade and a half. But what happens next? Clearly innovation through digitalisation and technology would be the next wave of growth opportunities for Australia. And according to METS, this can occur also in the area of mining equipment, technology and services.

In fact in May I hosted a dialogue on Mining 4.0 with a large mining company at Siemens’ head office in Munich and there is tremendous interest in new technologies and collaboration to ensure competitiveness into the future. The reality is that all industries are seeking efficiencies through innovation and technology. In a report released this month by METS and CSIRO, data driven services was identified as one of a handful of areas that the Australian mining sector should focus on. Interestingly this week we also have Gerhard Kress in Australia visiting key customers and stakeholders in the rail industry. Gerhard heads Siemens’ data driven services for rail customers from Munich. From there with his team of data scientists they collect data from trains in Bangkok and the UK as well as the Valero fast trains in Spain and Russia where through clever data analytics they can predictively maintain those trains. And they are achieving train “availability” results as high as 99.99 per cent. I’ll be very interested to hear what Elizabeth Lewis-Gray thinks about Australia being a laggard or leader in this space.

In late April in my role as Chair of the Prime Minister’s Industry 4.0 Taskforce I sat in the International Leaders conference on Industry 4.0 at the world’s largest industrial trade fair Hannover Messe. The theme was international collaboration. At the time I was struck with the question: Why does Germany, one of the most advanced industrial nations and the inventors of Industry 4.0, want to collaborate with other countries? After all it’s their competitive advantage and they should want to keep it. But the answer became very clear in one of the panel sessions where they stated that Germany is actually at the implementation stage of Industry 4.0. Other countries were either just starting to think about it or were formulating their framework. And the statement was made that “digitalisation has no borders”, which means Germany needs good partners.

In fact, this changes everything for countries like Australia. And I’m pleased to say that Australia is only one of a handful of countries to have a formal collaboration agreement with Germany on Industry 4.0. Preparing our existing and future generations of workers is a critical element in this digitalised future and I believe there is much we can learn from the 500-year-old vocational learning approach in Germany – which is one reason we have launched Australia’s first Industry 4.0 apprenticeship this year.

From my point of view we can do a lot to be a leader or close follower but we can’t do it alone, we can’t do it all, and we can’t do it unless we pool our resources and talents rather than fight within our geographic, national and state borders.

This blog discusses the themes covered in the panel Jeff chaired at State of the Nation 2017, titled Australia: Leader or laggard in the race to secure our future industries? Watch the panel discussion below.