After years of limping along with government support, Ford is finally closing its manufacturing operations in Australia. How has it come to this?
Has the company, which was among the first to embrace the full potential of the production line, forgotten how to innovate? Should Australia accept that it can no longer compete in manufacturing? I believe the answer is no – but it’s time to rethink what manufacturing is.
To begin, we need to recognise that manufacturing isn’t an industry sector, it’s a capability with plenty of opportunity for innovation. We take industry sector definitions for granted, as if they were clubs with exclusive admission criteria and secret handshakes only revealed to companies that agree to play by understood rules. The industrial era was defined by clearly delineated industries, making it easy to identify which sector every company was competing in. It was all so gentlemanly really, as if competition was governed, like boxing, by a code of generally accepted Marquess of Queensberry rules.
Companies were all assigned a Standard Industrial Classification (ANZSIC) identifying which industry sector they fit in to. The combination of industrial-era thinking and ANZSIC industry codes have force companies into characterising their business models as being either product- or service-focused.
This is a false choice. Making a product doesn’t define the market a company is creating or competing in. Describing a business as a manufacturer immediately constrains business model innovation opportunities. If we want to bring back manufacturing we have to start by changing our thinking about manufacturing.
Industries simply don’t work that way any more, the industrial era isn’t coming back.
Is Google a manufacturer or a service provider or both? Their acquisition of Motorola Mobility and US production of the Nexus Q home media player suggest Google is serious about building manufacturing capability.
Is Apple a manufacturer or a service provider or both? It’s hard to tell the difference between a manufacturer and a service provider and the distinction is limiting.
Today the lines are blurring. Think about the iPod. Apple didn’t bring the first MP3 player to the market. It changed the way we experienced music by delivering on a value proposition that bundled product (iPod) and service (iTunes). Apple didn’t view the competition as other product manufacturers. Apple is a market maker not a share-taker.
Once we realize that manufacturing is a capability we can get on with democratising it. We can all be manufacturers. To bring manufacturing back to Australia we need more than a new product to manufacture; we need a million makers creating stuff.
It wasn’t long ago we listened to the whir of a dot-matrix printer spitting out documents from our computers, now a 3D printer renders any object we can dream up the same way. With the magic of 3D printing capability we are all manufacturers, constrained only by our imaginations. 3D printers will democratise our manufacturing capability. Armed with a 3D printer, individual makers can create their own digital design for any imagined object or borrow a design from anywhere around the world. By simply pressing a button makers can set a 3D printer into motion rendering the physical object with layers of plastic or other material right before their eyes. What was science fiction ten years ago is a reality today.
Perhaps it’ll be a while before Australians are printing cars. But when Ford Australia president Bob Graziano cited the high cost of manufacturing cars in Australia – four times that of Asia and double that of Europe – as the reason for profit loss and now a complete withdrawal, he belled the cat. Prosperity has changed the face of manufacturing in Australia but it doesn’t have to cost it its manufacturing capability – as long as Australians remember to innovate.
Saul Kaplan is the author of The Business Model Innovation Factory and founder of the Business Innovation Factory in Rhode Island, USA. He will be speaking at the Amplify Festival in Australia 3-7 Jun.