1. Mapping Capability and Connections Northern Tasmania Manufacturing Sarah Jones, Facilitator, Entrepreneur Development August 2015

2. Objective: To support the growth of small to medium enterprises (SME’s) in the manufacturing supply chain by: –Better understanding current capability –Identifying ways to support firms to build individual capability and capacity –Exploring new business opportunity (individually or via a collaborative approach) –Identifying key skills needs (now and future) –Building broad collaboration and networking opportunity Project partners and participants: –Launceston Chamber of Commerce; –University of Tasmania and Australian Maritime College; –Department of State Growth; –RDA Tasmania; –Northern Tasmania Development; and –Industry (31 firms). Background to Project

3. Detailed firm ‘interviews’ – October 2014 to January 2015: –Business profile/overview (demographics); –Capabilities and characteristics; –Business outputs and sectors; –Supply chain connections; –Business growth and diversification; –Regional characteristics (that support or constrain) –Business management systems and skills needs Process

4. Employment Small to medium (SME) firms many employing less than 20 people Age 74% have been operating for more than 10 years – 61% more than 20 years. Participant Profile

5. Turnover Majority operated with gross turnovers under $5M (2013/14 year) Products and Services Key categories of products and services supplied by participants. Light engineering and fabrication (up to 2T)55% Mechanical maintenance & repair48% Engineering, design and drafting42% Manufactured goods39% Medium engineering & fabrication (2-9T)35% Participant Profile

6. Specialised or unique products Well established (long term) customer relationships Quality and flexibility of the business Location/proximity to customer Technical expertise Capability of facility Broad/diverse customer base and product capability Customer service Skills and training of employees Innovation in approach Commitment to research and development “We are big enough to be relevant but small enough to be nimble” “If we can’t do the job we will help the customer to find some way to do it” “We deliver to spec and on time – it’s what the customer values the most.” “We have in-house design capability this enables us to offer the full package – we don’t subcontract – we maintain control and adopt innovative approaches.” Value Proposition

7. Sales Distribution location of products/services (70% Tasmania) Purchases Strong regional focus & long term (60% of supply relationships in excess of 10 years) Supply Chain Linkages

8. Customers are in a range of sectors. Key focus areas: Minerals processing Food and beverage Construction Sectors

9. Strong reliance on some key customers within the region. Relationship seen as critical for the business rating: 8.2/10 and 7.4/10 in terms of importance. Supply chain linkages

10. Strategy48% developed on an ‘as needs’ basis 35% had more formal processes in place – documented and reviewed at least annually 17% engage external assistance and had a very formal/structured approach (tended to be larger firms). Productivity and Continuous Improvement Strong focus on identifying opportunity to improve productivity and implement improvements. Staff actively involved in doing this. Only 1/3 rd had a systemised approach (Lean). Innovation 84% are actively (and continuously) seeking new products, systems and processes to improve what they do - customers and suppliers were seen to be key to this. “We work with our customers to innovate with our products, and our workforce to improve our process.” Organisational Processes/Approaches

11. Partnering and Networks Not a strong area of focus. Only 19% actively exploring Networking/collaborative opportunity Was seen to be an area where they could/should do more. Recruitment Tended to be on an ‘as needs’ basis (dictated by economic climate) Almost a third indicated that when recruiting they were trying to align this to future/anticipated skills needs. Training Workforce development was not a strong focus. Training for almost 50% tended to be ‘as required’ Only 16% had a training ‘plan’ linked to broader organisational strategy or growth plans. Organisational Processes/Approaches

12. Skills ‘gaps’ Trades seen to be area of greatest gap. Issues raised: attitude and ‘aptitude’ ‘system’ and quality Ability to access training “Finding people capable of being trained in this area is a challenge.” “We can close the skills gap if we have people that are willing to do it - we have issues with young people and their attitude.” “As a business we managed our skills needs but the industry doesn’t.” Current Skills Gaps

13. Trade qualifications: –mechanical, electrical, boiler makers, machinists etc. Professional qualifications/capabilities: –marketing, business, finance, business development, engineers, geology, metallurgists, leadership, management, production management, process engineering, ICT. Competencies (can also be qualifications): –Design, CAD, drafting, Lean, customer service/sales, CNC, automation/robotics, PLC programming, industrial blasting/painting, process operations and technicians, crane operators, HV specialists, data analysts. Attitudes and aptitude: –Mathematical knowledge, literacy, mechanical “nouse”, work readiness – attitudes and willingness. Skills to support growth

14. Market intelligence Difficulty finding information to support business development. Road transport corridors Transportation to Ports outside the region. Research Institutions Not considered to be important. Regional Factors

15. Employment growth through: Diversification Increased volumes (current customer) Competitors leaving market Existing spare capacity and capability Building, workshop, floor space, warehousing, office space Industrial zoned land Equipment & capability – laser cutter, folder, CNC machines, injection moulding, research lab, profile extrusion Skilled staff Design/engineering capability Blast and coat facilities Future Directions/Opportunity Trends in employment over past 3 years:

16. Enhanced customer relationships Enhanced supplier relationships Future Directions/Opportunity

17. Participants currently actively seeking work: 32% - mining/ & resources sector 29% - water and energy project area 26% - advanced manufacturing 19% - food and agribusiness. Future Directions/Opportunity

18. “We need the right people that are able to relate to the customer” “The cost of freight is beyond the capacity of the business” “Freight limits our opportunity to go off island” Skilled staff39% Freight limitations – costs and delays29% Access to finance/capital investment16% Cost of inputs and equipment13% Timeliness and surety of delivery by suppliers10% Regulation and licencing10% Plant/facility space and suitability10% Identified barriers to growth

19. Importance of relationships and brand (individual business brand more so than regional). Contributors to future profitability

20. Skills – addressing current and projected future skills needs. Business planning and development – identifying growth areas for the business – alignment of planning and business development to achieve. Knowledge and market intelligence – developing an understanding of key growth sectors and what it takes to be competitive in these. Promotion of industry capability – demonstrating what currently exists Addressing vulnerabilities/dependencies on key customers –maintaining relationships while seeking new opportunities. Collaboration –to deliver individual and collective commercial outcomes. Innovation –better linkages with research institutions, investment in skills, developing design focussed businesses and adopting new technologies and processes. Emerging Themes – the way forward

21. Awareness of what is available – “simplifying the bureaucracy”: –Access to business advice and information –Market assistance –R&D support –Training and skills support Addressing duplication: –Red tape – environmental areas –Planning systems – State and Local Providing opportunity: –Government tenders –Access to politicians – build knowledge and support (collaboration) Continuing to explore solutions with industry: –Freight –Payroll tax thresholds Where ‘Government’ and other stakeholders can assist

22. Supply chain ‘facilitation’: –Within existing customer and supplier base and exploring new opportunities Promotion of capability –Demonstration of regional and firm level capability –Utilisation of spare capacity Skills and workforce planning –Aligned to business plans –Accessible and affordable Business improvement and productivity –Business planning –Implementation of Lean –Management resources Networking and collaboration –Knowledge sharing –Joint tendering Recommendations

23. Department of Industry and Science | Business Sarah Jones Sarah.Jones@aigroup.com.au 0457 509 621