Reshoring Australia and New Zealand’s manufacturing sector

One of the many learnings over the past few months is that of self-sufficiency. In the past, Australia and New Zealand, like many other countries, gradually outsourced a large part of its supply chain internationally to reduce costs.

Covid-19 saw the best and worst of supply chain management – some companies came to a grinding halt while others couldn’t keep up with manufacturing demand. SMC itself has managed to deliver consistently throughout the pandemic because of their local stocking policy and commitment to local manufacturing.

Manufacturing in Australia has fallen over the last two decades from 13 per cent of gross domestic product to 6 per cent with jobs within the sector falling a staggering 24 per cent between 2011 and 2016; the impact of which certainly came to light during the coronavirus crisis. William Lebihan, head of field sales for SMC Corporation Australia and New Zealand says the past few months have helped strengthen the belief in local manufacturing; to create more jobs, increase local revenues and to safeguard the economy.  “Businesses that relied on importing where caught in a supply chain drought and I sincerely hope that as we all emerge from C-19 that these examples are still front of mind in order to help drive a change in attitude towards Australian manufacturing. Unfortunately, it’s not a simple matter of just switching it all back on again and hoping for the best, government has massive role to play here to help support a ‘reshoring’ of Australian manufacturing; and time is of the essence – I think.”

Committed to local manufacturing
As an established player in the market, Lebihan notes that SMC Corporation has noticed a trend towards more flexible manufacturing and a big drive among local companies to look at how they can improve their local manufacturing facilities; the company remains ever committed to its local customers.

“SMC has resources, people, skills and products to support our customers across both Australia and New Zealand. Whether you’re investing in IOT technologies to enable more flexible manufacturing or whether you are ramping up your automation to cope with demand, or diversifying your current product lines, SMC is a partner in the automation process. We offer a practical approach and want to assist our customers by making the resources we have at our disposal available to customers in our effort to support local manufacturing.”

Founded in Japan in 1959, SMC Corporation opened its first subsidiary company in Australia 1967 with New Zealand opening in 1984. “While we have access to a wealth of global resources from our head office, we have invested heavily in the local market with offices and manufacturing facilities across Australia and New Zealand. I am pleased to say that, as it stands, we have $25 million worth of local stock on-hand; in fact, our logistics and production teams never missed a beat during the worst of C-19, working a split shift to accommodate for social distancing requirements and to help support our customers.”

Virtual support – every step of the way
In a new move, the company has moved towards offering hands-on remote support to customers. The company’s wide range of available products are backed by its virtual support strategy. “We are helping customers futureproof their businesses remotely. For the first time our customers have access directly to our applications engineering team and can set up and conduct remote meetings, consultations, assessment of current systems and technical advice with no strings!”

This translates into hands-on assistance should the customer need it at the conceptual, installation or programming phase. “The team, comprising of 88 sales people and 12 application engineers, is on standby to assist with product selections, quotes, placing orders, enabling remote access to set up components, delivering product training, technical advice and more,” said Lebihan.

In terms of lead times, Lebihan notes that popular products are available locally within a day or two while special products on request from its head office in Japan can be imported in as little as five days. The local engineering team is also able to design and engineer solutions which may not yet be a standard product. “Nothing has changed in terms of our delivery and customer offering – we still offer high quality products at low cost with rapid delivery. This is part of our commitment to reaccelerating and invigorating the local manufacturing sector. We want customers to feel safe knowing that no matter where they are in their journey, we are there every step of the way”.

Steps to Smart Flexibility
Lebihan notes that keeping costs down remains critical. “Rather than upgrading entire systems, there are smart and affordable decisions that can be made. We offer a practical approach for new and existing customers to sharpen up their digitalisation, without the hefty upfront investment costs – even if the project is a basic concept only – drop us a line, we have application engineers and specialists happy to assist

What COVID-19 has taught us so far

While COVID-19 continues to plague the globe, companies spend their time preparing for the future – the ‘new normal’.

It’s no secret that the acceleration process of Industry 4.0 has been rather slow to date but post-pandemic, the adoption rate is set to skyrocket in some of the most peculiar ways.

Adaption is key in times of uncertainty
Max Jarmatz, managing director for Nord Drivesystems ANZ believes that every crisis requires adaption under exceptional circumstances. “We’ve learned a lot from past disruptive events like the economic crisis in 2008, or the supply chain interruption after the Fukushima disaster. In the aftermath, we have decentralised our production, built up second source suppliers and increased our stock levels.

“Our highly automated production centres already rely heavily on robots and can be run even without the presence of human workers for some time. To cope with COVID-19 while meeting customer demand, we have now changed our supply chain from air to sea freight,” Jarmatz said.

Flexible, functional and digital manufacturing to fast-track ANZ
Jozef Ceh of SMC Corporation ANZ echoes Jarmatz’s sentiments saying that if anything, the pandemic has cast a spotlight onto manufacturing. It encourages us to re-evaluate our current systems and their abilities to adapt to rapid changes.

“At a time like this, we need to analyse our production lines to ensure that they are three things: flexible, functional and digital, moving forward”.

Ceh noted that flexibility has been challenged on a physical and functional level, with more emphasis on the functional software changes.  “Changing a production line to produce more units, multiple variations or a completely different product at a rapid speed has called for consideration of modular and scalable production lines.

“In terms of functionality, it is becoming more apparent that if each product, from the central processor right down to the sensor level, can possess more individual parameters it will that may be allow for a greater functional scope and reduced physical changes,” said Jozef.

“Digitally, having real time systems and a flow of data form the whole process provides a more complete picture which integrates with the CRM or ERP and leads to more accurate forecasting, production planning, use of resources and more efficient production in terms of cost of production, energy use, waste management and production capacity.”

Adopting a ‘lights-out’ approach
While FMCG manufacturers such as those producing ‘in-demand’ items like toilet paper, pasta, rice and hand sanitiser have already had to adapt their manufacturing and distribution processes, many of us are still to learn.

“Many industries can adopt a lights-out approach, especially those in the distribution of fast-moving consumer goods (FMCG). Fully automated warehouses have been utilised for many years and have proven themselves to be far more reliable and timelier than those using traditional manual pick-and-pack methods,” said Nick Psahoulias of Beckhoff Automation.

“By harnessing the power of live-data and automated picking machines, the process of getting goods out the door, safely and accurately, benefit both the consumer and the supplier.”

Jim Wallace of Balluff has seen various companies in the FMCG sector repurposing their production lines to cope with the demand. He says that the Industry 4.0 concept of flexible manufacturing plays a key role in aiding this rigorous process.  “The fewer components that need to by physically changed or adjusted, the faster the goal can be achieved”.

An independent approach to manufacturing
Another notable learning amid the pandemic is the need for shorter supply chains and local manufacturing. Multinationals still rely heavily on their international counterparts for assembly, manufacture and supply.

The Open IIoT panel believes that we will see a notable shift here in years to come based on the COVID-19 ‘shake up’.

Traceability and real time visualisation of the supply chain is critical at times like this to allow flexibility and fast reaction to demands. RFID systems, barcode information and software integration to ERP systems are critical to achieve this goal,” says Wallace. “In addition, traceability of employees is very important.  Who was working on which machine at what time, producing which batch of which product?”

More support is needed by local government
Psahoulias said that state and federal government should however further support local manufacturing.

“Our leaders should introduce incentives, subsidies, concessions and remove the costly red tape that is required to manufacture goods locally.”

To further curb the current crisis, Jarmatz said that Nord has once again looked to IIoT technologies to implement predictive maintenance algorithms. “Our drives can monitor the current status from anywhere in the world.”

Implement an Industry 4.0 Plan, right now
Richard Roberts of ZI-ARGUS says that seven steps can be applied to implement an Industry 4.0 strategy, sooner rather than later:

  1. Consult with Industry 4.0 experts to understand what Industry 4.0 can do for your people and your business.
  2. Identify areas in your processes and plant that can directly benefit from Industry 4.0 solution.
    1. Measure these areas to take a snapshot of the now, this will act as a KPI back into the business to measure successful implementation.
  3. Generate a scope of works to implement I4.0
    1. Break it down into phases, each successful phase leading onto the next.
    2. Earmark local subject matter specialists to liaise with I4.0 experts to assist in the transition.
  4. Engage Industry 4.0 Experts to implement these phases:
    1. Measure each phase upon completion comparing the changes from area previously identified.
  5. Educate local staff members on the tools used for the Industry 4.0 solution
  6. Continue to measure to ensure the solution is still making an impact on process/ production.
  7. Be open to simplicity for a solution and define budgets to accommodate. Consider an operation costing model to support on-going development and implementations rather than a traditional capital costing model.


As a collective, the team believes that COVID-19 will rapidly accelerate IIoT technologies and local manufacturing. Use this time to speak to your preferred automation consultants, upscale your production in your quiet times to reap the rewards post-pandemic.

Industry 4.0 delivers opportunities to manufacturing in 2020

2019 was another interesting year for the manufacturing sector. Competition and cost cutting forced manufacturers to operate more efficiently and as a result, the industry turned to Industry 4.0 for its long-term benefits.

More than a fad or buzzword, Tim Keech, Sales and marketing director for SMC Corporation says that Industry 4.0 is here to stay, and it’s set to have a major impact on the industry in 2020.

“Manufacturing has become increasingly competitive. We’re competing both locally and on an international front where many manufacturers are already advanced in the implementation of IoT (the Internet of Things) solutions,” said Keech. “Australia should leverage the benefits of implementing Industry 4.0 solutions to remain competitive.”

Keech notes that challenges around cost reduction, energy savings, compliance with environmental initiatives, effective supply chain management and stringent health and safety standards can be alleviated through the implementation of Industry 4.0 technologies.

READ MORE: SMC’s smart thermo-chillers for peace-of-mind

“Some of the most recent challenges addressed by Industry 4.0 solutions is meeting the evolving expectations of consumers, such as immediate access to products and services and access to more detailed information about the products. Smart manufacturing helps to meet this demand and we see this trend continuing to grow and influence production in 2020.

“With changing technology comes a change in job skill requirements. Both production and people need to evolve at a rapid pace. “We need people who can interpret and utilise the data which Industry 4.0 will bring. This is one of the major challenges facing the industry,” said Keech. “This skill can only come through on the job experience, making it critical for STEM undergraduates to be closely aligned and integrated with industry.”

Developing talent
SMC has been evolving not only as a business also as an employer. The company has a keen focus on upskilling and developing their workforce to meet the needs of the changing economy.

SMC has developed a Cadet Program to attract and retain talent. “Through much-needed skills transfer, we are training technical people in sales, operations, logistics and administration to ensure they have a comprehensive overview of the business. These cadets are earmarked for future roles in the business and will be highly adaptable to changing economies,” said Keech.

In addition, SMC is placing more engineers in the field of energy savings and has been setting up digital transformation departments. “Our clients look to us to provide them with insight into automation trends. As a multinational with over 60 years’ experience, we draw on global expertise and skills to ensure that our local teams are trained up and ready to add value.”

Security and IOT
Keech believes that no one company is immune to cyber security threats and that these continue to have major implications on business. “Fear of such risks may initially hamper the appetite for investing in Industry 4.0 technology. It is however a matter of educating customers with industry proven solutions and processes that are available to limit exposure and protect their business.”

The challenge of our environment
Keech notes that shrinking resources, climate change and power hikes continue to affect business. “We cannot ignore this factor. It puts pressure on the supply chain and impacts our ability to compete – both locally and globally. Drought conditions continue to affect our farmers and we are now finding that reduced access to reliable water is having similar impacts on the mining and manufacturing industries.”

Supporting Australia’s 2030 climate change targets, SMC’s energy saving efforts remain active and continuous. “Many manufacturers are starting to realise the hidden costs of compressors running inefficiently throughout their plants. The recent success of SMC with several multinational manufacturers demonstrated real savings at the compressor.”

According to Keech, SMC’s team of engineers work closely with customers to meet their energy saving mandate. “We have the ability to identify areas of savings, from something as simple as identifying excessive leakage through to optimising the pressure and flow through the use of regulators, boosters and more.”

“2020 promises to be an interesting year but manufacturing is gearing up for the changes that are required to remain competitive,” said Keech.