06/11/2013 - 05:09

The competitive edge

06/11/2013 - 05:09

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A recent report on R&D spending in Australia sheds interesting light on the perennial debate over this country’s competitive future.

Together, (mining and manufacturing) accounted for 46 per cent of total business spending on R&D.

Bassendean is not a locale that immediately springs to mind when discussion turns to innovation and modern technology. 

Better known for its panel beaters and dusty workshops, Bassendean is, nevertheless, also home to one of Western Australia’s most admirable businesses. 

Hofmann Engineering is a family owned business that has invested heavily back into the business, to help it remain competitive. 

It’s a rare example of an Australian manufacturer that is exporting goods back to China, after adding value through its precision engineering. 

A prime example of its expertise was the manufacture of a forged steel mill gear – believed to be the world’s biggest with an external diameter of 13.2 metres and weight of 73.5 tonnes. 

It will transmit 17,000kW when driven by two 9 tonne pinions, also made by Hofmann in Bassendean. 

The completed gear set is bound for the grinding mill of a copper mine in China. What better example could there be of ‘coals to Newcastle’? 

Hofmann is not alone in being a big investor in R&D in the manufacturing sector. 

In fact manufacturing is nation’s biggest investor in R&D, according to the latest analysis by the Bureau of Statistics, with $4.5 billion in 2011-12 putting it ahead of the second-ranked sector, mining, at $4.1 billion. 

Together, these industries accounted for 46 per cent of total business spending on R&D

If the woes besetting the manufacturing sector across Australia are any guide, it’s clear that investing in research on its own will not save a troubled industry. 

Car manufacturers, for instance, have been very big investors, but that seems to have counted for little when they were dealing with a high dollar, high wages and low production runs. 

While R&D cannot create a competitive industry, it can certainly enhance the competitive edge that various industries possess. 

The good news for WA is that this state leads the country – R&D spending in WA is equal to 1.5 per cent of gross state product, putting it ahead of NSW (1.4 per cent), Victoria (1.2 per cent) and Queensland (0.9 per cent). 

Most of the R&D spending by business is focused on ‘experimental development’ and ‘applied research’. 

A very small amount is devoted to ‘pure basic research’; that is the area where universities and taxpayer-funded bodies like CSIRO can add value. 

The main fields of research are engineering (47 per cent of the national total) and information and computing sciences (30 per cent of the total). 

What does this mean in practice?  

Think of the remote operations centres developed by mining companies such as Rio Tonto and BHP Billiton. These are huge R&D projects with a big focus on engineering and ICT. 

On a smaller scale, think of local success stories like Osborne Park-based Immersive Technologies, a world leader in the development of training simulators for the mining industry; or Nedlands-based Micromine, a global leader in mining software. 

These are businesses that had their origins in the state’s mining heritage but should be able to survive and prosper, irrespective of what happens to WA’s mines. 

The challenge for researchers and investors in other sectors, whether medical devices or high-growth technology apps, is to realise some of the commercial success achieved in mining services. 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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