Bringing back Australian Manufacturing: Discard programmed obsolescence

[farmerge]

Thing is, unskilled people can be trained.

Someone who's trying to make ends meet in whatever low end service industry job could indeed be trained to become an operator, tradie or even a white collar professional if given sufficient opportunity both for the training and ongoing employment thereafter.

If we look at how we used to train tradies (always known as tradesmen back then but that term's deemed sexist today ) then there were basically 4 groups. From largest to smallest:

1. Big companies that manufactured, refined or processed something.

2. Utilities especially the state owned electricity authorities.

3. Various other things run by government - the Transport Department, the Housing Commission, public transport fleets, etc.

4. A relatively smaller number trained by private contractors, builders, self-employed tradies with an apprentice, etc.

I'm less familiar with the companies in other states but if you find any group of older tradies in Tasmania and ask them where they did their apprenticeship then the answers will mostly be a list of big business acronyms and things run by government. APPM, Tioxide, ANM, EZ, TEMCO, Comalco, Sheridan, ACI, Incat, Cadbury and so on for the big companies, the Hydro in the next category as an entity unto itself albeit ultimately government owned, and in third category the various state government departments. The remaining 20% would be from the assorted builders, contractors, self-employed tradies and so on.

A key point being they all saw training as something that they needed to be doing and trained far more people than they needed to retain. That's what kept society supplied with tradies who then went to work for themselves or small business.

Part of that was multiple parties working cooperatively to make it work. Apprentices with anything run by government were commonly placed with privately run businesses, typically construction related, for a period to broaden their experience both at their trade and with how private business goes about things. Apprentices from the private sector were likewise commonly sent off to a big workshop run by government to do things that contractors don't do. Etc. Then of course there was a well resourced TAFE for that side of the training as well.

All up it wasn't flawless but it worked pretty well. As a system it took a huge number of high school leavers who weren't going to uni, gave them a job followed by a qualification and, in practice, often ended up unofficially but in practice also taking on the task of correcting flaws in their upbringing and setting them on a sensible path in life.

Magic, spot on. My eldest son who wanted out of schhol at 16 got into a TAFE course that had 9 trads in it. He got his chance with the local Shire as a Heavy Diesel Fitter. From there had various jobs with the big companies and has now been in Tom Price for 20 years. A variety of positins which has given him many arrows for the quiver. Highly skilled.

 

[qldfrog]

See that’s where I disagree with you, all the value adds including baking bread are adding wealth to the country, it’s just that it is consumed quickly.

Wealth is constantly being produced and consumed. Some things we produce like a hydro dam have very long lives, some things like a loaf of bread have a short life, but they are all contributing to increasing our standard of living.

Google “mercantilism” I think you are falling into that old fashioned idea that, that only trade that increases an arbitrary thing like the amount of gold in the coffers is valuable.

The only true measure of wealth of a nation is how many goods and services it produces, weather it trades that goods and services internationally or consumes them it’s self is irrelevant.

and where we disagree, really a matter of perspective:
whereas you see the US (current as an ecomomic monster (positive) , I look at the trade balance (roughly, there are fine distinctions etc) and see it as a collapsing economy.
It does not mean people can not be happy there but there is a wall ahead.
I see your point of view and it is followed by many, including the helicopter money, high debt etc
but for me, this is actually good on a selfish basis..my RE, shares, etc but a disaster for the country/the future of my kids.
I often wondered if you have children @VC, not as a personal stalking or even a nasty attack, I had to bit pushed to get a child but I think all your positions here and many other would fit nicely in a childless couple, and i can see your points.
Do not feel pushed to answer here or via PM.
ok, let's move on and agree to disagree

 

[Value Collector]

and where we disagree, really a matter of perspective:
whereas you see the US (current as an ecomomic monster (positive) , I look at the trade balance (roughly, there are fine distinctions etc) and see it as a collapsing economy.
It does not mean people can not be happy there but there is a wall ahead.
I see your point of view and it is followed by many, including the helicopter money, high debt etc
but for me, this is actually good on a selfish basis..my RE, shares, etc but a disaster for the country/the future of my kids.
I often wondered if you have children @VC, not as a personal stalking or even a nasty attack, I had to bit pushed to get a child but I think all your positions here and many other would fit nicely in a childless couple, and i can see your points.
Do not feel pushed to answer here or via PM.
ok, let's move on and agree to disagree

No we don’t have any kids, but I enjoy being an uncle to 4 kids. To be honest I have never felt mature enough to have kids, and now that I am 40 and enjoying the travelling life, I am not sure I will have kids, my wife is younger than me so, never say never I guess, but for now I don’t see it happening.

I don’t look at the USA as a model I would like Australia to folllow, but I do think Australia is in a great position to carve out a great niche in the global market.

 

[rederob]

Thing is, unskilled people can be trained.

True, but to do what?
We effectively have what many economists call "full employment".

Someone who's trying to make ends meet in whatever low end service industry job could indeed be trained to become an operator, tradie or even a white collar professional if given sufficient opportunity both for the training and ongoing employment thereafter.

While true, the TAFE sector in particular has been addressing these needs for as long as it has existed. Private providers are now in this space as well, and lots of people are running up huge educational debts trying to get ahead.

If we look at how we used to train tradies (always known as tradesmen back then but that term's deemed sexist today ) then there were basically 4 groups. From largest to smallest:

1. Big companies that manufactured, refined or processed something.

2. Utilities especially the state owned electricity authorities.

3. Various other things run by government - the Transport Department, the Housing Commission, public transport fleets, etc.

4. A relatively smaller number trained by private contractors, builders, self-employed tradies with an apprentice, etc.

I'm less familiar with the companies in other states but if you find any group of older tradies in Tasmania and ask them where they did their apprenticeship then the answers will mostly be a list of big business acronyms and things run by government. APPM, Tioxide, ANM, EZ, TEMCO, Comalco, Sheridan, ACI, Incat, Cadbury and so on for the big companies, the Hydro in the next category as an entity unto itself albeit ultimately government owned, and in third category the various state government departments. The remaining 20% would be from the assorted builders, contractors, self-employed tradies and so on.

A key point being they all saw training as something that they needed to be doing and trained far more people than they needed to retain. That's what kept society supplied with tradies who then went to work for themselves or small business.

Again all true. But people entering their trades today have typically completed Year 12, and they don't all live at home and need mere pocket money to survive. Most will either be paying off their first car or about to buy one, and a good number are planning to leave home if they have not already. Apprenticeship wages are barely survivable for today's cohort.

Part of that was multiple parties working cooperatively to make it work. Apprentices with anything run by government were commonly placed with privately run businesses, typically construction related, for a period to broaden their experience both at their trade and with how private business goes about things. Apprentices from the private sector were likewise commonly sent off to a utility or maintenance workshop run by government to do things that contractors don't do. Etc. Then of course there was a well resourced TAFE for that side of the training as well.

All up it wasn't flawless but it worked pretty well. As a system it took a huge number of high school leavers who weren't going to uni, gave them a job followed by a qualification and, in practice, often ended up unofficially but in practice also taking on the task of correcting flaws in their upbringing and setting them on a sensible path in life.

There's even as societal understanding and political aspect to all that which I see as positive. No apprentice got through in that era without the point being reinforced that business needs to be profitable and government needs things done. Business can't survive if it doesn't make money, government can't survive if the lights go out.

The profit motive remains and things still need to be done.
As I see it, Australia lacks an ambition that its working towards as a nation.
What exactly do we want to become?
Albo's AUKUS will generate very few jobs in the greater scheme of things and defence is hardly an industry that we can hang our hat on!
Keating correctly saw us as an appendage of Asia rather than Europe or North America. That's what every bit of data reinforces:

The question is "what is our plan for leveraging our strengths into Asia?"
For now we can take our minerals export as a given, but it's finite.
We have an agriculture sector that remains overlooked for assistance yet generates over 11% of exports.
We have a renewables energy capacity that beggars belief, but seems to be getting most traction from the private sector... the likes of Twiggy for example. Asia needs energy and fossil fuels are not going to be their saviour. I see an investment now in Australia's renewables export capacity as akin to putting solar on rooftops 15 years ago. The trend is inevitable and the input costs will continue to decrease with scale and technological advances. Musk saw the same with his vision of electric cars, and now Teslas are a many streets ahead of the competition. Australia's situation will be somewhat different, as very few other nations can leverage wind and solar to match us.
The idea of bringing back manufacturing might arise in the future when our energy costs are low enough to offset labour costs. Right now it's about as good an idea as doing a lithography apprenticeship.

 

[sptrawler]

View attachment 157244
The question is "what is our plan for leveraging our strengths into Asia?"
For now we can take our minerals export as a given, but it's finite.
We have an agriculture sector that remains overlooked for assistance yet generates over 11% of exports.
We have a renewables energy capacity that beggars belief, but seems to be getting most traction from the private sector... the likes of Twiggy for example. Asia needs energy and fossil fuels are not going to be their saviour. I see an investment now in Australia's renewables export capacity as akin to putting solar on rooftops 15 years ago. The trend is inevitable and the input costs will continue to decrease with scale and technological advances. Musk saw the same with his vision of electric cars, and now Teslas are a many streets ahead of the competition. Australia's situation will be somewhat different, as very few other nations can leverage wind and solar to match us.
The idea of bringing back manufacturing might arise in the future when our energy costs are low enough to offset labour costs. Right now it's about as good an idea as doing a lithography apprenticeship.

That sums it up well, the rest will follow along, value adding will become cheaper as energy costs come down, but again we will still be in the situation where there will be no skilled workers.
IMO it makes a lot of sense to develop the value adding industries as the sector grows, we actually supply about 50% of Teslas lithium not to mention the nickel, cadmium etc, why not have a giga factory here?

 

[rederob]

That sums it up well, the rest will follow along, value adding will become cheaper as energy costs come down, but again we will still be in the situation where there will be no skilled workers.
IMO it makes a lot of sense to develop the value adding industries as the sector grows, we actually supply about 50% of Teslas lithium not to mention the nickel, cadmium etc, why not have a giga factory here?

Maybe if we value added "energy" to make cheap steel or some other products we could get some traction.
And maybe there are other sectors where some basic levels of value adding can occur, and would make practical and economic sense.
But while the idea of a giga factory sounds nice, how do we compete against a market that makes batteries by the multimillion and lives next door to the production facility it supplies? Also, the R&D essential to battery making, let alone its future focus, does not exist in Australia. Unless we can actually get a company who has these skills to move new production capacity to Australia I personally can't see how we get a foothold.

We in Australia have a market size of less than 1% of that in Asia, so what makes anyone think we should try to compete in terms of manufacturing, unless it's a niche product?

 

[moXJO]

I have a son going through tafe for electrical and the teachers suck. It is to the point of ridiculousness. 4 teachers so far and they fired the guy that actually knew what he was teaching.
Why? Because he was trying to change the absolute idiotic culture amongst head staff that had developed there. I'm seriously considering looking if there is some kind of legal action that can be taken it is that bad.

A major problem in the trades is that it really takes 7 years and up to 10 to train before someone is fully competent to a high degree.
Also not everyone can be trained. Some guys are just not suited to it for a wide range of reasons.

 

[sptrawler]

Maybe if we value added "energy" to make cheap steel or some other products we could get some traction.
And maybe there are other sectors where some basic levels of value adding can occur, and would make practical and economic sense.

Yes moving the product from the raw material stage to the next level of processing, always adds value to the product and as technology improves the requirement for the unskilled labour component falls. So as time moves on Australian based processing should increase.

But while the idea of a giga factory sounds nice, how do we compete against a market that makes batteries by the multimillion and lives next door to the production facility it supplies? Also, the R&D essential to battery making, let alone its future focus, does not exist in Australia. Unless we can actually get a company who has these skills to move new production capacity to Australia I personally can't see how we get a foothold.

We in Australia have a market size of less than 1% of that in Asia, so what makes anyone think we should try to compete in terms of manufacturing, unless it's a niche product?

IMO and I've said it on several occasions, Australia is crazy not to encourage and or demand a battery manufacturing facility is built here.
The argument for not manufacturing vehicle batteries is valid IMO, however IMO there is no excuse for not manufacturing grid connect batteries, they are standard size similar to shipping containers for ease of transport and handling.

With them being like containers the transport cost is basically nullified, by the removal of the need to transport huge amounts of raw materials to make batteries overseas, not all of the material is used in the manufacture of the batteries so therefore that loss is reduced by not transporting the raw material great distances in the first place.

Also the fact that when assembled there is very little wasted space, so shipping costs are reduced, as opposed to transporting something like an E.V where there is a lot of air space that has to be shipped and makes that option very uncompetitive.
There is also the new U.S rules regarding import tariffs on things like batteries, Australia is one of the countries that wont be hit with the 50% tariff, where China is.

So I would think building a giga factory here would actually make a lot of financial sense, as I said there is a perfect location at the old BP oil refinery in Perth, it has a battery grade nickel processing plant on one side and a new lithium hydroxide plant on the other, plus a ship loading facility already there.

I certainly wish someone would do the sums.

Tesla's Next Gigafactory Looks Like Being In Canada. Will Australia Follow?

Tesla's next gigafactory will likely be in Canada. Learn more about key EV-related changes in Inflation Reduction Act and what would TSLA's next move after Canada.

seekingalpha.com

From the article:
Following the recent passing of the Inflation Reduction Act (US$369b for climate change), it has now become very important for companies wanting to sell EVs in USA to meet the new rules so they remain competitive and qualify for half or all of the US$7,500 electric car subsidy.

Key points of the Inflation Reduction Act (qualification requirements)​

• 50% of the $7,500 subsidy - Electric cars are manufactured or assembled in North America.
• 50% of the $7,500 subsidy - An escalating % of the EV's raw materials must be extracted or processed in the US or a US free-trade partner.
• Exclusion: From 2025, any of the applicable critical minerals contained in the battery of the vehicle were extracted, processed, or recycled by a “foreign entity of concern”.

Note: The last dot point above basically rules out batteries coming from China unless we see any amendment.

 

[moXJO]

Perhaps advances in robotics will bring the cost of manufacturing down.

I do think as of right now that micro manufacturing might be able to turn a buck as prices are ridiculous.

 

[sptrawler]

I have a son going through tafe for electrical and the teachers suck. It is to the point of ridiculousness. 4 teachers so far and they fired the guy that actually knew what he was teaching.
Why? Because he was trying to change the absolute idiotic culture amongst head staff that had developed there. I'm seriously considering looking if there is some kind of legal action that can be taken it is that bad.

A major problem in the trades is that it really takes 7 years and up to 10 to train before someone is fully competent to a high degree.
Also not everyone can be trained. Some guys are just not suited to it for a wide range of reasons.

The education system in Australia is an absolute shambles, obviously the loonies have got in charge of the nut house.
Digressing for a moment, one of the grandsons started high school this year, talking to him yesterday he said a lot of the kids in his class are getting stressed and depressed because they can't understand maths due to not knowing the basics.
With TAFE it will probably be in a similar situation, now the Governments have distanced themselves from direct employment of apprentices and training, the system will probably have fallen into a heap.
Good TAFE teachers, same as any good teacher are worth their weight in gold. Unfortunately the great working conditions attract a wide spectrum of applicants and filters to remove bad ones were removed years ago.
On a side note my oldest son wants to become a TAFE elect/inst teacher, when he can afford it, he will be great at it he has always enjoyed teacher his siblings, his own kids and when he was at the mines the company paid him to coach the apprentices that worked there. He is just a natural at it, shame he owes so much on his house.
It may be worth contacting the governing body of the TAFE section of Govt.

 

[UMike]

Back in 84 in TAFE my nickname was "Brains". I was the only fitter and turner apprentice in class that could do Trigonometry.

Not sure the standards are worse. Just the need to be educated is greater.

 

[qldfrog]

Perhaps advances in robotics will bring the cost of manufacturing down.

I do think as of right now that micro manufacturing might be able to turn a buck as prices are ridiculous.

Problem in Australia is well past wage issues..real estate/ land price and tax,red green tape rates power prices..of course manufacturers have checked Australia and they build factories in Mexico instead.
We have dug too deep a hole to get out and people are happy with the situation as per election..Argentina till left dictator and Venezuela collapse needed to reset the country

 

[moXJO]

On a side note my oldest son wants to become a TAFE elect/inst teacher, when he can afford it, he will be great at it he has always enjoyed teacher his siblings, his own kids and when he was at the mines the company paid him to coach the apprentices that worked there. He is just a natural at it, shame he owes so much on his house.
It may be worth contacting the governing body of the TAFE section of Govt.

Seems the entrenched bludgers chase out the talent. My son got on well with the experienced young teacher. It was the older guys that seem to be waiting on retirement causing an absolute toxic learning environment.
The office politics chase a lot out.
It's at a stage they are not trying at all

 

[rederob]

IMO and I've said it on several occasions, Australia is crazy not to encourage and or demand a battery manufacturing facility is built here.
The argument for not manufacturing vehicle batteries is valid IMO, however IMO there is no excuse for not manufacturing grid connect batteries, they are standard size similar to shipping containers for ease of transport and handling.

With them being like containers the transport cost is basically nullified, by the removal of the need to transport huge amounts of raw materials to make batteries overseas, not all of the material is used in the manufacture of the batteries so therefore that loss is reduced by not transporting the raw material great distances in the first place.

Also the fact that when assembled there is very little wasted space, so shipping costs are reduced, as opposed to transporting something like an E.V where there is a lot of air space that has to be shipped and makes that option very uncompetitive.
There is also the new U.S rules regarding import tariffs on things like batteries, Australia is one of the countries that wont be hit with the 50% tariff, where China is.

So I would think building a giga factory here would actually make a lot of financial sense, as I said there is a perfect location at the old BP oil refinery in Perth, it has a battery grade nickel processing plant on one side and a new lithium hydroxide plant on the other, plus a ship loading facility already there.

I certainly wish someone would do the sums.

The logic is there, but what about the market?
Grid scale battery demand in Australia is presently strong with many projects in the pipeline. However, by the time your idea got up that demand may well have been mostly met, and an overseas market would be needed. This begs the question of how a newcomer would compete against proven technologies already manufacturing at scale.
I'm not suggesting your idea is dead in the water, but if it's going to have legs then I reckon Indonesia and India should be our main targets. Neither of these nations are advanced enough with renewables atm to need grid scale batteries, so there's certainly an opportunity to get in early.
A secondary audience would be the many Pacific islands that we could satisfy with wind/solar/battery energy solutions.
The question is, who will facilitate your idea, let alone do the maths?

 

[sptrawler]

The logic is there, but what about the market?
Grid scale battery demand in Australia is presently strong with many projects in the pipeline. However, by the time your idea got up that demand may well have been mostly met, and an overseas market would be needed. This begs the question of how a newcomer would compete against proven technologies already manufacturing at scale.
I'm not suggesting your idea is dead in the water, but if it's going to have legs then I reckon Indonesia and India should be our main targets. Neither of these nations are advanced enough with renewables atm to need grid scale batteries, so there's certainly an opportunity to get in early.
A secondary audience would be the many Pacific islands that we could satisfy with wind/solar/battery energy solutions.
The question is, who will facilitate your idea, let alone do the maths?

The market is the World IMO.

I see your point, but at the end of the day if there isn't a lot of labour content in assembling the grid battery boxes, we should have the advantage of not having to transport the raw materials, so the finished product would be available to be loaded on container ships and send to where ever they are required. Plus they should be cheaper to build here as the raw material is here.

As per Tesla they would be standard pre fabricated sizes reflecting their capacity, so they could be sent anywhere in the world and also it is a product that has a life cycle, so has to be replaced.
Seems like it's a no brainer to me, which being in Australia means it probably wont happen, we will send the raw materials to China and import the batteries, because that's the way we do it now. ?
Meanwhile our kids and grandkids go to uni to become baristas for wealthy Chinese, who own the holiday homes on our East Coast, that our kids and grandkids can't afford.
Ah the clever country, always finding another excuse for taking it up the, but who cares.
Like you said there will be a considerable domestic demand for grid batteries in Australia in the immediate future, that should underpin the feasibility for building the plant and then the export demand would support its expansion.
But guess what we will do fck all and send all the raw materials overseas for $10/ unit value and import back the assembled batteries for $1000/unit value, because we are a smug affluent society that can afford to indulge our smugness.
For the moment. ?

 

[bk1]

Plus they should be cheaper to build here as the raw material is here.

I'm not sure that one assertion follows the other.

Nothing is cheap to build in Australia, viz. the Kemerton plant in WA.
You have flown over IP as if it simply does not exist.

Neoen, (French) won the contract to build the 100MW Capital Battery, ACT. Doosan Heavy Industries (South Korea) will build it, operate it, maintain it for 20 years.The software developed to operate the battery is owned by Doosan GridTech.

 

[sptrawler]

I'm not sure that one assertion follows the other.

Nothing is cheap to build in Australia, viz. the Kemerton plant in WA.
You have flown over IP as if it simply does not exist.

Neoen, (French) won the contract to build the 100MW Capital Battery, ACT. Doosan Heavy Industries (South Korea) will build it, operate it, maintain it for 20 years.The software developed to operate the battery is owned by Doosan GridTech.

Well not really, it isn't as though I'm the only one that thinks it makes sense.

Our problem is we are always finding reasons not to make things happen, because we are living the dream on the back of digging holes, eventually the hole runs dry.
As can be seen by reading the posts on here, we are conditioned to be miners forever, the continuous race to the bottom.

I'll even put another perspective on it, during covid we found out how dependent we were on our survival to the supply of vaccine, we now are building a vaccine manufacturing facility.
Well how dependent do people think our electrical system will be to grid connected batteries, when they are our main storage medium and what happens if those who supply us with those batteries, all of a sudden don't?

‘Australia is missing out’ on battery revolution: Tesla chairman

Tesla chairman Robyn Denholm says Australia is missing out on the “value-add” from its resource riches and should establish a battery manufacturing sector.

www.afr.com

Tesla and Technology Council of Australia chairman Robyn Denholm says Australia is missing out on the “value-add” from its mineral resources, urging the nation to establish the infrastructure to refine and manufacture battery cells and electric vehicles.

In a speech to the National Press Club on Wednesday, Ms Denholm said a major question for the country was whether “we will take the necessary steps to move further up the value chain”.
Last month, Harvard Business School’s Economic Complexity Index revealed Australia had slipped down the global rankings from 86th to 91st, due to “a troubling pattern of export growth, with the largest contribution to export growth coming from low and moderate complexity products”.

“Australia is missing out on much of the value-add from this supply chain because, to date, the focus has been on shipping the raw materials offshore,” Ms Denholm said.

“Australia should aim to do the refining, the battery cell manufacturing, and the vehicle manufacturing. We can and should do all of that.

 

[moXJO]

Costs associated with business here can mean it's not viable. It's often easier and more profitable to start something else.
Competition from overseas is usually cheaper.

It's hard to fathom that if it were so profitable that business wouldn't be flooding into it.
There's a lot of smaller manufacturers around. But perhaps there isn't enough investment capital

 

[basilio]

The market is the World IMO.

I see your point, but at the end of the day if there isn't a lot of labour content in assembling the grid battery boxes, we should have the advantage of not having to transport the raw materials, so the finished product would be available to be loaded on container ships and send to where ever they are required. Plus they should be cheaper to build here as the raw material is here.

As per Tesla they would be standard pre fabricated sizes reflecting their capacity, so they could be sent anywhere in the world and also it is a product that has a life cycle, so has to be replaced.
Seems like it's a no brainer to me, which being in Australia means it probably wont happen, we will send the raw materials to China and import the batteries, because that's the way we do it now. ?
Meanwhile our kids and grandkids go to uni to become baristas for wealthy Chinese, who own the holiday homes on our East Coast, that our kids and grandkids can't afford.
Ah the clever country, always finding another excuse for taking it up the, but who cares.
Like you said there will be a considerable domestic demand for grid batteries in Australia in the immediate future, that should underpin the feasibility for building the plant and then the export demand would support its expansion.
But guess what we will do fck all and send all the raw materials overseas for $10/ unit value and import back the assembled batteries for $1000/unit value, because we are a smug affluent society that can afford to indulge our smugness.
For the moment. ?

View attachment 157290

I think your idea makes really good sense SP. If I was looking for a businessman who would run a thoughtful ruler over the idea it would be Twiggy Forrest.

There would be so many synergies with his current projects of massive electrification. He already has precedents of simply buying up companies with the technologies and talents he wants and enclosing them in his public and private companies. Be interesting to see if he has been considering such a move.

 

[farmerge]

I think your idea makes really good sense SP. If I was looking for a businessman who would run a thoughtful ruler over the idea it would be Twiggy Forrest.

There would be so many synergies with his current projects of massive electrification. He already has precedents of simply buying up companies with the technologies and talents he wants and enclosing them in his public and private companies. Be interesting to see if he has been considering such a move.

Twiggy a man with massive foresight and of course a massive bank balance to pursue his wants.