Manufacturers Must Improve Their Game: Innovation Minister

10 Nov 09

Poor management is causing Australia's $100 billion manufacturing sector to lag behind that of other major economies, prompting Innovation Minister Kim Carr to accuse the industry of complacency.

A survey of 439 manufacturers, to be released today, found many companies were weak when it came to looking after their staff, including attracting and retaining employees.

''To improve, Australian managers must give more attention to building their people-management skills and the relationships within their organisations,'' wrote report author Roy Green, a University of Technology, Sydney, academic.

The research found larger companies outperformed smaller rivals and multinationals did better than those locally owned, but challenged the idea that more flexible hiring and firing practices led to improved productivity.

The research is part of a project by the London School of Economics ranking the manufacturing performance of 16 major economies. Australia ranked sixth out of 16, behind the US, Germany and Japan, with the strongest area being efficiency-focused ''lean'' manufacturing and the worst the ''instilling of a talent mindset''.

Professor Green called for better-educated managers and constant upgrading of skills.

Manufacturing accounts for about 9 per cent of Australian jobs and generates 40 per cent of exports, but the sector has become a regular recipient of government assistance as protective tariffs are removed.

Senator Carr, who will release the findings today at a Melbourne Institute conference, said the report showed there was plenty of room for improvement in the Australian sector.

''There's no question that Australian firms for too long have had a view that they are better than they really are, and that there is a limited awareness of what is best practice,'' he told businessday.

''The fact is our major competitors are better at the management of manufacturing firms than we are, and government is very keen to work with industry to improve this.''

Senator Carr said a shift in thinking was needed to overcome Australia's sluggish performance.

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