Japanese-based SMC Pneumatics knew that in order to future-proof its business it needed to get on-board with Industry 4.0 especially with the push towards automation.
“Five years ago, the managing director of SMC brought me in to reposition the business post the mining industry moving from greenfield to brownfield,” said SMC Pneumatics’ Australian and New Zealand director of sales and marketing James McKew.
“We needed to move from a capital investment phase to a maintenance repair and overhaul phase. We saw the mining boom come off quite considerably until about late last year. What I don’t think SMC contemplated was the car industry going away so quickly in Australia,” he said.
Luckily for McKew and SMC Australia and New Zealand, the route a Japanese-based company takes differs from that of a traditional western industrial enterprise. It is this support and direction that McKew sees as the starting point for the growth the company has seen.
“In hindsight, it was quite exciting because the leadership in Japan, fundamentally our founder, said ‘go back to Australia, get your team together and tell me what you need to reposition the company so it stays on a growth trajectory’, as opposed to the alternative,” said McKew. “The western philosophy would have been, ‘well your major market is going down, make sure you resize your business and make it profitable’. The Japanese philosophy was, ‘you tell us the investments you require to target and access new markets and based on your representations we’ll look at making those investments’. So we did.”
And has there been a pay off? Absolutely, said McKew. While the mining industry was off the boil, SMC aggressively targeted those businesses from the OEM and end user side with the multi-site operators. Its market share over the past three years has gone from the low 40s, percentage-wise, to 51 per cent. And it is in growth in every single market in Australian and NZ. The last two-year financial results for SMC have been the best in a decade, according to McKew. The company is now on a trajectory to be the biggest it has ever been in the industry.
Which brings us back to Industry 4.0, smart factories and making sure that a company is future-proofed when building new plant, machinery and the automation aspects.
“I think educating people is what makes automation an easy sell,” said McKew. “I think everybody in manufacturing – ourselves included – is tasked with asking themselves ‘how will our future look and what technology do we need to drive it?’. You are future proofing. We also need to talk about the benefit of big data and being able to intimately understand our businesses at a granular level. So the question is asked – how can we chart our future based on those two things with massive improvements in efficiencies and substantial improvements in understanding things at a granular level? We look at the different pieces in our business and how they align with the best possible operation result.”
This brings us to the next aspect of Industry 4.0 that has been mentioned and really gets McKew animated. Big data.
“When going down the big data path it is being able to understand intimately – from a data capture perspective – what your employees in the field are doing,” he said. “How does that correlate to a fantastic result? By capturing the data and analysing its correlation to results, you can get extraordinary performances from your people in field service or field selling.
“I think big data support in manufacturing is going to lead to a rejuvenation of the sector. When you look at the investments being made in the advanced manufacturing sector, I think there is finally a light that has gone on in government that says manufacturing creates more value through supply chain than just about any other industry including financial services.
“The growth in manufacturing is economically sound. If you look at the investment that the federal government has put behind the advanced manufacturing growth sector initiative, and the fact they are rolling their sleeves up and actively wanting to promote manufacturing, it is showing everyone where it creates value.”
McKew is also optimistic about the traditional manufacturing and primary industries within Australia, some of which have struggled over the past few years. He believes that Australia has to play to its natural resources. The sector has to acknowledge that food is just as much a part of this as minerals are.
“I even think that the current conversation around the ban of live exports is a positive for Australia,” he said. “The ban is good for Australian manufacturers in that, in my opinion, it will result in jobs for Australians in Australia.”
Speaking of jobs, doesn’t all this talk of Industry 4.0, robotics, automation and a slew of modern manufacturing processes mean less jobs for the traditional Australian working man and woman?
“A protein processing plant can’t run with lights out,” said McKew. “You still need people, so everything is not fully automated. It’s around how you employ people and those people – particularly in automated plants – are being paid better rates because they are in a more sophisticated role. What I’m talking about is initially opening and expanding plant.”
McKew is also optimistic about the next few years for the Australian manufacturing sector. He believes Australian industry needs to be more aggressive, and not towards the low-cost labour markets in South-East Asia, but against more traditional industry rivals.
“I am very positive for the next two to three-year outlook. You’ve got to formulate your strategies properly,” he said. “They’re not Disneyland, but they’re not Luna Park either. You have to be realistic about how far out you can look. We are expecting positive momentum in the manufacturing sector, especially the food, robotics, mineral processing, building products and aggregate. What we are also seeing a lot of is automation in large warehouses. I think for Australia there is an opportunity there because at the moment, a lot of that technology is coming straight in from Germany. There is no reason that Australian automation companies cannot deliver those solutions. Designed, built and delivered in Australia and New Zealand. Germany is a high-cost country.
He believes that Industry 4.0 is about keeping high-cost labour countries in play and believes that what people forget about Australia being high cost is that the country also produces high-quality goods.
“It’s all well and good to malign the manufacturing sector – the costs are what they are – but we are high quality,” said McKew. “There is nothing that comes in from Germany or Japan that Australia can’t do as well. I think in the presence of an automated warehouse, that knowhow and expertise is a combination of Australian and New Zealand engineering and manufacturing, and componentry from Japan and Germany. World-class solutions can be deployed in Australia and New Zealand. We’re having bigger conversations in Australia about manufacturing and quality. The reason we are having these conversations is because manufacturing is important to so many Australian families who can rely on it for employment. We are committed to the sector and are committed to manufacturing across the five locations we manufacture in Australia and New Zealand.”