Manufacturing recovers in Australia’s southeast

A05I6568When US billionaire Hamdi Ulukaya first came to Melbourne four years ago, the owner of America’s No 1 Greek yoghurt brand, Chobani, headed straight into the heart of the city’s manufacturing heartland.

Ulukaya had heard the stories about the death of Australian manufacturing, led by the local car industry.

He drove past a number of empty warehouses, dishevelled housing estates and graffiti-ridden train stations. Yet he was determined that Australia — and more specifically southeast Melbourne — would be the location for his first manufacturing facility outside the US.

By late 2012 Chobani had set up its Australian headquarters in Hammond Road, Dandenong South, after acquiring the Bead Foods business, the owner of the Gippsland Dairy yoghurt brand. And it hasn’t looked back.

“Hamdi bought the local business because he could see it had good capability and that it was going to be the enabler to launch Chobani here and in Asia in the right way,” says Chobani Australia managing director Peter Meek.

“Overlaid with the proximity of fresh milk supply, it was the perfect location.”

When production started under Chobani ownership at the Hammond Road site, it delivered 25,000 cases of yoghurt a week. It now churns out 30,000 cases a day and the business has doubled in size in four years. The brand is also performing well in three export markets of Malaysia, Singapore and Thailand.

“We just launched into the dips category and we see potential to build out our manufacturing operations. Australia is a great location to create food for Southeast Asia — in terms of APAC we see that has a lot of scope for us,” Meek says.

Chobani is not alone. The likes of Canadian transport giant Bombardier, German auto and industrial components manufacturer Robert Bosch and Volgren Australia — now controlled by Brazil’s Marcopolo, one of the world’s largest bus manufacturers — have all been quietly expanding their operations in recent years in what is known as “The Manufacturing Zone”.

Robert Bosch Australia has just poured $40 million into redeveloping its Centre Road head offices in Clayton, which were officially opened a three weeks ago.

The multinationals have been joined by the likes of local caravan maker Jayco, sheet metal producer Hilton Manufacturing, healthcare waste collector SteriHealth, engine reconditioning firm HM GEM Engines and car components manufacturer MTM Group.

The Shires of Dandenong, Kingston, Casey, Cardinia, Knox, Monash and Frankston in Melbourne’s southeast now make up Australia’s second-largest manufacturing region behind greater western Sydney.

And next week Dandenong will play host to the Smart Manufacturing Expo and Symposia.

It will be the first time the local government authorities of Greater Dandenong, Kingston, Knox, Monash and Casey/Cardinia have come together with industrialists from the Committee for Dandenong, the CSIRO and the Chisholm Institute, one of the largest providers of vocational education and training in Vic­toria.

The alliance of industrialists, councils and research institutions is seeking $1.2 billion from governments and the private sector to fund a number of projects in a region that produces over half of Victoria’s manufactured products, provides in excess of 90,000 manufacturing jobs and is home to more than a million people and 5000 enterprises — 94 per cent of which are SMEs.

“What is great about this region is we found the council and the community are incredibly responsive to our manufacturing business. Having access to the right capability and resources — people, raw material, service support — is really important and we have all those things in this area,” Meek says.

“Manufacturing is and should always be an important part of our economy. We may not be making cars but there is absolutely no reason we can’t be manufacturing and exporting some of the best food in the world.”

The recent federal budget reported the loss of some 60,000 jobs across the nation in the manufacturing sector in the past year, yet the southeast Melbourne manufacturing precinct appears to be bucking the trend.

“Manufacturing is growing but it is changing. It has the capacity to evolve because of its unique locational advantages, where you have high-value advanced manufacturing co-located within a high-quality food bowl linked with leading Australia research institutions such as the CSIRO, the Australian Synchrotron and Monash University, together with leading vocational institutions such as Holmesglen and Chisholm TAFEs,” says Kingston City Council CEO John Nevins.

Kingston houses 15,500 businesses employing more than 70,000 people and is second behind Dandenong in terms of manufacturing contribution to the “zone”.

“Our regional manufacturing opportunities need to be seen in today’s context. It is not about mass-produced widgets but rather it is about exploiting our world-leading competitive advantages in our homegrown technological innovations. This leadership is not well understood by the broader community,” Nevins says.

“In southeast Melbourne we have companies selling technology to Germany and the rest of Europe as well as NASA and the US defence forces. These manufacturers employ highly qualified engineers, food technologists, chemists and also skilled trades people as well as shop floor personnel and truck drivers.”

Federal Industry Minister Christopher Pyne said he welcomed next week’s symposium, noting such initiatives were “an important part of the future for the manufacturing sector and illustrates how innovation and creative thinking can give us a competitive edge”.

“Advanced manufacturing is one of six key high-growth industry sectors of competitive strength and strategic priority where the government is concentrating its investment through the $248 million Industry Growth Centres Initiative,” he says.

“These growth centres are working to lift the levels of collaboration between businesses, industry, research organisations and government in order to better capitalise on the excellent research and development undertaken and scientific knowledge generated in Australia.”

Shadow federal industry minister Kim Carr, who will attend next week’s symposium, said the ongoing development of the zone was essential to spreading prosperity through a region still battling with unemployment and low incomes.

“The great strength of these industrial clusters is the personal relationships that can allow people to learn from one another,” he said.

“These words get abused all around the world but industrial clusters has been a pivotal point in thinking about industry policy and this is a clear illustration of how it really works.”

In March Victorian Premier Daniel Andrews launched the Committee For Dandenong Strategic Agenda 2016-2019 that identified a range of priority investment areas for the zone, including strengthening smart manufacturing and innovation, improving transport and infrastructure and continuing the revitalisation in Dandenong’s CBD.

It was backed by all the councils in the “Zone“ as well as the South East Melbourne Manufacturers Alliance (SEMMA), and industry group representing more than 200 leading manufacturers based in the region.

Committee for Dandenong chairman Gary Castricum says the key is tackling a crisis in confidence in both the government and public perceptions about what manufacturing means.

His family has run meat processing and retailing businesses in the Dandenong City for 60 years.

“We want government to think about long-term sensible procurement practices that will encourage these businesses to continue to employ,” he says of the likes of Bombardier and Volgren.

“These businesses need to invest long time and governments tend to be the big buyers of transport equipment.”

The committee now wants to establish a connectivity centre to give SMEs a one-stop shop for access to information about suppliers and government programs.

One of the many SMEs in the Zone is Lupe Wines, established by Georgia Beattie, which packages single serve wines produced in both 150 and 187ml volumes with a 12 month shelf life.

Beattie first trialled Lupe in Japan, Singapore and Korea before discovering its potential in the Australian wine industry.

“The export market is a big market of ours. It is about leveraging and having synergies in Australia to get bigger and get smarter,” she says.

Lupe now does the contract packaging for Treasury Wines and is looking at putting her products into the US and Chile.

This article first appeared in the Australian newspaper.

“From my perspective, I have spent a lot of time in start-ups. Twenty years ago a manufacturing start-up would not be possible but now it is with technology,” she says.

“Government needs to support in giving access to research. From my perspective research is the key thing. I need to get smarter if I am going to be competitive globally.”

The Chisholm institute of TAFE, which offers over 330 certificate, diploma, advanced diploma and graduate certificates, is working closely with the likes of Hilton and Bombardier as well as the Pratt Family’s paper, packaging and recycling group Visy Industries to support the region.