Future Made in Australia - How About Using High Speed Rail as a Catalyst?

But what exactly do we or could we make? And how do we (eventually) compete on a global scale to make the business economics work?

Just this week, the Federal Government and South Australian governments announced plans to save the Whyalla steelworks with a $2.4b 'bailout' to salvage the operation which they said was critical to the nation's sovereign manufacturing capacity. “Australia needs to make stuff. Australia needs to be more resilient, that's one of the lessons of the pandemic,” Albanese said. So we'll continue to make some steel in the future. But this is a rescue plan to maintain the little we already do up the value chain. What could we do in the future to achieve the Future Made in Australia objectives?

Who else has done this? South Korean case study

South Korea, Singapore and a multitude of other small European nations have a great track record of making this happen for their nation. As a particular case study, South Korea's economy experienced rapid growth between the 1960s to 1980s despite it not being 'blessed' with an abundance of natural resources.

South Korea's rapid economic development is widely attributed to the following key factors:

• Strong leadership: The new Korean regime in the early 1960's adopted five-year economic development plans, focusing on industrialization and exports.
• Export-oriented or outward looking system: South Korea's emphasis on exports led to growth rates exceeding 10% in the 1970s. This created a drive and incentive for innovation and global market competition
• Strategic planning: The country's commitment to long-term economic plans contributed to its transformation from an underdeveloped nation to a high-income country. The spearhead was specifically providing support to diversified family conglomerates such as Hyundai, Samsung, and LG Corporation, which received state incentives such as tax breaks, legality for their exploitation system and cheap or free financing: the state bank facilitated the planning of concentrated loans by item according to each five-year plan, and by economic group selected to lead it.

In addition to this, South Korea and other manufacturing developing nations focused on industries where they could innovate, add value and be competitive. Some of the strategies from observation have been to focus on:

1. Specific unique section of the value chain, where we could become 'world leading'
2. A market sector that isn't necessarily getting the attention of every other nation
3. Government investments to kick-start manufacturing, but with the view of creating a sustainable business
4. A structured and focused technical workforce development program. The objective being to be known globally as a skilled provider in particular services and products

As a strong proponent for a High Speed Rail solution in Australia, I was drawn to the concept of expanding this nation-building and future-shaping project as a catalyst for manufacturing or value chain contribution to “Future Made in Australia”.

So what could Australia do to kick-start our higher value export economy? Australia is currently embarking again on a renewed effort to develop High Speed Rail. The current project includes a $AUD79 million business case for the first stage of the line between Sydney-Newcastle. The business case has been developed by the newly (re)established High Speed Rail Authority and was delivered to the Federal Government at the end of last year.

Among many benefits, two of the key objectives of the HSR Authority is for the project to:

• Use local manufacturing and build local workforce skills and participation
• Achieve net zero carbon emissions and support sustainable green infrastructure

Achieve net zero carbon emissions and support sustainable green infrastructure.

Given it's high investment and impact, the High Speed Rail project may well be the perfect opportunity to achieve Future Made in Australia – both from a local manufacturing perspective and moving towards green / renewable energy infrastructure.

But again, what will we manufacture exactly? An obvious choice is the rolling stock. As a rolling stock professional and keenly aware of the manufacturing processes around making and assembling rolling stock – becoming a serious rolling stock manufacturer or even an 'assembler/integrator' is no small task. Making a train manufacturing industry would be difficult and competing with established and billion-dollar global duopoly businesses is counter-intuitive. Australia has of course, done it before, we have had a strong train manufacturing/assembly industry in our various states, so why couldn't we do it again? The problem with trains is that, like cars, we need strong domestic demand to keep the assembly lines going. The train industries (and workforce skills that go with it) across the States have inevitably been project-specific and have ended due to low ongoing demand from the relatively small Australian market and non-aligned Australian State interests and Government support.

As a more achievable objective, I do think that targeting a particular sub-system of the rolling stock could be a smaller and effective way of achieving the same goals for our 'developing manufacturer' nation and would a be a manageable first step in establishing Australia as an exporter of rail-related manufacturing. For example, we could target the bogie (train wheel and suspension system) manufacturing and assembling capability. We could potentially expand into metro's and light rail industries as well. If given the right attention – strong leadership, strategic planning and an export focus – it could be a lasting way to be competitive long after the high speed rail project is complete.

The key is to create a manageable and sustainable industry that is competitive and valued overseas to be sold. We aren't currently known for our high value exports, but the South Koreas weren't either once upon a time.

A Future (HSR) Made in Australia

Albanese also said we were blessed to have been able to dig up dirt and sell it. However others add value to it and then we purchase it back at higher prices. Recently I asked a Korean business executive, why do you think Australia doesn't make anything? His response was cheeky - “because Australia has nice beaches” he said. Maybe we've had it too good – digging up dirt by the hundreds of millions of tons and patting ourselves on the back with large economic returns per capita. I agree with Anthony Albanese, we need a Future Made in Australia for us to be a resilient nation, but we have to have clear short-, medium- and long-term plans and incentives and investments. These need to be focused on specific value chain activities to be able to sustain global competition. High Speed Rail may well deliver this for us and many other benefits.