Beverley Head
October 30, 2017

Willox: Skills are a massive problem

The Establishment

Willox: Skills are a massive problem

Innes Willox: There are fundamental problems that we need to be dealing with

Australia is in danger of falling off the skills cliff according to Australian Industry Group CEO, Innes Willox – severely limiting organisations’ ability to innovate and grow.

AI Group represents 60,000 businesses with one million employees, but access to skills for the future is posing a real and immediate challenge.

According to Mr Willox; “We are going to run off the cliff very soon when it comes to skills and skills development. And that gets down to the basics of reading, writing and mathematics, as well as the development of STEM and STEAM skills.”

October’s Productivity Commission report notes that Australia now leads the OECD in the rate at which our maths skills are dropping. It’s not a great table to top.

According to Willox; “Business is starting to really identify shortfalls around capability in mathematics, science and languages. They are abundantly clear to business and will impede our innovation ability for years to come unless there is some pretty urgent attention.

“That will take time because we are going to be making up for a couple of decades of neglect quite frankly,” Mr Willox said in a wide ranging conversation with InnovationAus.com.

Compounding the challenge, he said, is the fact that industry continues to struggle with the rework of the 457 Visa programme.

According to Mr Willox, the 457 rework has dented confidence among businesses and made potential overseas applicants more hesitant about relocating to Australia. He is however hopeful that the six monthly reviews of the scheme will help fix some of its “glaring gaps”.

“What I equate this to is government throwing out a fishing line and starting to reel it in, as there was greater understanding of its impact. It has been particularly difficult for universities, and big four service companies, which have found it hard to get in highly qualified skills.”

He said that while the 457 scheme helps identify skills gaps in Australia what is still missing is the segue into training to plug those gaps.

There’s a certain irony talking about industry being challenged to find people in a month when the last car maker closed its doors in Australia. Mr Willox described the recent closure of the Holden production line as a sad day, but noted that there were still 20,000 jobs in the automotive supply chain in Australia, while a further 30,000 people worked in related sectors that design, make and repair ships, boats, trains trams and aircraft.

Debate continues about the exact size of the manufacturing sector. By one measure Australian manufacturing currently contributes 6 per cent of Gross Domestic Product (GDP) , exports $96.1 billion of goods and employs 856,000 people. This has fallen from a high in 1995, when it contributed 14 per cent of GDP and employed more than a million people.

However the Advanced Manufacturing Growth Centre (AMGC) has recently issued a report saying that in fact there are 1.3 million people employed in the sector.

Whatever the quantum today, there are clear signals that it will slide as automation takes a greater hold.

Mr Willox however said that some reports – CEDA’s for example, which predicted massive job losses as a result of increased automation are “alarmist” and cause anguish, particularly among older workers.

“Someone over 40 is probably at the last of the generation brought up with the non-digital age,” he says.

“There is a lot of concern about the disconnect in conversations between older and younger people. For younger people [automation is] just part of their life, and it's also creating tremendous opportunity. These transitions demand different skills, different ways of doing jobs.

“There is a lot to be excited about – and an enormous amount of jobs will be created as these technologies evolve. We couldn't predict ten years ago where we are now - if you try to predict ten years ahead you get exponential change.”

One of AI Group’s key roles is preparing itself and its members for that shifting future.

“We are a connector and facilitator and problem solver and a provider for our member companies across a whole range of business needs,” said Mr Willox.

“We deal both at factory floor level and at conceptual thinking level for businesses, we are involved in training and part of our job is to try to provide for members pathways to make it easier and better for them to do business.”

AI Group is also the lead industry partner in the Innovative Manufacturing CRC, Mr Willox is about take on the role of chair of the National Industry 4.0 Taskforce, and his AI Group colleague Mark Goodsell is also executive director of the Australian Advanced Manufacturing Council.

Mr Willox says the transformation taking place across industry means companies no longer operate in the box they once did.

“The traditional lines between industries are blurring as companies move up and down the production line or becoming more service oriented.”

Against that backdrop; “Innovation is seen as crucial and increasingly vital to a business’s success or failure, and that is innovation in processes, products, in techniques, in distribution.

“There is growing recognition that every business has the opportunity to operate way beyond its immediate geographic limit, and in every business there is now increasing focus on customisation.”

As a result; “The market is becoming more fragmented and segmented. Competition and opportunities can come from anywhere in the world - there is no time to stand still.”

While Australian industry needs to be firmly hitched to the innovation engine, he is concerned that the Government’s focus on innovation may have come off the boil.

However at the height of the Turnbull Government’s innovation push, Mr Willox said; “There was an overfocus on small and startup, rather than existing and bigger.

“That's understandable because it's shiny and new – but there are opportunities missed because all the evidence shows you that by far the greatest innovation comes from existing companies, and that got missed through the focus on new technology rather than developing technology.”

Right now though there are still fundamentals to get right, particularly skills supply and access to affordable and reliable energy.

Mr Willox has described the Government’s new energy policy as “plausible” and is hopeful it will achieve its goal of lower prices, reliable supply and meeting Australia’s emissions commitments.

"We must maintain that hope – because the alternative is to continue the current pathway of rising emissions, lost competitiveness and declining reliability."

According to Mr Willox; “There is a fundamental need for business to have access to raw materials - energy and the like and at the moment that is proving very difficult and a massive distraction for big parts of industry across mining, mining services, agriculture, manufacturing.”

The distraction was imposing an opportunity cost as enterprise focused on survival rather than growth, he said.

“There has to be reliability, certainty and affordability around all those inputs. That has to be the task of Government to provide that or the conditions to allow for that.”

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