Wednesday, March 28, 2012

Advice from Dow Chemical - manufacture success

DOW Chemical's global president and CEO Andrew Liveris has called on Australian governments to scrap their hands-off policy towards the embattled manufacturing sector and develop partnerships with industry to use Australia's skills and resources to make high-value products.

Mr Liveris, co-chairman of Barack Obama's Advanced Manufacturing Partnership and author of Make It In America, a blueprint for revitalising manufacturing in the US, has returned to his homeland with a similar plan to rebuild manufacturing in Australia.

Launching the plan yesterday at the University of Technology, Sydney, he said Australia should change policies to aim for "a balanced, sustainable economy that adds value to resources", rather than one dependent on minerals and energy.

"Australia's current growth trajectory is unsustainable," he said. "Internal disparities will become exacerbated, and its global competitiveness will decline because other countries are maximising their value-adding capabilities.

"Passivity is not a strategy for growth."

The plan, which Mr Liveris will present tomorrow to Treasurer Wayne Swan, calls on governments to:

Develop a plan to encourage "advanced manufacturing" here, creating the right environment for manufacturing that is export-competitive, dependent on innovation, and on partnerships with researchers, government and other firms.

Increase investment in innovation, by lifting incentives for venture capital, co-operative research centres, and the "D" end of R&D, to bridge the gap between Australia's world-class research effort and its low rate of commercialisation.

Require gas producers to reserve a big share of new gas fields for domestic use at well below world prices, making Australia's huge gas reserves a feedstock for value-added industries, which would have a global comparative advantage.

The plan, titled The Dow Chemical Company Advanced Manufacturing Plan for Australia, also urges new initiatives to increase the focus on science and mathematics in schools, and partnerships between business, universities and government to develop advanced manufacturing.

"Australia has all the building blocks of a global leader, including a vast quantity of natural resources [and] a highly skilled, talented workforce," he said. "Australia has the ingredients, but no recipe.

"We believe the government has a big role to play, not by protectionism, but through focused public policies. The current environment does little to address the challenges associated with commercialising new concepts here, and driving the creation of new markets."

Mr Liveris sharply criticised Australia's energy policies, warning that the carbon tax and renewable energy targets would damage competitiveness. He urged the government to focus instead on low-cost savings through greater energy efficiency, increased use of gas, and cleaner coal.

He urged state governments to reserve part of all new natural gasfields for domestic use, as Sir Henry Bolte did with Bass Strait, giving companies cheap gas to build globally competitive downstream industries.